The first Kentucky Derby was in 1875. But during Thursday’s investors call, Churchill Downs CEO Bill Carstanjen said the event, in a nod to the upcoming World Series, is only in its third inning.
“It’s a very dynamic evolving event, as we develop it and as the country changes and as we see things moving towards experiential customer spend,” Carstanjen said. “I think the future is very bright for the Derby, and there’s a lot more to come. I think it’s important to have a breadth of offerings for the Derby and a lot of that is still yet to come.”
Churchill Downs reported record revenue for the third quarter of $683 million, a year-over-year increase of $54.5 million, or 9% The company also announced record third-quarter Adjusted EBITDA of $262.3 million, an 11% increase over 2024 third quarter’s $27 million.
The company recently announced plans for Victory Run, a $280 million-$300 million project at Churchill Downs Racetrack that will encompass the space just past the finish line between the Sky Terrace and the first turn section. Carstanjen said the project will replace uncovered ground level box seats and dated dining areas with premium hospitality offerings, including private suites, indoor and outdoor dining areas, and covered box seats. Construction on the Victory Run project will begin after the 2026 Kentucky Derby and is scheduled to be completed in time for the 2028 Kentucky Derby.
“We targeted 20% unlevered IRR (the expected rate of return on an investment without consideration of financing or debt),” Carstanjen said. “That’s what we shoot for; we’re really focused on year three. It takes time in this business to introduce the new asset, get a trial, and then get word-of-mouth out.”
In July, Churchill Downs signed a definitive agreement to acquire most of the outstanding equity interests of Casino Salem in New Hampshire, with the right to develop a charitable gaming, entertainment and dining destination featuring historical horse racing machines.
Carstanjen said the acquisition was the result of increased activity and clarity in markets.
“We’re both an opportunistic acquirer and we’re also a seller when opportunities afford themselves,” Carstanjen said. “We’re always a flexible participant in the market and we like to pay attention to the trends and the activities we see, so everything is relevant and interesting to us. What I would say, in general, you are seeing a pickup in activity over the very recent term.”
Prediction markets have emerged during 2025 as an ongoing threat – and opportunity – for the traditional gaming industry. Carstanjen said Churchill Downs has not been in contact with any operators offering prediction markets, and noted that because horse racing abides by the rules of the Interstate Horse Racing Act, it’s different than betting on a football game or any other sport.
“We are governed by a specific dedicated federal law about how wagering works on horse racing, so that makes us quite different,” Carstanjen said. “The requirements under that law are very clear about what it takes. In order to take a wager on a horse race, you have to have a contract with the content provider. That’s us. You have to have a contract with our horsemen.
“So, our philosophy on the prediction markets are, if we approach them, we will explain to them the legal construct under which activity on our sport happens, how the wagering activity on our sport happens. We’ll explain both the civil and criminal elements of the Interstate Horse Racing Act and why compliance with it is so clear and we’ll take it from there. But we do not have a deal with any prediction markets companies to take wagers on our products and we are not in discussions to do that at this time.”
