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Additional Reading from MarketBeat Media
Churchill Downs: The Derby Is Just the BeginningAuthored by Chris Markoch. Date 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 Musk: This Could Turn $100 into $100,000
In a word-association game, Churchill Downs and the Kentucky Derby are nearly synonymous. But for investors, it’s worth getting familiar with Churchill Downs Inc. (NASDAQ: CHDN), the parent company that operates the racetrack hosting the Kentucky Derby. The company is much more than an event-driven business and still has substantial growth ahead. That growth showed up in the company’s Q1 2026 earnings report, where Churchill Downs delivered record results on both the top and bottom lines.
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 topped 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, and with good reason: that’s when the Kentucky Derby is run. Outside of Derby week, racetrack revenue is a relatively small portion of the business — this quarter it accounted for $3 million, a YOY decline of $1 million. That’s why the Derby itself is a weak rationale for investing in CHDN. The real investment case centers on the company’s leadership in Historical Racing Machines (HRMs). HRMs are essentially slot-machine-style terminals that let players bet on the outcomes of previously run horse races; the historical identifiers are removed so the experience resembles live gambling. The legal distinction matters: HRMs are classified as a form of pari‑mutuel horse-racing wagering rather than casino gambling, which allows them to operate in states where traditional casinos are restricted or illegal. In the quarter, segment revenue was $301 million, up $24 million year over year and driven almost entirely by HRMs. Expansion is a major part of the growth story:
Marshall Yards Racing & Gaming in Southwestern Kentucky opened Feb. 25, 2026. Rockingham Grand Casino in Salem, New Hampshire, announced Jan. 12, is a $180–$200 million investment targeting a mid-2027 opening. The company is allocating $70–$80 million of its 2026 capital-expenditure budget to Rockingham. 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 announced it had agreed to purchase the intellectual property rights to both the Preakness Stakes and the Black‑Eyed Susan Stakes for $85 million. That deal gives Churchill Downs ownership of the trademarks and associated rights for the Preakness Stakes without requiring it to run the event or own Pimlico, the host racetrack. Instead, the company will collect an annual licensing fee from the state of Maryland and gains leverage over future broadcast rights, calendar negotiations, potential HRM licensing and the broader cultural narrative of American thoroughbred racing. And it did so for less than one quarter of its current free cash flow (FCF) — a move that was not priced into CHDN before the earnings release. CHDN Stock Outlook: Can HRM Growth Drive the Next Leg Higher?CHDN jumped more than 10% on the day of its earnings report. Before the release, the stock was trading near its 52-week low, so many investors likely saw the floor — but what about the ceiling? Analysts assign CHDN a consensus price target of $135.60, implying roughly 35% upside. That raises the question: are the Preakness IP rights 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 those, Live Racing and Gaming are not large growth drivers — casino revenue actually declined year over year in Q1, affected by the exit from Louisiana. TwinSpires, which handles online and retail horse-racing wagering plus sports betting, is a steady contributor but not a high-growth engine. That puts the growth burden squarely on HRMs — a business that produced $257 million in pari‑mutuel revenue in Q1 and is actively expanding into new states. The Preakness IP acquisition adds an intriguing wrinkle: if it helps accelerate HRM legalization in Maryland, as some analysts expect, Churchill Downs' most important growth driver would gain additional runway. Looking at the chart, CHDN was in a cautious recovery after a steep selloff from a December 2025 peak around $120. That decline produced a death cross, with the 50-day simple moving average (SMA) falling below the 200-day SMA. 
Price action reclaimed the 200-day SMA on the day of the report, a notable single-session move when coupled with a fundamental catalyst. The key will be whether CHDN can consolidate at the 200-day SMA, roughly $92–$93. That could set the stage for a golden cross within weeks. Waiting for that confirmation may be prudent, but risk-tolerant investors might consider initiating a position at these levels. |
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