How Churchill Downs plans to lean into gaming, racetrack projects and Kentucky Derby as it grows

Churchill Downs is days away from the 150th run of the Kentucky Derby, but the company's growth plan for success doesn't stop there.

Rather than relish too long in the company's accomplishments from 2023, which proved to be the best year ever for the 150-year-old business delivering a net revenue of nearly $2.5 billion, or spend too much time focused on the successes anticipated to come in the first weekend of May, including anticipated wagering records over Oaks and Derby days and the unveiling of the new multi-million dollar Paddock Project, Churchill Downs Inc. CEO William "Bill" Carstanjen and his team are focused on the future.

"Our success is a function of really careful strategic planning over the previous years, so, for us, nothing here is random, everything is thought through ... usually multiple years in advance," Carstanjen told the Courier Journal. "We're seeing the fruits of our labor over the last number of years."

The iconic Louisville-headquartered company is known globally for its marquee event, the Kentucky Derby, held each year on the first Saturday in May.

"I always think of the Kentucky Derby as the heartbeat of our company," said Carstanjen.

But Churchill Downs Inc. is no longer a single-minded company supported solely by on-track horseracing. Over the last 10 to 15 years, the company has seen itself emerge in new markets — brick-and-mortar gaming venues and online sports betting.

"We are focused on growing in 2025 and beyond," Carstanjen said in a quarterly results investor call in February.

Showing no signs of slowing down, Churchill Downs has big things in store for 2024 and beyond. Here's a look at what to expect from the legacy company.

Expansion of gaming, casinos, and online betting

As more and more states have become friendly to gaming — whether through Historical Racing Machines gaming like in Kentucky or casino gaming in Indiana — Churchill Downs has managed to carve out a spot for itself in the market offering a variety of gaming ventures.

Nationwide, Churchill Downs is approaching 30 gaming facilities.

"I remember when we had zero, so it's all relatively recent," said Carstanjen, who has been with the company since 2005.

In Kentucky, the business will open its seventh HRM facility in Owensboro next year. Carstanjen said the six facilities already open, including the recently opened Derby City Gaming Downtown and Derby City Gaming and Hotel on Poplar Level Road in Louisville, "are all growing."

Churchill Downs is also taking its HRM business to other states, including a massive project in Northern Virginia called The Rose. A $400 million gaming and entertainment venue, The Rose is anticipated to bring $35.5 million in annual tax revenues and employ more than 500 people after it opens in September.

On the HRM side, Churchill Downs isn't growing solely by opening new facilities, but by taking control of the technology systems used to control HRMs. In August 2023, the company acquired Exacta Systems, the leading technology support provider for HRMs nationwide, including at Churchill Downs properties and other companies.

"Our HRM business has been on fire, Kentucky has been an area of great success, Virginia has been an area of great success, that's an area where there are lots of opportunities currently that we're executing on, and that's been driving a lot of growth," Carstanjen said.

In the casino world, Churchill Downs recently opened a roughly $300 million casino resort in Terre Haute, Indiana. A hotel addition to this property will open in May. The company now has 12 casino properties in its portfolio and as future opportunities allow, there could be further expansion in this gaming segment.

Outside of physical gaming spaces, Churchill Downs Inc. has turned its TwinSpires online parimutuel wagering product from a retail-only interface into a hot commodity for companies like FanDuel and DraftKings.

Carstanjen and his team saw growth potential, noting the technology and software used to create parimutuel online wagering systems varies from traditional sportsbooks, allowing Churchill Downs to license and sell the technology usage to other online gaming giants.

As Churchill Downs readies for a handful of gaming venue openings this year, it is clear the gaming segment will be its most crucial business area for long-term future growth.

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"Over the last decade, we've become a really accomplished and capable gaming company that doesn't have to shy away from competing against anybody," Carstanjen said. "We've now proven across a variety of jurisdictions that we have the team members and financial strain and experience to go head-to-head against any competition."

Future racetrack projects for the Kentucky Derby

While Churchill Downs has shifted some of its company focus to expanding other business segments such as its online and in-person gaming venues, the company will always rely on and continue to develop the Kentucky Derby.

Over the last few years, Churchill Downs has worked to create a culture of elevated experiences at the Derby with the addition of fan experiences like the Woodford Reserve Paddock Plaza and through partnerships and brand engagement booths.

Alongside, Carstanjen said the company is planning future large-scale projects like this year's $200 million paddock overhaul, which is set to be open for Derby.

"The paddock project is another step on the road, it's not the final destination," Carstanjen said. "There's a lot more we can do on our 200-acre property to develop new areas and new customer experiences."

With the track in Louisville being used more than ever before, Churchill Downs relies on the constant creation of projects and developments to keep the experience fresh for visitors and stay competitive with other sporting and entertainment venues.

"It's really important to always have a project that our team and our customers can look forward to," Carstanjen said, noting his team has projects "the scale and scope of the paddock renovation" already in the works.

While he did not share details on what specific development projects may be heading to the iconic racetrack, Carstanjen said projects for future Derbies are on schedule. The company has already planned a "surprise or two" for Derby 151, he added.

"There's a built-in limitation to how fast we can grow [Derby] in order to be ready every year to have it be that bucket list event," said Carstanjen. "That throttles back the maximum amount of growth we can have in Derby in any year."

How Churchill Downs is bringing more jobs to Louisville

While much of this growth is happening outside of Louisville, the future of Churchill Downs will remain in Louisville.

These new venue openings, the acquisition of HRM technology, and the licensing of the TwinSpires platform all lead to job growth in Louisville.

In 2012, Churchill Downs Inc. moved its headquarters office and all 30 corporate employees from the racetrack to a one-floor office off North Hurstbourne Lane. Today, the company has grown to occupy three floors in the office and employs more than 400 people there.

Carstanjen said, that as the company continues to plan big gaming expansions and further enhances the Derby each year, the city should expect more jobs to come to Louisville.

"We're proud of that, and those jobs are a reflection of our success not only in Louisville, and not only in Kentucky, but in these other markets throughout the United States," he said. "Because when we're successful in those other markets, jobs get created here."

The first Saturday in May will come and go this year as it has every year before, but Churchill Downs is ready for the future.

"Churchill is an old company, this will be our 150th year, and in a lot of ways, it's a brand-new company," Carstanjen said. "As we look forward, we have a lot of growth, a long runway of growth and hopefully we'll continue to evolve like we have over our entire existence."

Contact business reporter Olivia Evans at oevans@courier-journal.com or on X, the platform formerly known as Twitter at @oliviamevans_.

This article originally appeared on Louisville Courier Journal: How Churchill Downs plans to lean into gaming as Kentucky Derby grows