管理層發言
Ladies and gentlemen, and welcome to the Churchill Downs Inc. 2026 Second Quarter Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Sam Ullrich, Vice President, Investor Relations.
Thank you, Andrew. Good morning, and welcome to our second quarter 2026 earnings conference call. After the company's prepared remarks, we will open the call for your questions. The company's 2026 second 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 Investors 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 related announcements 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'll turn the call over to our Chief Executive Officer, Mr. Bill Carstanjen.
Thanks, Sam. Good morning, everyone. Joining me today are Bill Mudd, our President and Chief Operating Officer; Marcia Dall, our Chief Financial Officer; and Brad Blackwell, our General Counsel. I will begin with highlights from our record second quarter performance in Kentucky Derby. I will then provide an update on our major development projects and our strategic plans. Marcia will follow with more detail on our financial results and capital management strategy, and then we will take your questions. First, regarding our second quarter results. We delivered all-time record net revenue of $980 million and all-time record adjusted EBITDA of $477 million. This marks the sixth consecutive record second quarter for both metrics. At the end of April, we began a week-long celebration leading up to the 152nd running of the Kentucky Derby on Saturday, May 2. We made several enhancements that expanded the reach and value of our iconic event. We added Sunday Racing on April 26. With this additional day, we welcomed over 386,000 guests for Derby Week. This is the equivalent of nearly 6 Super Bowls or World Cup games over the course of 1 week. We continue to reap the benefits of the capital we have deployed to enhance the Derby experience. We are building long-term demand in each of the areas in which we have invested over the past 5 years, including the Starting Gate Courtyard and Pavilion, the First Turn and the Paddock. We completed the renovation of the Mansion and a significant upgrade to the Finish Line suites for this year's Derby Week. Both premium areas offer exceptional views of the Finish Line and the guest feedback has been extremely positive. Our partnership with NBC delivered record broadcast revenue and viewership. Broadcast revenue increased $10 million under our new NBC agreement. Peak viewership exceeded 24 million, 12% above last year's record. For the first time, NBC aired the Kentucky Oaks race in prime time, reaching an average audience of more than 2.4 million viewers. The Friday night broadcast created a strong lead-in to the Kentucky Derby and expanded awareness, engagement and wagering around our flagship event. Derby Week also generated more than 500 million social media impressions, up 84% from 2025. This year, we once again set all-time records for all sources wagering on Derby Week. The Kentucky Derby race remains by a massive margin the highest U.S. horse racing wagering event, while the Kentucky Oaks race is the fourth highest. As expected, sponsorships and licensing for Derby Week also grew in 2026. Together, all of these results demonstrate the continued growth in Derby Week's cultural relevance, reach and value. Turning to our key development projects. Our capital investments in 2026 are primarily focused on the continued development of Churchill Downs Racetrack and our HRM expansion in New Hampshire. Regarding Churchill Downs Racetrack, first, our $285 million Victory Run project will be completed before the 2028 Kentucky Derby. Located on the first turn, this new hospitality offering will add premium suites, covered box seating and multiple high-end dining experiences. For the 2027 Kentucky Derby, we intend to have high-end temporary stadium seating, restrooms and concessions underneath the newly constructed Victory Run roof to materially improve the guest experience until the interiors and other permanent improvements are completed in 2028. This project remains on time and on budget. Second, we are expanding the interior of the Homestretch Club to add amenities and indoor space for the 2027 Kentucky Derby. Third, we are redeveloping the infield areas on both sides of the Winners Pagoda, which is the historic building in the infield near the finish line where the Kentucky Derby winners receive their trophies. As part of this redevelopment, we will be removing the tote boards and using this space to create new customer experiences with exceptional views of the homestretch, the Finish Line and the Derby winners trophy presentation. For the 2027 Derby, we will be installing 1,400 temporary seats and we'll also be testing a new Cabana offering for approximately 500 guests along the turf course. These new offerings will enable our team to further segment the infield experience and provide a broader set of price points. We are also making underground infrastructure improvements in the first turn area of the infield, which will enable us to create a more level area for music stage and new bar and lounge concepts. We will continue to evaluate long-term permanent entertainment experiences for these highly desirable areas of the infield. In New Hampshire, Rockingham Grand Casino in Salem remains on track for a mid-2027 opening. We expect this state-of-the-art gaming and entertainment destination to attract guests from across New England. Now I will provide a brief update on our strategic plans. Over the last number of years, we have built and acquired unique growth assets, invested organically in the Kentucky Derby and high-return HRM properties and monetized assets when we believed another owner could create additional value. We believe that our recent share price performance has not reflected the quality, durability and cash-generating characteristics of our properties, and we certainly recognize that we must constantly analyze and adapt to our market environment and dynamics. After a great deal of internal strategic analysis and discussion, we commenced a strategic review of our wholly owned regional gaming properties within our Gaming segment. As part of this review, we assessed the strategic importance of each of our wholly owned regional gaming properties to our overall company strategy. As a result, we are exploring various options to sell the following nine gaming properties: Calder Casino in Florida, Terre Haute Casino in Indiana, Hard Rock Casino in Iowa, Oxford Casino in Maine, Ocean Downs in Maryland, Harlow's and Riverwalk Casinos in Mississippi, del Lago in New York and Presque Isle in Pennsylvania. We will retain our Fair Grounds related properties in Louisiana because of their long-term importance to the horse racing industry. Fair Grounds Race Course is home to the Louisiana Derby, which is a premier road to the Kentucky Derby race. Fair Grounds also offers one of the very few wintertime turf courses in the eastern half of the United States and plays a key strategic role in the migration of race horses in the colder months. Based on market feedback, we now believe that a sale of these properties will most likely be individually or in small groups to maximize value for our shareholders. We are working hard to execute this process over the coming months. We have engaged Macquarie Capital to assist us. To be clear, we do not intend to sell our HRM properties in Kentucky, Virginia or New Hampshire. Our intention is to use any asset sale proceeds to significantly reduce our leverage, reinvest selectively in Churchill Downs Racetrack and in other high-return projects and fund the repurchase of shares of our stock. Going forward, we will concentrate on assets with strong cash flow and durable competitive advantages. Three cornerstones will anchor this strategy: the Kentucky Derby, our HRM businesses and our TwinSpires business. Together, these cornerstones support the horse racing ecosystem and provide multiple avenues for profitable growth and long-term shareholder value. The Kentucky Derby is our defining asset and the foundation of our differentiated strategy. As the crown jewel in our portfolio, we are committed to expanding its relevance, reach and earnings power while preserving the traditions that make it singularly unique. It is a one-of-a-kind luxury live sports and entertainment property that builds on 152 years of tradition, historic Americana, celebration and shared experiences. We intend to build on that legacy. Our goal is to make Derby Week an even broader national and international event. We see meaningful opportunities to grow global attendance, wagering, viewership, sponsorship and EBITDA across the full week. Strategic investments will remain a key part of our long-term strategy for growing the Derby. These projects are designed to elevate the guest experience, expand premium inventory, deepen sponsorship opportunities and generate attractive long-term returns. The second cornerstone of our strategy is HRMs. We will continue to develop and optimize high-quality HRM entertainment venues in Virginia, Kentucky and New Hampshire and to pursue opportunities in additional states that authorize HRMs. We will use Exacta technology to improve returns at our properties, expand the platform with other U.S. and international operators and continue to develop electronic table games to broaden our product offerings. Our HRM venues play an important role in supporting the horse racing industry in their respective states. They generate purse funding, support the local agricultural industries, support local charities, create jobs and drive meaningful economic impact in their communities. In Virginia, we also plan to continue to grow and optimize our Virginia HRM footprint. Through our ownership of Colonial Downs, we have the sole right to 10 HRM licenses and 5,000 machines in the Commonwealth. Our portfolio generates strong margins and free cash flow while supporting racing purses, tax revenues and jobs across the state. We are exploring options to run referendums in the town of Pulaski and in Amherst County, both in the western part of Virginia that would allow us to further expand our HRM footprint. We believe both jurisdictions are underserved markets with attractive growth potentials. In Kentucky, our eight HRM venues operate approximately 5,300 machines and continue to generate strong growth and significant purse funding. Since Derby City Gaming opened in 2018, purses at Churchill Downs Racetrack have increased from less than $40 million to more than $100 million. We see further long-term growth through leading gaming content, enhanced entertainment, new products, including electronic table games and selective expansion. In New Hampshire, as I discussed earlier, we are excited about the opening of Rockingham Grand Casino in mid-2027. We also retained the HRM license associated with Chasers and Salem and we'll pursue attractive alternative uses for that license. The third cornerstone is TwinSpires. TwinSpires remains focused on expanding interest and participation in horse racing wagering through innovation and broader direct-to-consumer and business-to-business distribution. During Derby Week, TwinSpires again set records for wagering, new registrations, first-time depositors and active players. We intend to build on that momentum. In summary, the second quarter delivered record results and demonstrated the strength of our core businesses. Our Churchill Downs Racetrack and Rockingham Grand Casino projects remain on time and on budget. We are executing a long-term strategy with the Kentucky Derby, HRMs and TwinSpires serving as the pillars, and we will seek to sell our wholly owned regional gaming properties to pay down debt, to repurchase shares and to selectively reinvest in our business. Our strategic decision-making, disciplined capital allocation, strong balance sheet and portfolio of unique and iconic assets have positioned us well to drive sustainable long-term growth. This is an exciting time for our company and our shareholders. With that, I'll turn the call over to Marcia, and then we will take your questions. Marcia?
Thanks, Bill, and good morning, everyone. I'll review the key drivers of our second quarter financial performance and then discuss capital management. Starting with our second quarter financial results. As Bill noted, we delivered all-time record revenue and adjusted EBITDA. Our Live and Historical Racing segment and our Wagering Services and Solutions segment also achieved all-time record results. Momentum in our Live and Historical Racing segment remained strong with adjusted EBITDA increasing 7% compared to the prior year quarter. Adjusted EBITDA for Churchill Downs Racetrack was up $16 million for the quarter, driven by the successful running of the 152nd Kentucky Derby. We continue to expect Derby Week to contribute $15 million to $18 million of incremental adjusted EBITDA in 2026 compared to the prior year. The combination of our recent Derby capital projects, the renewal of our NBC broadcast contract, the running of Oaks during prime time television, the expansion of Derby Week race days and increased sponsorship and wagering interest all reinforce our confidence in the Derby's long-term earnings power. Our Kentucky HRM properties delivered strong results with adjusted EBITDA up 10% year-over-year, driven by strong growth across both Western and Northern Kentucky. We also benefited from the opening of Marshall Yards in February. Revenue trends in these markets have demonstrated sustained consumer durability and demand in these markets remains resilient. In Virginia, adjusted EBITDA increased 1% compared to the prior year quarter, led by continued strength at The Rose. Since opening, The Rose has delivered sequential quarterly growth in GGR per machine per day, supported by expanding guest awareness, effective marketing and higher spend per visit. Revenues and margins also improved sequentially, reinforcing our confidence that The Rose is still early in its development and has meaningful growth potential ahead. At our Central Virginia properties, results continue to reflect near-term competitive pressure. We are responding with targeted marketing and guest engagement initiatives designed to stabilize performance and improve returns over time. Overall, Virginia margins have remained at 46%, consistent with the prior year quarter. Turning to our Wagering Services and Solutions segment. Adjusted EBITDA increased over 8%, driven by growth in TwinSpires horse racing and continued expansion of our Exacta platform. TwinSpires adjusted EBITDA also benefited from lower legal expenses in second quarter than in the prior year quarter. And last, regarding our Gaming segment, adjusted EBITDA increased 5% compared to the prior year quarter. Our wholly owned regional gaming properties performed in line with expectations given the cessation of HRM operations in Louisiana in May of last year. Overall, second quarter same-store margins at our wholly owned casinos were essentially flat to the second quarter of last year. Consumer trends have improved from both the prior year quarter and first quarter levels. Higher value rated play remains strong, while our lower-value unrated segments were consistent with the prior quarter trends. Turning to capital management. In the first half of this year, we generated record free cash flow of $474 million or $6.70 per share, demonstrating 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 our shareholders. We spent $79 million on project capital in the first half of the year and continue to expect full year spend between $180 million and $220 million. We spent $38 million on maintenance capital in the first half of the year and continue to expect full year spend between $90 million to $110 million. We remain disciplined in our management of capital given our commitment to reinvesting selectively in Churchill Downs Racetrack and high-return live and historical racing projects to create long-term shareholder value, significantly reducing our leverage, maintaining consistent growth in our annual dividend and repurchasing shares of our stock when our shares are trading below their intrinsic value. We have reduced our leverage over the past 12 months. At the end of June, our bank covenant net leverage was 3.7x, reflecting continued strong operating cash flow generation from our recent investments. As Bill discussed, our intention is to use any asset sale proceeds to significantly reduce our leverage. We've also returned significant capital to our shareholders over the past 10 years. Since late 2015, we have returned over $2.4 billion to our shareholders through share repurchases and dividends. As of the end of June, we have $430 million remaining under our share repurchase program. We intend to repurchase shares of our stock in the second half of the year, given the current market dynamics and the nominal impact that our planned share repurchases will have on our leverage. We expect bank covenant net leverage to remain in the 3.6 to 3.8x range through the end of the year. And in 2027, we expect that it will drop based on our cash flow projections and if and when we complete any regional gaming asset sales. The dividend paid in January of this year marked our 15th consecutive year of dividends per share increases, a strong signal of our confidence in the company's future cash flow generation. From a financing perspective, given the current market environment, we are in active discussions with our best-in-class relationship lender group regarding refinancing alternatives for our near-term debt maturities and our credit facility. We tend to be opportunistic regarding our capital structure over the next few months. Overall, we have a very strong balance sheet to support our future growth. With that, I'll turn the call back over to Bill so that he can open the line for questions. Bill?
Thank you, Marcia. And we're now ready to take your questions.
分析師問答
Our first question comes from the line of Barry Jonas with Truist.
Thank you for the very thorough comments. I wanted to just ask a little bit more about Virginia. Can you maybe talk a little bit more about the remaining HRM deployment strategy, how you're sort of balancing that with the evolving competitive dynamic in the state? And anything you can share in terms of your goal of increasing the deployment limit in the state?
Barry, thanks for the question. The way it works in Virginia is we're entitled to 10 licenses, so 10 places where we can deploy machines and a total of 5,000 machines across the jurisdiction. And by jurisdiction or by county and town, there can be some limitations that apply to where we can deploy the machines even when we're approved for a license. So we still think there's lots of opportunity in Virginia, and we wish and are working towards getting more than 5,000 machines over time. But right now, we're working within the 5,000. So in the central part of the state, we've seen the introduction of the Petersburg Casino in January or early February of this year. And that's had some impact in the short period of time since then on our properties such as Richmond and New Kent. And even a little bit of Emporia, that's had some impact on the performance of those properties. But as often is the case, it's disruptive when a new property opens and you adjust, you take the lessons that the market gives you, you learn from those and you adjust your marketing and you adjust your competitive positioning. And we'll continue to do that as we face that additional competition. And I think you'll see us perform strongly and make adjustments and make improvements to our efforts there. And across the rest of the state, as I mentioned, you'll see us run two referendums in more of the western portion of the state, near Blacksburg and Lynchburg. And we'll look to use the remaining machines we have, also look to responsibly and sensibly redeploy machines from other facilities where we think we can get a higher return off those machines by moving them around. So in all, it's a bit of a chess board in the state finding the best places to open up licenses and finding the best place to deploy the machines and again over time I hope we have more licenses and machines to play within the jurisdiction.
Our next question comes from the line of Brandt Montour with Barclays.
So on the strategic review, Bill and Marcia, and I appreciate there's only so much you probably want to say. But maybe you could just talk about how you see the health of the transaction market right now for these types of assets, maybe key into the dynamics that we're seeing play out at some of your peers that are looking at high-profile transactions if that helps or hurts your cause.
Sure thing, Brandt. Thanks. These are great assets. First and foremost, these are assets with long histories of good cash flow generation, good returns on capital and performance. So, starting with that premise that we have good assets, certainly it's the case that there's activity in the market in this space in general. We can all see that and people can take from that what they wish. But we think this is an excellent time for us to go to market. Like I said, in our case, I think we'll be looking at more individual or small bundles of transactions based on different buyers' interest and needs. But first and foremost, the most important thing to highlight is we're selling proven strong assets that ought to fit in other people's portfolios and other people's plans. And from our perspective, we're pleased with the environment and pleased with our plan to take these properties to market.
And our next question comes from the line of David Katz with Jefferies.
Bill, I appreciate all the strategic commentary. When it comes to the Derby, you laid out, I think, a pretty detailed list of the avenues through which the earnings potential there could grow, right, sponsorship, ticket sales, et cetera. Two questions. One is help us without guidance, of course, maybe rank order where you think the biggest opportunities are in the medium term? And then second, based on where you sit today, where you have put some capital in and are putting more in, how should we think about the trajectory of earnings growth medium term and whether there are certain gating factors we can look to for an inflection presumably upward in the earnings power at the Derby?
Thanks, David. So as I highlighted in my comments and you just hit on, too, everything is moving in the right direction with respect to the Derby. So whether you're talking about admissions revenue, broadcast revenue, sponsorship, wagering, all of every metric by which we measure the Derby and evaluate the performance of the business, every single metric is moving in the right direction, and that's a great place to be when you operate a business. You don't always find that in every business at every time. But with the Derby, we found that. That's the environment we're in, and we're the beneficiary of the history of the events, the fact that it's cut above the noise that you find in a broad, diverse American public to reach a national presence and at a place where America stops and pays attention. It's hard to achieve that in America, and we've achieved that with the Derby. So with that caveat that everything is moving in the right direction, certainly, you see that in terms of step function growth, you see the work we're doing on Victory Run. And when that reaches fruition, particularly in Derby 2028, you're going to see the first of the rounds of additional growth that comes from that capital investment. But even with smaller capital investment, even with smaller projects, you'll see growth. You'll see additive revenue and you'll see momentum. For me, I'm particularly excited about some of the experiments we're running in the infield. You may have noticed when we talked about the infield projects, we're putting in temporary structures, cabanas, temporary seatings around the Winners Pagoda. We need to do some experimenting there. We need to test some concepts before we want to go with permanent structures there. So we can really take some of the lessons we think we've learned from what we've seen in other parts of the world and in other parts of the country, even with other events to see how they'll work for us. So building out the physical facility, changing the physical facility, innovating around the physical facility is, I think, the beginning. I think when you talk about broadcast, when you talk about sponsorships, first and foremost, it's what's that event on the ground? What's that event like to participate in. So first and foremost, I think we start with that. And I think there's a lot of momentum on sponsorships. You've seen the new NBC deal and the impact and the contribution of that. And all of these things fit together and they all move generally in the same direction. But first and foremost, it's about delivering a world-class unique special American event. We think we have that formula, and we'll keep innovating around that formula to grow it.
Our next question comes from the line of Dan Politzer with JPMorgan.
It does feel like we're kind of making a strategic pivot here, right? I mean you guys are selling regionals, you repurchased United Tote and then you attempted to get more involved with Preakness, right? So it does feel like you're leaning into racing. Can you maybe give us a peek under the hood about how you think about expanding within racing and especially as it relates to maybe being more involved within the Triple Crown?
Well, happy to do that, Dan. Like many parts of American business, there's a flight to quality. Whether you look at our TwinSpires asset or the Derby, you see real opportunity to build around what works and to enhance those things. Within horse racing, our focus is on what is best and most interesting about the sport and what resonates with American and global consumers. We don't pursue every aspect of the horse racing space or every track, but we focus on the things that are delivering growth, excitement and better television ratings. So yes, we see opportunity in horse racing, and others do too. I didn't mention it in my comments and I haven't been asked about it, but there is a lot of interest around leagues and different ways of packaging horse racing. Those are things of interest to us and things we pay attention to. You'll see us focus more on that and you may see exciting innovations announced from us. We don't shy away from what is working. The top end of horse racing is working, and we have a formula of building events, increasing purses, growing attendance and boosting sponsorships that we believe we can expand on.
Our next question comes from the line of Jordan Bender with Citizens.
Bill, Kentucky HRMs continue to be a bright spot kind of quarter after quarter here with EBITDA moving in a solid direction. Can we get an update on the ETGs that you guys put in? And maybe just if we look back over the last 6 months, just some of the learnings that have happened at some of these properties and maybe where that leads us or brings us to in the coming years?
Yes. I think right now in Kentucky, it's maybe 1% of our machines deployed and 2% of our revenues. So we need to go faster. We need to keep pushing on that, and we will. This is the beginning of a new thing. So for us, we want to introduce more titles. We started with Roulette. We're working on other games. And we'll keep pushing on that to not only expand Roulette, but to introduce different products and move in lockstep with the market absorbing the new games, the regulatory authorities being comfortable with new games and otherwise fitting it in with our host of other marketing and other strategy to grow those properties. So it's an important piece. I think you'll find over time it comes more and more important for our performance, and we're going to move as fast as we responsibly can while fitting it in with our other strategies and efforts to grow those properties.
Our next question comes from the line of Chad Beynon with Macquarie.
Just piling on the theme of sports as an asset and kind of focusing this on your HRM business. Has there been any more teachings or learnings from other states? Just really understanding kind of what Churchill Downs and other constituents do for the industry that could potentially lead to further expansion in the U.S. from an HRM standpoint?
Thanks, Chad. Yes, HRMs has been an incredible bright spot for our company a business model and a series of assets that we just have a high degree of confidence that we can grow and expand and innovate around. So for us, there's a lot of opportunities for HRMs within the jurisdictions where they are deployed. We hope to find other jurisdictions, both domestically and internationally where we can grow into as well. So with the quality of the product as it continues to improve, just the availability of titles, the business model as a whole, where it's often used to fund purses, fund agricultural development, fund horse racing in general. There's a real synchronicity to it that works for a lot of states. So it delivers the product. It delivers the impact for the state and the governments that approve it. And for us, it's a vertically integrated product offering where we have not only physical sites where we can deploy these, but also the Exacta technology, which is integral for their operation. We just think there's a lot that we can do there. And when we do talk to other states and when we do talk to the states where they are deployed, we do so from the confidence of demonstrating that we've kept our promises in terms of what the impact of this can be for the state for job creation, for the horse industry, for agriculture, for the tax base, et cetera. So it's a formula that's worked where these assets have been deployed, where this model has been deployed. And we think there's plenty of opportunity for more of that. So for us, it's one of the pillars. It's one of the cornerstones that we intend to drive growth around over the next number of years.
Our next question comes from the line of Daniel Guglielmo with Capital One Securities.
As a follow-up to Dan's question on the clear kind of horse racing focus, do international horse racing fans become more of a priority now? And high level, are there certain countries around the world where you all see the best customer demand dynamics where you would like to grow?
Yes. So certainly, we always found strong international interest in attending the event, but building programs and strategies around recruiting international or driving international attendance has been something that we've been more recently focused on. So we do think that there's enormous international interest in the Kentucky Derby, just enormous, both from an attendance perspective. And we also think from a sponsorship perspective. So those are two areas of real focus for us. Interestingly, just about everywhere you go in the world, you find the Thoroughbred horse industry. So whether you're talking the Middle East or Europe or Japan or China, you find interest and a history in this sport. And for many of these non-U.S. international fans, the Kentucky Derby represents the pinnacle of the sport, arguably the pinnacle of the sport and certainly the pinnacle of the sport from an American perspective. There's great interest. And our brand is well received and well understood in a lot of these jurisdictions. So the challenge for our team is building the programs to fully harness that interest from an attendance perspective, from a sponsorship perspective and occasion from the wagering perspective, although the wagering rules around the world are all different in terms of access to wagering for the citizens. So it's a big focus going forward. This is why we've started the European and Middle Eastern Road to the Derby, the Japanese road to the Derby. You'll see innovation around those pathways all with the intention of driving earlier awareness and participation and anticipation of the Kentucky Derby and perhaps some of our other races as well.
Our next question comes from the line of Jeff Stantial with Stifel.
I wanted to follow up on David's question from earlier on the Derby and some of the key growth initiatives and really specifically drill down into the midweek strategy. Bill, could you add some color here and help us think about the long-term strategy and potential financial uplift? What do visitation revenues look like today through Oaks Day? What are some of the new initiatives you've either already put in place or are considering to try to grow that midweek business? And then how should we think about both the direct flow-through impact of driving more midweek visits as well as any indirect benefit from improving the overall guest experience and driving higher loyalty for Derby Day itself?
Sure, Jeff. Happy to do that. As I mentioned in my comments, in 2026 we had about 386,000 guests attend Derby Week, and somewhere around 150,000 of those came on Derby Day. The substantial majority of our fans are actually coming on other days of the week in totality. We saw a great, thrilling response from putting the Oaks on national television for the first time on NBC. We were thrilled with those numbers, and so was our broadcast partner, NBC. Essentially every day of the week now, starting with opening day, then Sunday, Tuesday, Wednesday, Thursday, Friday and the Derby on the following Saturday, has its own brand, identity and contribution to the week as a whole. We continue to develop each of those days around the themes that have proven to work for them. The Derby is a spectacular, overwhelming event and one that's a must-see, but for many people in the region and increasingly across the country they pick another day as well to enjoy, and we're encouraging that. We're thrilled by that. Each day has its own business model and brand that we'll look to develop. The Derby, followed by the day before with the Oaks, are the premier events; that's the pinnacle and the finale. But every day offers something a little different, a different price point, a different brand and style, and there's something for everybody. We don't really ever work toward pushing the Derby crowd north of 150,000; although we have been higher than that, 150,000 is the level at which we think we can offer the best experience for our customers. To soak up the rest of the demand and to develop our customers as best we can, we need to push them to the other days, not just the Oaks but those other days as well. You'll see us continue to invest in marketing and brand development for each of these days. Part of the future for the event is driving more of a festival atmosphere — there already is one — not only at the track but across the community and the region to capture more visitation and participation, and to acknowledge that we need a variety of price points to do that, not just the pinnacle day of Derby, which is a big and very competitive day from the perspective of seat availability and everything else. So it's a big part of our future, a big part of how we want the event to be perceived both nationally and internationally, and it's working extremely well.
And our next question comes from the line of Shaun Kelley with Bank of America.
For Bill or whoever wants to take it, I just want to get some thoughts on sticking with the Derby theme here, a little bit around your experience with some of the expanded programming during Derby Week. Specifically, I'm wondering how you think about the ramp or the seasoning. Maybe an easier way to say it is what you learned from the Oaks and the move to prime time this year, how that influenced betting behavior, and how you think about optimizing or spreading the event across the broader weekend. Appreciating this was year one, what did you learn? What could you do better? What can you take into next year for further improvement? Do you think there's a multiyear opportunity to optimize this?
Sure, Shaun. The ability to get the Oaks on prime time television was a really important development for the Oaks and for our company. As I mentioned, our broadcast partner, NBC, was thrilled with the results and so were we. I would say two increasingly important things in building an event across the United States are awareness and distribution. Awareness is something we're building for the Oaks, and I'm always focused on that for our team and for the Derby itself, because the day arrives and you don't want people to miss it because they forgot it was on Saturday. Having the Oaks on prime time reminds everyone that the Derby is the next day; in addition to building the Oaks, it's an opportunity to remind people not to miss the Derby the following day. That applies to all our activities during Derby week and the races leading up to it. What worked was being on national television, and we're pleased with the results. We'll continue to build the Oaks, which in turn supports the Derby. You saw this in wagering and viewership: record viewership for both the Derby and the Oaks, and record wagering across the week for all our races. Everything feeds into each other. Generally, we seek awareness, distribution, and brand building for each day of the week, with the most important being Thurby on Thursday, the Oaks, and then, of course, the Kentucky Derby. We think our programs and strategies are working extremely well, and that shows clearly in our attendance, wagering, sponsorship, and viewership numbers.
And our next question comes from the line of Trey Bowers with Wells Fargo.
I have two different questions. First, I know it’s early, but what are your thoughts on the newly announced horse racing league? Have you had any conversations with them, and what might this mean for the Derby and the business going forward? Second, on M&A, how are you thinking about the JV assets? If a buyer wanted to purchase only the properties and leave the operating company with you, would you be willing to do that?
Okay, let me unpack that. There are different categories of questions within there. First, on horse racing leagues, there are several being contemplated and announced, and I believe every potential league reaches out to us early on. We’ve had good exposure and a real chance to learn about these leagues as people develop them. We encourage the leagues because it’s about quality, building more awareness, creating continuity, and achieving broader distribution for the sport and for our company. In general, we’re strongly supportive of different league concepts. Obviously, there can’t be ten new leagues that appear; there will be winners and losers in that process, but we encourage the process. We also have our own ideas about what would interest our company and what would work as a league with staying power. We’re sorting out our options, and it’s fair to say we’re very interested in these concepts. We’ll make a move on one of these concepts or on our own concept when we’re ready and confident it will resonate with the American public. Regarding the M&A process we highlighted in our prepared remarks, we completed a comprehensive, thoughtful review of all our assets. We’re focused on our nine wholly owned assets because we believe that’s where the most opportunity for transactions exists in the short and midterm, and that’s where the team is concentrating its efforts. We are not selling any other assets, nor are we contemplating or announcing sales of other assets. We’re focused on the assets I listed today, which we discussed and decided with our Board made the most sense to pursue. As for OpCo/PropCo structures, that is not our focus. We’re going to sell the assets as announced. There may be buyers who participate in different structures, including OpCo/PropCo arrangements for some assets, and we encourage whatever makes sense for potential buyers. But for us, the team has been tasked with selling the announced assets, and there aren’t any nuances such as selling only the real estate. We’re not interested in doing that.
And our next question comes from the line of Joe Stauff with Susquehanna.
Bill, I was wondering, with the Pennsylvania Supreme Court decision recently on gray games, does that change your view on the opportunity in Pennsylvania or in other emerging states for HRMs, because we have now seen three rulings, Kentucky, Virginia and Pennsylvania. I'm wondering if that is likely a strong incentive for other states to pursue this.
Yes. A really interesting question, Joe, just for everyone on the call. In June, the Pennsylvania Supreme Court definitively ruled that the so-called skill games deployed in Pennsylvania are illegal gaming devices, and they established a grace period before those machines needed to be removed from operation. That period ends October 15. What you have is a gray market where illegal operators came in and cannibalized very quickly. There are a variety of estimates of how many of these illegal machines are deployed in Pennsylvania, with numbers running from 70,000 to north of 100,000. Now it’s clear under Pennsylvania law, as we’ve seen in other jurisdictions like Kentucky and Virginia, that these machines are illegal. As a legal gaming operator in jurisdictions like Kentucky, Pennsylvania and Virginia, that’s good for our business. We play by the rules. We’re licensed. We pay taxes. We contribute to other avenues as the government requires, whether it be horse racing or otherwise. It’s not fair, it’s not regulated, and it’s not right when people open illegal gaming operations. This will be good for Presque Isle. Whether the machines are completely removed from the jurisdiction and not replaced with any distributed gaming, that’s good for our facility. If there is a movement to tax, regulate and legalize some form of distributed gaming, then those operators will be playing by the rules like we do. That will be good for us as well. All in all, events like the Pennsylvania Supreme Court decision, and similar rulings in Virginia and Kentucky, are good for regulated gaming operators. It gives confidence to those of us that operate under regulated gaming jurisdictions and play by the rules and pay our taxes. While there can be bumps in the road and uncertainty for a while, eventually the states get it right and allow our business model to function as intended and achieve the public policy objectives that the state intended when they legalized gaming. I think it’s good news ahead for Presque Isle in Pennsylvania. Regardless of what happens from here, I think the operations there are likely to show improvement, and we’re pleased with that. We’ll keep pursuing what we do, which is regulated, licensed gaming models in jurisdictions where we’re welcomed and clearly legalized to operate.
I'm showing no further questions. So with that, I'll hand the call back over to CEO, Bill Carstanjen for any closing remarks.
Thanks, Andrew. We covered a lot of ground today. I appreciate everyone's time and everyone's interest in our company. And we have a lot to get done between now and the end of the year, and we're going to get right on it, and I look forward to talking to everybody in October when we next speak. So thanks very much. Talk to you all soon.
Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.