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DATE

Apr. 23, 2026, 9 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — William C. Carstanjen
  • President and Chief Operating Officer — Bill Mudd
  • Chief Financial Officer — Marcia Ann Dall
  • General Counsel — Brad Blackwell
  • Senior Director — Sam Ullrich

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TAKEAWAYS

  • Net Revenue -- $663 million, representing a new first-quarter record for the company.
  • Adjusted EBITDA -- $257 million, also a record for the period, with segmental growth cited in both Live and Historical Racing and Wagering Services and Solutions.
  • Live and Historical Racing Adjusted EBITDA -- Increased by over $11 million, or 11% year over year, driven by outperformance in Kentucky and the opening of the Marshall Yards facility.
  • Kentucky HRMs Adjusted EBITDA -- Rose by more than $9 million, or 17% year over year, supported by both Western and Northern Kentucky properties and the new Marshall Yards location.
  • Virginia Adjusted EBITDA -- Gained $3 million, or 6% year over year, supported by performance at The Rose and a 19% handle increase during the Virginia Derby, which was cited as the third-highest wagering day in Colonial Downs’ history.
  • Wagering Services and Solutions Adjusted EBITDA -- Improved by 8% year over year, attributed to growth in retail sports betting, online market access agreements, and XASSA platform expansion.
  • TwinSpires Adjusted EBITDA -- Achieved modest growth due to lower legal expenses, as directly stated in the call.
  • Gaming Segment -- Performance aligned with expectations, with $2 million in weather-related disruption and the cessation of HRM operations in Louisiana cited as impacts; same-store margins remained relatively consistent year over year.
  • Free Cash Flow -- $276 million, or $3.94 per share, demonstrating continued strong operating cash generation.
  • Project Capital Expenditures -- $40 million in the quarter; full-year expectation maintained at $180 million to $220 million.
  • Maintenance Capital Expenditures -- $19 million in the quarter, with full-year guidance between $90 million and $110 million.
  • Net Leverage Ratio -- Ended the quarter at 3.9x on a bank covenant basis, reflecting ongoing cash flow strength.
  • New HRM Facility Opened -- Marshall Yards in Calvert City, Kentucky opened on time and on budget, marking the company's eighth HRM venue in the state.
  • Preakness & Black-Eyed Susan Stakes IP Acquisition -- Announced a definitive agreement to acquire all intellectual property, including trademarks, for these races from The Stronach Group subsidiary.
  • Preakness IP Fee Structure -- CEO Carstanjen said, "a base fee of $3 million that grows at 2.5% every year, starting in 2028," plus "2% of handle for Black-Eyed Susan Day plus Preakness Day." CEO Carstanjen also noted that "Last year, the Preakness and Black-Eyed Susan Day in combination did about $140 million of handle."
  • Kentucky Derby Hospitality Upgrades -- Completion of The Mansion and Finish Line Suites renovations, with additional premium offerings to be completed by 2028 under the Victory Run project.
  • Derby Week Expansion -- New Sunday racing and Kentucky Oaks to be aired in primetime on NBC and Peacock were highlighted as growth initiatives.
  • HRM ETG Rollout -- Roulette electronic table games based on historical races introduced at six Kentucky properties, described as accretive to GGR; craps and blackjack products in development.
  • Rockingham Grand Casino Project -- Remains on schedule for a mid-2027 opening in Salem, New Hampshire.
  • Derby EBITDA Growth Guidance -- CFO Dall said, "we are very confident in our $15 million to $20 million of Derby growth over last year’s number."

SUMMARY

Churchill Downs Incorporated (CHDN +7.51%) reported new records for both net revenue and adjusted EBITDA in the first quarter, driven by growth across all major segments and geographies. The launch of Marshall Yards in Kentucky and the acquisition agreement for the Preakness and Black-Eyed Susan Stakes intellectual property were explicitly highlighted as major portfolio milestones. Strategic capital deployment remained disciplined, with robust free cash flow covering both expansion projects and ongoing shareholder returns. Ongoing enhancements to Derby Week and investments in premium hospitality are positioned as recurring EBITDA drivers and market differentiators for future years.

  • The Virginia Derby achieved a 19% increase in total handle, marking one of the highest wagering days in the track's history and directly supporting higher purses and local industry funding.
  • Electronic table games using HRM technology have already driven incremental GGR and database growth, with early-stage marketing efforts showing accretive customer behavior metrics.
  • CEO Carstanjen confirmed legislative vetoes in Virginia this quarter blocked expansion of skill games, a new Fairfax County casino, and iGaming approval, creating a stable competitive landscape for the company's operations in that state.
  • Customer trends among higher-value rated players improved, while the company called out some softness in unrated and out-of-state segments, with marketing tactics actively refined to address these patterns.
  • The company indicated that its current HRM venues in Kentucky and Virginia have not yet peaked in maturity, suggesting additional near-term organic growth potential as product offerings and targeted expansion efforts continue.

INDUSTRY GLOSSARY

  • HRM (Historical Racing Machine): A wagering device allowing play of previously run horse races using randomly selected result pools, operating similarly to slot machines but based on pari-mutuel outcomes.
  • ETG (Electronic Table Game): A digital or electronic simulation of a traditional casino table game, such as roulette, craps, or blackjack, sometimes utilizing underlying pari-mutuel racing outcomes.
  • Handle: The total amount of money wagered over a specified period or on a specific event.
  • GGR (Gross Gaming Revenue): The difference between wagers placed and payouts made to players, representing a gaming property's revenue before expenses.

Full Conference Call Transcript

Sam Ullrich: Thank you. Good morning, and welcome to our first quarter 2026 earnings conference call. After the company's prepared remarks, we will open the call for your questions. The company's 2026 first quarter business results were released yesterday afternoon. A copy of this release announcing results and other financial and statistical information about the period to be presented in this conference call, including information required by Regulation G, is available at the section of the company's website titled News, located at churchilldownsincorporated.com, as well as in the website's investor section. Before we get started, I would like to remind you that some of the statements that we make today may include forward-looking statements.

These statements involve a number of risks and uncertainties that could cause actual results to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC, specifically the most recent reports on Form 10-Q and Form 10-K. Any forward-looking statements that we make are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in yesterday's earnings press release.

The press release and Form 10-Q are available on our website at churchilldownsincorporated.com. And now I will turn the call over to our Chief Executive Officer, Mr. William C. Carstanjen.

William C. Carstanjen: Thanks, Sam. Good morning, everyone. With me today are several members of our team, including Bill Mudd, our President and Chief Operating Officer; Marcia Ann Dall, our Chief Financial Officer; and Brad Blackwell, our General Counsel. I will begin with a high-level overview of our first quarter performance and key strategic developments. Marcia will then walk through our financial results and capital management strategy in more detail. Then we will open the call for your questions. Let me start with a few key highlights from the quarter. First, we delivered a strong start to the year with record first quarter net revenues of $663 million and record adjusted EBITDA of $257 million.

These results reflect strong execution across our portfolio and continued momentum with our growth strategy. Second, we successfully opened our Marshall Yards historical racing machine venue in Calvert City, Kentucky, on time and on budget. This marks our eighth HRM facility in the Commonwealth. Early performance has been encouraging, and the property is already contributing to job creation, increased purse funding for Kentucky's horse racing industry, and long-term shareholder value. Third, we continue to see strong progress in Virginia. We remain committed to supporting the renaissance of thoroughbred racing.

We will host 48 race dates in 2026 and expect to generate significant purse funding from our HRM operations across the state that will be distributed during our race meet at Colonial Downs. We also ran a successful Virginia Derby in March, and we are excited that the winner, IncrediBolt, will have the opportunity to compete in this year's Kentucky Derby. We were very pleased with several positive developments in Virginia during the closing stages of the 2026 legislative session. The governor vetoed legislation related to skill games and a proposed new casino in Fairfax County. iGaming also did not receive approval.

These outcomes support a more attractive operating environment, and we remain committed to continued investment and job creation in Virginia. Another example of our strategy around smart, transformative investments in the thoroughbred industry is reflected in our announcement earlier this week. We signed a definitive agreement to acquire the intellectual property rights to the Preakness Stakes and the Black-Eyed Susan Stakes from a subsidiary of The Stronach Group. This includes all trademarks and associated rights with respect to the Preakness Stakes, which is the second leg of the Triple Crown, and the Black-Eyed Susan Stakes, which is the second leg of the three related races for the fillies. We expect the second most wagered-on race in the country.

The Kentucky Derby is, of course, first by a very wide margin, followed by the two other Triple Crown races, the Preakness and the Belmont Stakes, and then our own Kentucky Oaks race. Let me now turn to the Kentucky Derby and our vision for long-term growth. We continue to invest in enhancing the Derby experience, and for this year's event, we are unveiling several exciting upgrades. We have completed renovations of The Mansion, one of the most exclusive hospitality areas, offering exceptional views of the track and finish line. Our Finish Line Suites have also been significantly upgraded, creating a more integrated, high-energy hospitality experience with improved flow and premium amenities.

These are our most exclusive suites, and we are very excited to show our customers a reimagined and unique setting. Following this year's Derby Week, we will accelerate the work on the Victory Run project. As I discussed on our call in February, we will finish this project in time for the 2028 Kentucky Derby. This new structure will offer spectacular premium suites on the first level. The guests in these suites will be able to walk to the rail to watch the races. Victory Run will also incorporate covered box seating and multiple high-end dining experiences on the second through fourth levels of the building. These projects are designed to deliver strong long-term returns while offering exceptional guest experiences.

Looking ahead, we remain focused on expanding Derby Week into an even broader week-long national and international event. Last year, we welcomed more than 370 thousand guests across Derby Week, roughly the equivalent of five Super Bowls in one week. We see significant opportunities to continue growing with respect to attendance, wagering, viewership, sponsorship, and EBITDA. As part of that strategy, we are expanding Derby Week with the addition of racing on Sunday, April 26. And for the first time, the Kentucky Oaks will be broadcast in primetime on NBC and Peacock, giving us a powerful platform to expand the reach of this prestigious race and the broader Derby experience.

At the same time, the continued growth of Derby Week is attracting innovative global partnerships. These partners are increasingly focused on premium, experience-driven engagement, and Derby Week offers a unique platform to deliver that at scale. Our partners recognize that activations at live sporting events have become more coveted given the significant growth in the experience economy. When coupled with premium hospitality offerings during Derby Week, our partners can provide once-in-a-lifetime experiences for their customers during one of the most marquee live sporting and entertainment weeks in the world. Over 152 years, the Kentucky Derby has become an iconic event in sports and entertainment.

We are going to build on that legacy by continuing to expand its reach and relevance for future generations. Turning to our HRM portfolio, our venues in Kentucky and Virginia are performing well and play an important role in supporting the horse racing industry in their respective states. They generate purse funding, support the local agricultural industries, create jobs, and drive meaningful economic impact in the communities where we operate. We will continue to invest in HRM venues and product offerings. We introduced roulette electronic table games, or ETGs, based on historical horse races at six of our Kentucky HRM properties during the first quarter.

Early indications are very encouraging, and the new ETGs are accretive to our GGR in Kentucky. We will be rolling out additional machines throughout 2026 and beyond. We are increasing our marketing of this new offering, and awareness is building at each of our properties. We are also working on developing additional HRM-based ETGs, including craps and then blackjack, to attract an even broader customer base. Looking ahead, our Rockingham Grand Casino project in Salem, New Hampshire, remains on track for a mid-2027 opening. This development represents another compelling opportunity to expand into an attractive market with a high-quality entertainment offering. In summary, this was a strong start to 2026.

We delivered record results, executed on key strategic initiatives, and continue to invest in high-return growth opportunities across our portfolio. Churchill Downs Incorporated remains exceptionally well positioned with a strong core portfolio of businesses and a clear path for long-term growth. We are confident in our ability to deliver consistent and meaningful value for our shareholders. And before I turn it over to Marcia, a quick reminder: Derby Week begins this Saturday, April 25, with Opening Day and culminates on Saturday, May 2, the 152nd running of the Kentucky Derby. We have an exciting week of racing and events planned, and we look forward to hosting many of you in person.

We are anticipating an exceptional Derby and Derby Week, significantly outpacing not only last year but also Derby 150 in 2024. If you have not secured your tickets yet, we encourage you to do so. We expect to be fully sold out. With that, I will turn this over to Marcia. Marcia?

Marcia Ann Dall: Thanks, Bill, and good morning, everyone. I will begin with highlights of our financial results and then provide an update on capital management. First, regarding our financial results, as Bill noted, we delivered record first quarter revenue and adjusted EBITDA, with both our Live and Historical Racing segment and our Wagering Services and Solutions segment achieving record performance for the quarter. We are pleased with the continued momentum in our Live and Historical Racing segment. Adjusted EBITDA increased by more than $11 million, or 11%, compared to the prior-year quarter.

Our Kentucky HRMs delivered outstanding results, with adjusted EBITDA increasing more than $9 million, or 17%, compared to the prior-year quarter, driven by strong growth across both Western and Northern Kentucky. Our Kentucky growth also reflects the opening of Marshall Yards in February. In Virginia, adjusted EBITDA increased by $3 million, or 6%, compared to the prior-year quarter. This growth was supported by continued momentum at The Rose, which delivered sequential increases in the GGR per machine per day for each month of the first quarter. Our team is making great progress in marketing the property to attract new guests and increase spend per visit.

We are encouraged by the continued top-line growth and increase in the margins of The Rose. We believe the property remains in the early stages with a long runway for growth. At Colonial Downs Racetrack, we successfully held the Virginia Derby in March with sold-out attendance and a 19% increase in handle over last year, making it the third-highest wagering day in Colonial Downs’ history. Performance at our other Virginia properties was impacted by weather and increased competition. We are actively optimizing our marketing and operating strategies, and we remain confident in the long-term performance of these properties.

Turning to our Wagering Services and Solutions segment, adjusted EBITDA increased 8%, driven by retail sports betting, contributions from our online sports betting market access agreements, and continued expansion of our XASSA platform. TwinSpires also delivered modest growth in adjusted EBITDA primarily due to lower legal expenses. Last, regarding our Gaming segment, our wholly owned regional gaming properties performed in line with our expectations, given the cessation of HRM operations in Louisiana in May and $2 million of weather-related disruption in January. Overall, first quarter same-store margins at our wholly owned casinos were relatively consistent with the first quarter of last year. Customer trends have improved versus the prior year and remain consistent with the prior quarter.

We see continued strength among higher-value rated players and some softness outside of Kentucky and in lower-value unrated segments. We are actively refining our marketing strategies to capture opportunities across both segments. Turning to capital management, we generated $276 million, or $3.94 per share, of free cash flow in the first quarter, reflecting the strength and consistency of our operating model. Our strong free cash flow generation continues to support both reinvestment in high-return growth projects and meaningful capital returns to shareholders. Project capital expenditures were $40 million in the quarter, and we continue to expect full-year 2026 project capital spend of $180 million to $220 million.

Maintenance capital expenditures were $19 million in the quarter, and we continue to expect full-year 2026 maintenance capital spend of $90 million to $110 million. We ended the quarter with bank covenant net leverage of 3.9 times, reflecting continued strong operating cash flow generation from our recent investments. With that, I will turn the call back over to Bill so that he can open the line for questions.

William C. Carstanjen: Thank you, Marcia. Okay, everyone. I think we are ready to take your questions now.

Operator: We will now open the call for questions. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. One moment, please. The first question comes from the line of Barry Jonas with Truist.

Barry Jonathan Jonas: Hey, guys. Good morning. I may have missed this as the audio was a little off before, but can you detail a little more about the fee structure for the Preakness IP and also if you have any wider thoughts on the longer-term strategy there?

William C. Carstanjen: Good morning, Barry. Thanks for the question, and sorry if there were any difficulties with the audio. Certainly happy to cover anything that slipped through the cracks. The fee structure in Maryland is a two-part structure. First, a base fee of $3 million that grows at 2.5% every year, starting in 2028. It does not apply for the 2027 Preakness, and we have not closed on the purchase of the intellectual property yet at this point either. But starting next year, it is a $3 million base fee, and from that point on, it grows at 2.5%. The second portion of the fee is 2% of handle for Black-Eyed Susan Day plus Preakness Day.

You add those two amounts together, and you get the total. Last year, the Preakness and Black-Eyed Susan Day in combination did about $140 million of handle to give a rough perspective on where it is at this point. For us, it is a thrill to be a part of that. It is, in our view, an iconic asset. Having been in the game for a long time, I am familiar with the history of the Preakness and I know what it has been in the past and what it can be in the future. We are happy to participate and work with the state as they see fit to help build it back to its former glory.

Operator: Thank you. Our next question comes from the line of Dan Politzer with JPMorgan.

Daniel Brian Politzer: Hey, good morning, everyone. Thanks for the question. Just another one on Preakness. As we think about your capital allocation parameters, in the past you have talked about investing in the ecosystem, looking for things with local monopolies, and the ability to improve operations of an asset over time. How does this investment in Preakness fit into that, and how do you think about this potentially evolving over the medium to long term?

William C. Carstanjen: Thanks for the question, Dan. First, some of those attributes come in connection with iconic, unique, and special assets that can have different attributes than everything else over time. We think the Preakness is one of those assets. We think it has tremendous potential and a tremendous history. As it unfolds, we certainly are available to the state and happy to work with the state to help them figure out how best to transition that property into something great like it has been in the past. For us, it is entirely consistent with how we look at things like the Derby.

In my opinion, the Derby is always what is most special and most unique about our company, and it is an asset that cannot be duplicated. It is a very special, unique piece of Americana. We think Pimlico and the Preakness have elements of that themselves, and it is about developing and encouraging those things to happen over time.

Operator: Thank you. Our next question comes from the line of Daniel Guglielmo with Capital One Securities.

Daniel Edward Guglielmo: Hi, everyone. Thank you for taking my question. In the past, you have talked about growing the international customer base for the Kentucky Derby and U.S. horse racing in general. Outside of the dollars generated, how do you measure success there, and what are your goals over the medium term, so the next five or so years?

William C. Carstanjen: Dan, thanks for that question. That touches on a theme that is personally really important and significant to me. I think we have this unique American event, and there is an irony to that because over the long 152-year history of the Derby, the international piece has not necessarily been the focus of our efforts. Despite that, we still have this global brand. Focusing on building that is critical going forward. It starts with attendance. It starts with encouraging more folks in overseas markets, starting with those that have an attachment or an interest in horse racing, to come experience the event. From that, it builds into sponsors and partnerships, and those are the more important elements.

Certainly, some wagering can be possible; Japan is an example of that. But first and foremost, it is about driving high-end customer participation and encouraging sponsorships. Attendance and viewership can be a part of it. I do not have at my fingertips the information this year for all the markets that the Derby will be telecast. It is a very impressive and growing picture. Everything we see from an international perspective is positive, growing, and encouraging. You will see us focus more on that over the coming years because there is a big population out there in the rest of the world that is particularly interested in thoroughbred racing, as well as in the United States.

Our job is to attract those people and bring them here in the higher echelons of our ticket offering.

Operator: Thank you. Our next question comes from the line of Chad Beynon with Macquarie.

Chad C. Beynon: Hi, good morning. Thanks for taking my question. Bill, one for you on the legislative win in Virginia. Obviously, you cannot predict future legislation, but anything you can highlight in terms of why this was vetoed, if the governor or other constituents are realizing the impact on the state? We are getting a lot of questions if this will become a recurring thing. Anything else you can help on there would be helpful. Thank you.

William C. Carstanjen: Sure, Chad. Thanks for the question. Generally, state legislative processes are busy, messy processes. There is lots of activity and a divergence of views. It is part of democracy. The fact that legislation is introduced and discussed does not mean there is consensus in the state on what will happen that year or in the future. It is just part of the legislative process. Every year is different, and every legislature learns from past experiences, and that factors into what they want to do as a state going forward. Turning to Virginia, what happened there is part of a healthy democratic process.

There were lots of discussions and divergence of views, and the state came to a conclusion on how they wanted to manage and think about gaming for the time being. I am encouraged by some of the dialogue and discussion that their progression on gaming issues is a positive one from our perspective. I am encouraged going forward that there is a forum for discussion and convergence of views, and that our views are respected, heard, and part of that process, and will be reflected in whatever outcomes in the future we might see. Generally, Virginia shows a lot of elements of a very stable environment for us.

We believe in that jurisdiction and its potential, and we are really glad to be a part of that dynamic and environment.

Operator: Thank you. Our next question comes from the line of David Katz with Jefferies.

David Brian Katz: Hi. Good morning, everyone. I wanted to spend a second on Virginia if I may. Way back when we made this acquisition, there was clearly a lot of opportunity in what has evolved. Since then, there are more competing licenses and some traditional licenses, and forgetting about any discussion about iGaming, will it or will it not one day, Bill, I remember you telling me that every strategy should evolve as you go to be a good one. Has this turned out competitively the way you expected, and have you evolved your Virginia strategy for what appears to be increasing competition in that market?

William C. Carstanjen: Great question, David. Already, you can see Virginia has been a really strong and encouraging investment for us. In terms of new competition, you face that discussion in all jurisdictions; it is part of the gaming dynamic in the country, and we have progressed through that pretty well. For us, there will be opportunities too as discussions around Virginia evolve over time. Always be flexible. I agree with what you said: always evolve your strategy. We have done that in Virginia. We do not control the noise and discussion that happen during any legislative session, but we participate vigorously in those discussions, and we constantly evaluate what is best for our company—where to focus, where to pivot, where to change.

Through all this noise, Virginia has been a really strong investment. As we look forward, we see that continuing, and we will evolve that strategy and roll with the times as we see real pivots that need to be made. So far, so good. It has been a positive experience for us, and now it is about focusing on next year and how we want to evolve our business in that state.

Operator: Thank you. Your next question comes from the line of Jordan Bender with Citizens.

Jordan Maxwell Bender: Hi, everyone. Good morning. Thanks for the question. Kentucky continues to show some pretty nice growth. How do you think about the incremental 4 thousand machines you can put in the state, and more specifically, do you see any properties that are ripe for expansion?

William C. Carstanjen: Thanks, Jordan. Kentucky has been a very positive experience for us. It has been a great investment for us in the short and long term. All these properties are still showing real signs of growing into their own skin. They have not reached maturity; they are still growing. HRMs as a product continue to get better. We continue to have more options and more variety of product. ETGs are something we feel positively about, and we look forward to expanding our offering of roulette and other products on our floors. Marshall Yards, which we opened in February, has gotten off to a really encouraging start.

Without exception in the state of Kentucky, we do not view any of these properties as being at maturity yet. We will keep innovating the HRM product and growing into our marketplaces in each of these jurisdictions. More to come there.

Operator: Thank you. Your next question comes from the line of Brandt Montour with Barclays.

Brandt Antoine Montour: Good morning, everybody. Thanks for taking my question. I wanted to ask about the Derby. You sounded pretty upbeat about momentum there. To put a finer point on it, how would you compare the impact of geopolitical events to this spring’s ticket selling season to last spring’s geopolitical events? And, Marcia, is there any update to the $15 million to $20 million incremental EBITDA year over year that you called out last quarter? Thank you.

William C. Carstanjen: I will start first, and Marcia, if you want to comment on the last part of the question, please feel free to jump in. Last year, the geopolitical events—which were really the introduction of Paris for the first time—impacted us. It impacted the sales process when it started. I am pleased to say that this year, we have not seen that. We are not experiencing geopolitical corrections to our sales process. It has been a smooth, predictable, and really encouraging sales cycle for us.

Marcia Ann Dall: From a growth perspective, we are very confident in our $15 million to $20 million of Derby growth over last year’s number. As Bill said earlier on the call, that will be a very significant increase even over Derby 150.

Operator: Thank you. Your next question comes from the line of Jeffrey Stantial with Stifel.

Jeffrey Austin Stantial: Hey, good morning, everyone. Thanks for taking our question. Just one from us on the HRM business. We appreciate some of the commentary earlier on the rollout of electronic table games in Kentucky. I was hoping you might add a little more color in terms of what initial yields look like for these machines, how this is flowing through database growth and your ability to compete across the border with Class III casinos. Are you seeing some play shift over from slots to these tables? Any initial trends, keeping in mind it is still early, would be great. Thanks.

William C. Carstanjen: Sure, Jeff. Happy to do that. Even introducing just one single ETG product—roulette—even with just a single product and lots of runway to add others, we have seen the addition of new customers. There have been changes to our database and a nice pickup in new customers. These are definitely accretive to the GGR on each of our floors. We really just started marketing this new product in April. We wanted time to make sure we worked out the kinks and understood how the products worked on our floor. We are really just in the first month of marketing it. I have only good news to report on what we are seeing.

I wish we could push a fast-forward button and have more product, both in terms of the number of machines on the floor and the variety. Every metric we look at in terms of evaluating floor performance is a positive one with respect to introducing this product.

Operator: Thank you. Our next question comes from the line of Trey Bowers with Wells Fargo.

Trey Bowers: Hey, guys. Thanks for the question. Getting back to some of the more political questions we had earlier, as you said, this whole process can be messy and somewhat unpredictable. Is there a scenario by which, if you see digital expansion in states in which you operate that was not expected or you did not want, you could reverse course and lean into that? I would expect there will be more of this going forward. If ultimately iGaming does happen in Virginia, how might you benefit? Thanks a lot.

William C. Carstanjen: Part of participating in the legislative process is always thinking through your fallback positions with respect to things that will help your business. Sometimes that can be going into different businesses. Sometimes that can be more product or other benefits to the business you have in the state. Part of managing through a legislative process is understanding your list of priorities and your series of fallback positions, and your willingness and flexibility to pursue new options based on what those options are. I do not want to comment on any particular line of business other than to say iGaming is a terrible public policy choice for states.

It is not one that any state has figured out reliably to protect the consumers in that state. With that general caveat, we approach every state with a series of strategies based on what we see happening in that state. I think our track record reflects that we handle all kinds of issues fairly well, achieving positive improvements for our business environment in addition to battling things that can be threats to it. We make the best out of the circumstances we are faced with, and that is part of the skill set you need when you are in the businesses we are in.

Operator: Thank you. Your next question comes from the line of Joe Stauff with Susquehanna.

Joseph Robert Stauff: Thank you. Good morning, Bill, Marcia. On ETGs, I know the rollout is an iterative process. If we zoom out and think about the typical, say, 80/20 gaming positions, table versus slots, is that fair to assume you will likely get there at some point? Is that maybe a goal within 18 months, or does it take longer? Could you give us broader parameters on the rollout versus the near term?

William C. Carstanjen: Thanks for the question, Joe. We are going to take it one step at a time. We will evaluate every change we make to our floor, whether it is adding more of a particular type of ETG like roulette or introducing new and different categories of ETGs. We will respond to the data and the information generated by our experiments with introducing new product. We do not set a target 80/20 or anything like that. We make smart decisions based on what the data tells us and what our customers tell us on the floor. We try as a management team to be a data-driven organization.

We do not want to make up assumptions or stick to assumptions that do not turn out to be reflected in reality. We want to respond to what we see on the ground. That is true based on the experience of what we see on our floors, and that is true for the political environment. We will respond and plan around what the facts are.

Operator: Thank you. Our next question comes from the line of Shaun Kelley with Bank of America.

Shaun Clisby Kelley: Good morning, everyone. Marcia, wondering if you could comment a little bit on the proposal out there for Maryland historical horse racing machines. I think this may have existed in past iterations as well, but what is your broader take or support? Do you think there is any momentum behind it, and what might the process look like? Thanks.

William C. Carstanjen: Sean, thanks for the question. I think you are referring to a bill that came through the legislative process last year. It passed but is not law. There has been a movement, particularly among the off-track betting parlors, or OTBs, in Maryland to get HRMs. I do not want to comment on that right now. We are getting our sea legs in the state. We are talking to the government and the executive branch. We are evaluating how we can be supportive and helpful to the state in achieving their goals of creating a world-class, best-in-class event that drives tourism and investment to the state in the Preakness.

We are focused on that right now and becoming a more integrated part of that state-driven team. HRMs are a component of the discussion in the state, but I will not comment on it for now as we get our sea legs and become participants in all things racing in the state of Maryland.

Operator: Thank you. Our next question comes from the line of Ben Chaiken with Mizuho.

Benjamin Nicolas Chaiken: Hey, thanks for taking my question. Just one on Preakness. At risk of being repetitive, I think historically the property has had its own unique culture and following, which you referred to, Bill. Talk about your ambitions here, both qualitatively and quantitatively, if you can. Are you there to assist Maryland if they ask you to, or is this something that you can start to transform and redevelop near term? I am trying to get a better sense of the explicit goal for this property. Thanks.

William C. Carstanjen: Thanks, Ben. Maryland is in control of the destiny of the Preakness. They have the land. They have authorized legislatively $400 million of bond proceeds to invest in the property. There is another $125 million of other government funds that are available to invest in Pimlico and Laurel Park, the training center they just approved buying earlier this week. They have a war chest of about $525 million of funds allocated to invest in racing, and they are in control of that investment. We, upon closing, will be the owners of the intellectual property and have already started a very strong dialogue with the state on how we may be able to help them achieve those goals.

We have 300 people that work here in Louisville at the track or in our corporate offices supporting our racetrack—doing construction and design, ticketing, sponsorships, and wagering. We have a team of experts here that do this on an absolute world-class level, and certainly those resources and efforts are available to the state if they seek our help and would like our help in any way. Those discussions are just beginning, and it is important to let them play out at the state’s timing and direction. We really love the market. When we compare it to our own market here in Louisville and in the Midwest, we love that corridor from D.C. and Baltimore up through Philadelphia.

There are lots of great customers and potential sponsors and business partners there. We think it is a market with a lot of opportunity, and we have a lot of ideas. But this is something that the state will have to ask for our help on, and we have begun that dialogue. We are excited for that to develop.

Operator: I will now turn the call back over to CEO, William C. Carstanjen, for any closing remarks.

William C. Carstanjen: Thank you, everybody. Really great series of questions today. It was fun to hear your questions and how you are thinking about our company, and we did our best to answer those. Thank you for your support. This is an exciting time for us. We are now going to focus on getting this thing called the Kentucky Derby underway. We hope to see many of you there, and we are going to work our rear end off to deliver a great Kentucky Derby. Thanks very much, and we will see you next time.

Operator: Ladies and gentlemen, thank you for participating. This does conclude today’s program, and you may now disconnect.