CHDN - Earnings call transcript Q4 2018 | Churchill Downs Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the Churchill Downs Incorporated 2018 Fourth Quarter and Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

As a reminder, this conference call is being recorded. I'd now like to introduce your host for today's conference, Mr. Treasury, and President, Relations. Vice Zangari, Risk Investor Management Nick

Nick Zangari

remarks, to required morning, period quarter by other titled call. Thank financial as fourth the quarter prepared G were company's company's Good release call, and business yesterday questions. welcome for After will our to your the call company's be Web the and about conference the and presented as conference you, Investors results well Tiffany. this at XXXX announcing including News, earnings afternoon. available section. and information information Regulation A fourth is of churchilldownsincorporated.com, The of the open XXXX this in statistical in and site's the located results section year-end at site we released year-end Web copy

information update Form statements statements specifically, on the we I Before All cause earnings with include a should K. some SEC, in future report cautionary considered that these and result remind of of today you be forward-looking factors statements. uncertainties today, the or as statements to statements new number assumptions These the that that conjunction like events. may differ we in materially. no statements forward-looking results XX- involve on to most to as undertake our our make risks forward-looking risk started, the the in with statements Any obligation we make recent would based of filings included release and actual get are of we and could a

call is in The GAAP financial additional note, turn will in platforms. as and changed sports now, Bill today's to earnings continue we One Mr. and GAAP churchilldownsincorporated.com. I'll and name quarter Executive Chief Web non-GAAP XX-K wagering press iGaming at betting call, XXXX, to available Form of And release online our non-GAAP this release. are our over measures. on we our site A During both press reconciliation of Officer, included expand the our the we measures Carstanjen. segment to TwinSpires' to online fourth present

Bill Carstanjen

Counsel. XXXX, are Operating Financial morning, Thanks, including Chief General Dall, With Nick. members our Officer; and Bill to me of and team Marcia the a our ability Mudd, several full-year and Brad on After has questions. in Blackwell, your and we In key executed quarter take President be Chief Good our through fourth each earnings. Officer; we our sale she everyone. peers. multiple today gaming effectively will on positioned happy grow I walk organically fronts, strategic our then performance demonstrated our our business XXXX we will of and to to return our finished, and you manage core will segments. our asset for company drive exceeded additional highlights virtually Marcia details the growth of XXXX our provide how our all total acquire of S&P assets, XXX, and nonstrategic have shareholder Russell the on capital that

gaming to industry. We while the levels the our leverage of over one also shareholders lowest returned in million maintaining $XXX

In and Downs record we across Colorado owns leveraging the to our wagering XXXX mortar us to respect license at agreement Kentucky we things interest so all access setting remaining technology to sale Ocean that the of metrics. will believe a unit end In to we acquire Downs highlights. that XX% kiosk. October, sports in track include entire produce of interest and own if had Ocean August, traded November, New the Colorado made the other from online At our XXX% technology and Kentucky in to XX.X% May, to using of the our August, Grove partner The & Pennsylvania, Racing Saratoga, Fish. opened Derby best-in-class to our signing are with XXX an the performance facility machine up year, Midwest excellent to meaningfully the we Derby now agreement announced for exceeded York and we retaining properties rights the betting which of a few opened construct the Oak an iGaming among in Here harness January two Week at of brick early to provide properties. and York Presque $XXX Casino historical In the designed February, Kentucky of last historical in race late we market. In a XXXX Isle at racing early our Rivers team an sports in Downs financial In Sportsbook expectations. issued casino In also SBTech Big will in Gaming, New and Chicago which the we Horse Day we a September, our Saratoga, Commission of our we which retail TwinSpires Casino, Gaming significant Illinois. Plaines of online and City our completed expertise machine available Louisville. signed of region of racing while unit BetAmerica Pennsylvania facility. has custom our and Des Derby facility acquire least And million Mississippi

XX%. certain close to a actually minority result made shareholders, by we acquire As elections will

our these businesses respectively EBITDA, adjusted XX% stayed of year. on up XX% over the core million performance of initiatives, focused pursuing While of over prior and revenue and net $X we $XXX delivering billion

we the paths strategic As XXXX, our grow following pursuing are company. began to we

culture piece and to remain financial a grow asset. committed we healthy iconic of Kentucky to remain First, to lucrative the investing it in American and enable Derby this

TwinSpires led strategic that criteria. pursuing pursuing time, for our Greenfield believe disciplined will of healthy our teams. and our At can historical opportunities from iGaming we existing prospective the machine facilities effort our investment we are expansion by buyers and of BetAmerica achieve with investments. returns we third, casinos we be This the racing are And to Second, these meet Sportsbook platform. shareholders be continue same

their in open online will further invest and our up footprint. As markets, team we our states

are and that opportunities hope over Jersey most expand. Pennsylvania time, two But of to states have currently. we we states about these simply we New many are two where the are excited

I a comments segments. Now plans racing each on with our is our the the the for few operating Derby driver Kentucky our segment, will Starting growth of growth. make big of

I history. records Derby of benchmarks year financial last the wettest we As mentioned, set significant Kentucky for our despite virtually in suffering

surrounding metrics, our the everything to we Beyond Derby. the Kentucky is do mission improve

We deliver have our world-class for consistently experience to a invested customers.

and a projects as participant, Derby. the feel the is guests Kentucky the the a of unique more not experience growth Our of derby magic that long-term a for to spectator, is as help just invest connection our to in event, to strategy the that strong

entertainment lounge come over years rooftop gate additional For do a this we pricing year's signature the will the capacity guests unveil starting the to segmentation, have from area roughly to our proportions the $X of not There top derby on Kentucky Derby, and additional of coming seat. our are seating event many suites. million and who grow avenues XXX,XXX

at gaming. XXXX excited sponsorships Churchill City European to the generated the racing Additional the the machines purse account historical for and With we leveraging money Racetrack, to to interest generated at derby. the Derby the by increase racing about are roads and Downs from respect Japan

ownership money million Just us other good increasing will for of a million. for amount run. the of industry smaller is Ultimately, from increasing Downs. purse for more to category and example, And increased $X horses which the We Commonwealth we better-quality races every scale, are Kentucky. and an help the money races, purses meaningfully prize believe the will Churchill horse as on for wagered $X attract our we as increase Kentucky to as participants well this on the Derby

for was quarter year. adjusted and Turning XX% wagering for to X.X% our in online the up TwinSpires business our segment, EBITDA the

TwinSpires Clearly, XX% in X.X% the our and and up the were in in X.X% the handle However, the time, the up up over active XXXX, rate in decline up second-half was fourth same we've of growth XXXX, At quarter. experienced handle XX% players fourth XXXX. in total quarter. only a

our engage active prior to continue customers handle trends, double-digit in growth marketing modest to periods. quarter, We strong existing fourth conflicting the had total with yet new consistent We programs, particularly ones growth, and or two with players. with re-engage and reach and

towards XX% revenue quarter, growth in we have players, margins, on handled declining attention the data, to overall achieve in trend and our per our growth results, keep dropped by solid revenue adjusted fourth EBITDA strong us quickly believe and there focus total was pay We per because close still We processes, customer. although, respond drivers we our active our customer of and disciplined. are Our two very modest. business very

we're volume rebates. receive increased higher competition who First, for customers seeing

In our concluded practice. we a best been and can with player letting thin. customer you pervasive revisited model challenge, as cohorts respect rebating that know, business cut unwise, and our increasing that become face always As margins by become we high-level rebates We incentives. certain served slippery slope too leave rebates of this margins an into has are to business the

will Our objective sustainable business the competitive our sacrifice shorter-term business we of always not face is profitably in and to long-term, a over model grow the pressures.

of want customer per mitigate growing, rate base we our decline expect more retain. is as we as experienced decline, retaining wagering the profitably handle although the higher to best, who by Second to can can user we customers we average the

considerably the they did average for players higher believes platform harvest horseracing organic and and less however, must numbers These margin because come macro rebates. us, growth, As our environment The and as for wager tend our be on is they're be require still do less. They to do customers stable not significant new team experienced into that space. in large in ADW are XXXX. they

to recent Kentucky the a This pressures. extensively new we still TwinSpire We the business to and the to attract the competitive players platform. and market good triple remain year very unique opportunity about optimistic a long-term Derby potential have despite is growth very season every during

revenue to in seen far stable continuation all of of Turning XXXX of And our and operating so existing experienced our across segment markets. casino grew these relatively EBITDA environments our properties. XXXX, each we has at trends. a we adjusted casino

markets our However, future balance we a performance pipeline for the of properties. about nice casino existing pressures growth may of beyond excited the year. in see we the competitive some have increase certain segment, the competent I'm the because over continued of

which along owns a know, purchase our at As and ownership after we interest of the the by release of announcing minority the fourth in Illinois. Rivers Clairvest interest held Midwest ownership the Des XX.X% issued press gaming, gaming XX% in to of tag the on our own Midwest Based agreement Casino subsequent certain acquire all shareholders quarter the by Plaines, approximately recapitalization. least we you Group with that of rights, estimate we tendered will

most approximately The regulatory Board. the closing We million of cash. for significant condition $XXX in Illinois expect to the is transaction remaining this pay approval Gaming

of have expansion upside significant tomorrow. Racetrack. two also gaming have that's after to In legislature that license to prior highly compared future future acquisitions to reasons, regional if the We guarantee meeting the we the there a I location casino X march in casino the aggressively entity gaming will Gaming date. when brick believe betting acquisition receive would recapitalization property the past, are We mortar Board casino Rivers is with approval. we Illinois gaming a upside, for the premier regard it including market to the Chicago approval investment we sports receive higher is and not no the high and to it as agenda transaction, one as always grants a multiples But provide rights we the holders within Park on the comparatively Illinois on are We periods. that we following we our work of valued determine of intend an an gives gaming to past, and us as with and ultimately Arlington the land Illinois market important pursued for in weeks in strategic desirable close

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yet been sports closed BetAmerica is the a open an as has betting offer Isle not ultimate of testing certificate geographically sports as constructed the important in our a Presque We has begin online be to we conditions gaming this well already has that move. date Derby are betting. which Both casino Isle by sports interactive and Isle consider to go nicely Presque Pennsylvania believe We approved and live extremely been gaming gaming Casino been set in acquisition potential property new limited such in subject XX on and retail year. certificate more as and other have We in of for January strategic investments The mid-September. encouraging. of this second & plan Erie, acquisition quarter. an construction in will board. very segment. City last opened control and it of the our book on results Louisville Presque has nice also operating in Downs Presque to to a competition We upside an

another we last be Based adding the have City to the early growth second will XXX We in months. Derby quarter. significant four on the in gaming seen machines

for approval Churchill the have and continue warranted to racing We up machines under to performance. machines by evaluate will XXXX license more we the adding Downs facilities as

mentioned a facility. license machine historical racing racing proposed for I we Oak awarded earlier, Grove were As our Kentucky

this were We open build Forbes as about fastest harness America historical of which by in to growing about racing expect the the north hour facility opportunity racing conduct XX the Nashville, the We Tennessee, half plan in city seventh and to facility XXXX was XXXX. XXXX. to during first in an days excited of ranked October

casino like Our casino markets. online and and grant in reflect acquisitions mortar believe states gaming we will casino racing gaming pursuit our properties to to our well. in believe of license and the flows diverse historical their strategy brick cash may space We stable Greenfield and sports predictable investments both we facilities ultimately acquisitions offer as gas holder access pursuing long-held that and

team objective sports a beyond We wagering. online have us and experienced to for deeply and into an lead online team casino important this betting horseracing as

the soon the to in permitted the on We Mississippi, wagering and In Casino. Riverwalk, Mississippi, Jersey sports mortar in do we late the Our our where launched outside now Casinos, each property August. have Pennsylvania. in Harlow's at team New of and with in started and confines but efforts our has locations, sports Vicksburg is of this book brick not

XXXX are to solely our in The limited our view and with the to location. technology as local in released far test our been by before in stakes an raised Mississippi economically Given and of Mississippi opportunity team's significant we've more is expertise and physical build markets. wagering Vicksburg. state performance so We numbers the excellent have the very pleased markets been our Greenville

be our XXXX In both segment management all online the launched arrangement enter surprised Earlier still Store. gaming to known floor. quarter brand gain online betting and for driving books an casino jurisdictions only now. BetAmerica as to BetAmerica not brick of put profitable Our have been sports to and were are mortar material sports included is in We've awaiting product New New allows believe Jersey iOS the we've We books to the Jersey, market entered sports casino in control We and City products and with Nugget in other the marketed Nugget We're also way. Apple agreement is app traffic a fourth Golden how In in are results. BetAmerica started Thus we into a in with but access platform. have from available wagering. Jersey largely us they the our full directly any and we our month, will well Skin right own our what which casino this our do site. Jersey approval have we on Atlantic yet market. desktop New not New Golden to Casino because in the Apple about on

of completing we payment give think are and our an gain extremely competitive the We implementation product. us full will which also of compelling list vendors

our to while preserve team access modest market is have approach much practical. already we thoughtful cost online Given new is and vendors for with we've The for capabilities. into outsourced technology been entry a as in believe and with working class partners in which us ourselves relatively to we upside markets best for significant building as

$X regulatory marketing expect and of including a our timing XXX% operation remaining to to past at times and this while in seasonality through five on amount ad returned growing approvals, final spent. our of amounts accomplish New years, A and dividends modest sports in of while billion levered share X.X over spend a significantly. the shareholders a Jersey factors which have over few depend on very thought, have We return iGaming the number of sports total our and We and we Pennsylvania, XXXX delivered as will and final year-end. betting return modestly on shareholder repurchases

our stalwart greatly meeting next retiring for Mr. call Duchossois, Richard not I inspiration repurchases. longtime flexibility true and thank at company We green is to a new has have his performance as friendship. significant ability and gives for believe April. low great us him our a growth Mr. Directors excited create contributions existing personally I'm the reelection acknowledge continue a he of well and growth We've in been opportunities we field I Shareholder businesses dividend in that will of to long assets. for so will done and plan an missed. for standing share organic and drive company, because in strategic company. be one Annual he mentor our of source thoughtful and shareholder XXXX shareholder him for for for to for and to significant stewards strong invest exemplary our D to leverage. maintaining as while our as note beyond. opportunities many want On who I'm so also me opportunistic we operating of behalf pursue to This be the of capacity term to and the that his capital value service the of and us will while about his this be

Kentucky the out. good before shape right the before to but everything scheduled a of do Derby, XX call as for then lot in week now days next Our is is has the team

provide have. to to turn fourth details any call Now that additional over some you you. the quarter. we that to Thank Marcia? I'd answer will on After Marcia the questions like

Marcia Dall

good morning Thanks, Bill, and everyone.

will said, provide total results and our As details and fourth on quarter some some Bill XXXX financial I thoughts regarding year XXXX.

all on related it's that As updated three XXXX. of that the to was XX, for review effective split historical one measures you stock impact the see our shares we and that as our have you financials, important of EPS such January reflect

prior acquisition little results, to by So net Ocean XX% casino solid to revenue $XXX and of of August year for the $XX The our our this XX, our XX% fourth increase year to quarters. reported prior quarter Louisiana driven year quarter compared A remaining interest on revenue and XXXX for growth turning a at revenue quarter the was or increase the XXXX fourth of total million revenue in up the properties. our million we segment over in half prior Riverwalk drove casinos year. and casino to Downs our properties Oxford and growth compared compared

the The reflects in historical fourth to Churchill other our investments of Derby first Louisville, which revenue track November. race in is gaming, machine driver major quarter-over-quarter opened very Downs TwinSpires the Kentucky growth in City in Breeders in September, a also at XXXX other Downs Churchill racing part was that revenue Cup quarter that in contributed facility segment. included successful

All in solid addition quarter increase wholly-owned $X.X EBITDA of gaming adjusted EBITDA City or for our Miami the adjusted our Valley the and quarter. The year compared quarter, the contributed compared fourth to million operating to year Our XX% the prior TwinSpires. prior investment Gaming. to equity in casinos Derby was performance up

of continuing quarter. income million of net impacted operations have was quarter $X.X income number our net fourth year fourth the from the from compared prior were income, in a $XX.X continuing items net quarter million compatibility There to operations. to Turning

in walks release press Our detail. these items through

growth operating million as flow million due accrued after $X.X a our in debt. increase our Fourth from quarter. bonuses quarter expense income stock were million items, higher an operation. by following. taxes $X.X million outstanding the prior cash and tax. income after lower year prior were segments of to grew lower results from our and year in And the compensation tax fourth quarter. of quarter result compared Or to $XX year operating related quarter $X.X lower tax includes was from core quarter million benefited a the after operating the from XXXX. in these by interest We cash from quarter to cash continuing The from pay $XX $X.X prior operations fourth paid up compared Significantly segment to lower based flow fourth expense cash expense million interest net Excluding operations

sale which year of reduction Derby increased of the prior than out from City reflect XXX. in thoughts quarter the spent XX All company million a of which and Downs revenue adjusted more phase results to the the land fourth the due than the Gaming. lot accounting in maintenance lot in Derby project million capital on impact Starting adjusted in XXXX fourth fourth here compared was from we're EBITDA the operating the first, flow on EBITDA of items, diluted facility operations. was We million in of the we're the our forward proud and some standard of capacity we revenue, project. double-digit from additional XXXth cash EPS in which on exciting Churchill the higher to $XX all and ASC pricing Fish. driven incremental to as site net Suites Grove finally deliver we the help capital, In project, to XXXX, XXXX, days. quarter $XX of grew an the new $X income million And growth the Gate offset $XX by the Churchill looking and finishing continuing result year, Derby on Big the purchases Returning the capital total employees of spent When three our Purchasing prior future the primarily year. quarter major for Oak quarter finishing Downs parking second HRM build of

in will XXX add impact rooftop one time the the XXX for capital Derby the and anticipate Derby, completed Suites $X to one historical EBITDA range. which prior that projects will million the that to levels seats more new ASC approximately adjusted return another and we're the $X additional smaller million an Given experience growth in XXX guests. We only Gate area to access reserve of Starting

our regarding be discussed, Bill the expect Second growth of shift Oaklawn week of handle the to the increased factors of the number the competitive including online and a week that we wagering in quarter state. first of the the weather the of lower TwinSpires pressure given in racing last to of and impact first January January, for start recent of events cancellation different segment,

also planning The and money on upon of return in the including BetAmerica's to we on book approval, in XXXX factors number amount launch iGaming the are final the marketing sports depend We to ultimately spend year spend. New Pennsylvania. ad will Jersey and and this timing sports of spend seasonality regulatory

a of on based investment lower margin joint as to Rivers, We're transaction involving Illinois. casino January number full reflect Third adjusted the our given year of closing the venture. full the our when a platform EBITDA we the your will adjusted remaining Ocean XXXX the purchase of interest property impact of will transactions flow revenue transaction on nearly the Presque downs due and complete the existing currently a owned operating EBITDA planning tax has and year. Note Des in Presque rate year Midwest this revenue have wholly will regarding than casino that last results. Gaming contribute Isle flow the we Plaines of Isle the operating cash Pennsylvania casinos that cash contribute XX, in in to XXXX.

EBITDA a venture reminder, the for reported equity in our As interest we partners in adjusted adjusted joint a casino of our segment. include EBITDA

cash facilities would full-year impact joint include operating flow actual in operations we'll our receive ventures. we Derby distributions have historical of cash in in Kentucky, Gaming a only However, XXXX. the City our these Fourth, from racing we regarding machine that

open may investors the Kentucky facility the and Horse XXXX full HRM on results property. growth following The to recall, And continued Racing margins results facilities first Commission. that our the attractive are XXXX seeing are the XXXX. through you for our commission for database October the we XX, by reported per of marketing gaming gross in four September January we Many As operation, months reflects increasing the significantly of are monthly machine.

We in are incurring XX racing adjusted in reduction XXXX. and EBITDA to XXXX have the Grove in in of there from relatively days anticipate standard-bred operations planning racing small Oak a

Turning to and the will new we timing newly acquired capital at to project Downs. In capital million maintenance we of to maintenance XXXX additional result capital capital anticipate $XX $XX of Churchill XXXX, our approximately projects for million spending as increase properties a including that million capital. maintenance $XXX currently $XXX million carryover and slot XXXX, capital on to spend anticipate

Our portion the will anticipate represent capital of investment and this management, entertainment Gate beginning of with to finally, average per price along to Downs building area Churchill our at and of in amenities, May improve an of smaller year. Calder Churchill performances regarding experience approximately fourth $XX at and quarter, we for repurchased a in other racetrack investments in making share in in Oak a build this iconic other stock event. We're at our million facility HRM process [indiscernible] the rooftop also of facility the lounge share. We're significant at $XX of Grove $X the spend. investing million Starting Downs gate experience guest And

With under to of million Bill. I'll call the share $XXX remaining have call that We capacity Bill repurchase back questions. our he turn the existing over can so program. for that open

Bill Carstanjen

Thanks, Marcia.

answer happy have to everybody, us Okay, any if be know, please we'll questions them. let you

Operator

Instructions] David first question Please with proceed. Katz Jefferies. And our [Operator comes from

Erik Hellquist

Oak opportunity, facilities; for prospective a racing the the are first good historical it's viewing landscape Hellquist competition? questions there Hi, morning, at on Grove the Erik had few how you on just I David. on

Bill Carstanjen

This is Bill, Erik.

Erik Hellquist

Hi, Bill.

Bill Carstanjen

another Downs historical facility border. which Kentucky racing is facility The competition that of side a the on is called sitting relevant most Kentucky is the

which also number are the they out XX, Route as machines, on operation don't but can I be border. on directly north that will facilities that property just Our other the in on Kentucky ours, is I Nashville heads than then have Downs getting There sits out will directly north, those call, to residents but side much competition. They've road other coming on primary are been this side. them fewer they the And the years, the because different machines view is western bother Nashville, there primary the XX of drives road of wouldn't Kentucky I into XX. for be heads that I to, of drive Nashville but competition. that a sufficient of

Erik Hellquist

go, far potential far potential thanks. as regulations? sharing you're as And that machines latest new as [ph] as the historical regulation on that news with go Great, racing what's

Bill Carstanjen

it's I correctly? I talking you you're states, hear new -- about think did

Erik Hellquist

Yes.

Bill Carstanjen

fog. are cycles, there legislative At HRM there's that this -- misheard the or and other that I we about just are online iGaming, sports have talking talking stage we're question, sorry, state lot or wagering? confusion I'm in lots about of and talking sports are states Certainly, about always but may than and wagering that -- of online noise,

Erik Hellquist

HRM.

Bill Carstanjen

sorry. Bill, I'm have other HRM we HRM other are any -- there there, you but states like legislation? not that new in opportunities an are don't some HRM, opportunity HRMs new -- considering Gosh, of considering are aware, states -- I'm Virginia, states aware

Bill Mudd

has time sure [indiscernible] that I'm legislation but has. time, to not ramp Illinois much from kicked how that actually

Erik Hellquist

one just question historical the more and on great, Okay, themselves. racing machines

suppliers do as but a great you has you far, you look well? make [ph] think partner a other Ensworth could little sense obviously, So been as that so to further, expand for

Bill Mudd

Oak considering other manufacturers Wyoming opportunity has an think Grove I or with I be other existing at point. other it, and whether grows opportunity think as are come Illinois that to that Virginia states for in like Yes, the and there's some it states it,

Erik Hellquist

Appreciate me. from thanks. it That's it. Great,

Bill Carstanjen

Thanks, Erik.

Operator

question from Politzer our with JPMorgan. And comes Dan you. next proceed. Please Thank

Dan Politzer

thanks taking and everyone questions. morning good for my Hey,

Bill Carstanjen

Good morning.

Dan Politzer

dynamics more first more the could out in Can waiting not us note, similar hoping past? a bit tantalizing TwinSpires, seen walk flare-ups and you I was I talk it on have a the Thanks. thought do And your about competitive one and here? competitive, from think you process through Vision, on then So on guess, there. the about in long-term sports you getting competition how betting you little online

Bill Carstanjen

Thanks, Dan.

the think ebbs I what, competition this know and in You flows. space

I Predominantly, trend through time to in see think bit there's New the shifted they online of left used point simulcasting market weren't ADW do is saw wagering that. to out think like brick-and-mortar people it to online an or know over where facilities. OTBs continue. they do that episodic becomes you that of aspect As behavior conduct grown if little space. live as We can't York afford OTB a in at their OTB into the will City do channel that that that when to tracks you a you it has

continue it will So to grow.

where I margin, have think market, people ultimately little think, is there end the sports a horseracing, very that the of end the I the handle, in you competition to United licensed high of in today, lot is of all really it's but that. wagering offshore wagering on have the there's terms we'll bookmakers And U.S. an via that have States exists sports but aren't the and impact at in

it sports whole horse that and help lot could on in fact draw of a people sports think racing it towards sports. lot I So racing have wager on impact what have addition don't even that to cannibalization on will already wagering to at and like the have from applications a ability horse wager are other we a things of to extent in perspective, people BetAmerica. the on they

could see I unfavorable as and a it don't positive the whole just it lot or of ultimately, to much be us. impact So way one as could be other

Dan Politzer

about Derby Got expand what's we machines it. City, think Downs that similarly, guys kind then And there. longer-term mentioned adding much How it? machines relative And is maybe of to pretty Derby X,XXX to at you that's XXX helpful. capacity without opportunity that add a turning you at City, physically you're track? Thanks, the Churchill to at at should machines having to

Bill Carstanjen

second We have the Derby City expand to to the first. don't add games. part extra the facility XXX Well,

now. they warrant additional City games, Derby add be the would right We to maybe have just machines my X,XXX the continue our able to Bill not would so it mentioned, as publicly the at to manufacturers possibility. about Downs at our track maybe that's over those the gaming right But doing to best think acknowledge I'd that to Churchill not and at in enriched place putting talk acknowledge opportunities machines. terms at machines in we'll those a to to adding be something advantage announce games could we'll the the market race possible short-term is total. in we've at not up where quality absorb, doesn't the where explore machines license structure, remarked sense But in that something the we're further product. we're it's that's us that time where City to I'd the but it something both we hope market the and and to have improves, right X,XXX point the I And track, take data, opportunities doing to certainly in, even Right Louisville It's allows and whether consider makes and property. significantly comments, of its thought the long-term. in something now, now. be Certainly, to now, product have we we of that to machine something As the it's current have track. we'll saying I'm or how as about of Derby place job put about machines. X,XXX and about

that's about think as we'll performance something the warrants. So

Dan Politzer

wanted Thanks JV that. is still the for grand, anyway? three maintain target good times, do is then guess, long-term four that to level one I more make guys and target of leverage, to on Rivers leverage a going consolidated that's that sure just you Mid a And to

Bill Carstanjen

rule. fast a not that's Yes, and a target. That's hard

capital not take that have, constantly of our we debt structure. the amount think terms about about We constantly we we but of just So the leverage think on.

the of and constantly we are core plan a ours, exploring core interest growth company. I critical because it's of our a as We as it. something long-term think competence It's

some benchmarks like but are our paying guidelines, our yes, are see to some we to retesting we we attention if companies grow are also So, assumptions to, constantly most responsibly we have optimizing how company.

Dan Politzer

much. thanks appreciate right, the color. I All so

Bill Carstanjen

Sure.

Operator

Thank queue. time, showing no questions further you. I'm in at this And

Bill Carstanjen

in possibly your do capital. your We'll time investor best the job try Okay. everybody. to and today into we a appreciate company. return your and our Well, thanks investment support and sensibly We can to responsibly you earn

today, participating a and for you thanks the derby. in of see months before couple will So right we

Operator

for concludes the gentlemen, and Ladies you your This conference. participation today's program. in thank

You Everyone a now have great disconnect. may day.

Churchill Downs (CHDN) 28 Feb 192018 Q4 Earnings call transcript