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Further Reading from MarketBeat Media
Churchill Downs: The Derby Is Just the BeginningBy Chris Markoch. Article Posted: 4/24/2026. 
Key Points
- Churchill Downs beat Q1 2026 earnings expectations, driven by strong growth in historical racing machines.
- The company’s $85 million Preakness Stakes IP acquisition adds high-margin licensing revenue and strategic control.
- With analysts seeing ~35% upside, HRM expansion remains the key driver for long-term CHDN stock growth.
- Special Report: Elon’s “Hidden” Company
In a game of word association, Churchill Downs and the Kentucky Derby are a common match. For investors, it’s worth getting familiar with Churchill Downs Inc. (NASDAQ: CHDN), the parent company that operates the racetrack that hosts the Derby. It’s much more than an event-driven company and still has substantial growth ahead. That growth showed up in the company’s Q1 2026 earnings report, where Churchill Downs posted record results on both the top and bottom lines.
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Revenue of $663 million beat estimates of $659.32 million and was 3% higher than the $642.6 million posted in Q1 2025, a quarter in which the company had missed estimates. Earnings per share (EPS) of $1.21 beat forecasts by $0.18 and rose $0.14 year over year. The Real Reason to Bet on Churchill DownsHistorically, the second quarter has been Churchill Downs’ strongest quarter, largely because of the Kentucky Derby. Outside of that event, racetrack revenue is relatively small—this quarter the racetrack accounted for only $3 million, a year-over-year decline of $1 million. That’s why the Derby itself is a weak rationale for investing in CHDN. The better reason is the company’s leadership in Historical Racing Machines (HRMs). These are essentially slot-machine–style terminals that let players bet on outcomes of previously run horse races. The historical details are stripped away, so the experience feels like live gambling. There’s a legal logic behind HRMs: they are classified as a form of pari-mutuel horse-racing wagering rather than traditional casino gambling. That distinction allows HRMs to operate in states where conventional casinos are restricted or illegal. In the quarter, the segment generated $301 million in revenue, a $24 million increase year over year, driven almost entirely by HRMs. Expansion is a key part of the growth story:
Rockingham Grand Casino in Salem, New Hampshire, announced Jan. 12, is a $180–$200 million investment targeting a mid-2027 opening.
Churchill Downs Expands Its Racing Empire With Preakness DealThe Kentucky Derby is the first—and arguably the most iconic—leg of horse racing’s Triple Crown, which also includes the Preakness Stakes and the Belmont Stakes. Investors should note that on April 21, two days before the earnings release, Churchill Downs agreed to purchase the intellectual property for both the Preakness Stakes and the Black-Eyed Susan Stakes for $85 million. That purchase gives Churchill Downs ownership of the trademarks and related rights to the Preakness Stakes without owning Pimlico Race Course or running the event. Instead, the company will collect an annual licensing fee from the state of Maryland and gain leverage in future broadcast-rights negotiations, calendar reform discussions, potential HRM licensing, and the broader cultural narrative of American thoroughbred racing. At $85 million, the deal was a relatively modest investment—less than a quarter of the company’s current free cash flow—and it was not fully priced into CHDN before the earnings report. CHDN Stock Outlook: Can HRM Growth Drive the Next Leg Higher?CHDN jumped more than 10% the day of its earnings release. Before the report, the stock was trading near its 52-week low, which suggests investors may have already seen the floor—but what’s the upside? Analysts assign CHDN a consensus price target of $135.60, roughly 35% above current levels. With that much potential upside, it’s reasonable to ask whether the Preakness IP is enough to push price targets higher. Churchill Downs operates across four revenue streams: Live Racing, Historical Racing Machines, its TwinSpires wagering platform, and traditional casino Gaming. Of these, Live Racing and Gaming are limited growth contributors—casino revenue actually declined year over year in Q1 following an exit from Louisiana. TwinSpires, which handles online and retail horse-racing wagering and sports betting, is a steady but not high-growth business. That leaves HRMs carrying most of the growth expectations. The HRM business generated $257 million in pari-mutuel revenue in Q1 and is actively expanding into new states. The Preakness IP acquisition adds a strategic angle: if it helps accelerate HRM legalization or licensing in Maryland, it could materially extend CDI’s growth runway. Technically, CHDN was in a tentative recovery after a steep selloff from a December 2025 peak near $120, which produced a "death cross" when the 50-day simple moving average (SMA) fell below the 200-day SMA. 
Price reclaimed the 200-day SMA on the day of the report—a notable single-session move, especially with a fundamental catalyst. The key is whether CHDN can consolidate around the 200-day SMA, roughly $92–$93. A sustained hold there could set the stage for a "golden cross" in the coming weeks. Waiting for that confirmation may be prudent for cautious investors; more risk-tolerant investors might consider initiating a position near these levels. |
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