Churchill Downs (NASDAQ: CHDN) mentioned it should spend as a lot as $50 million to construct a brand new historic racing machine (HRM) institution in Calvert Metropolis, Ky.
Churchill Downs’ Derby Metropolis Gaming Downtown historic horse racing venue in Louisville. The corporate is opening one other such venue in Calvert Metropolis, Ky. (Picture: The Courier-Journal)
The gaming firm forecast expenditures of $40 million to $50 million on the HRM facility, which is being positioned as “an extension” of Oak Grove Racing, Gaming, and Lodge.
Churchill Downs plans to open the brand new 23,000 square-foot facility with 250 HRMs, a sports activities bar and a sportsbook, and a simulcast middle in early 2026,” in accordance with an announcement issued by the Kentucky-based gaming operator.
The corporate mentioned the HHR facility might be its eighth in its residence state. The announcement of the brand new property was made along side Churchill’s third-quarter earnings report.
Churchill Downs Bullish Outlook on New HRM Property
Churchill Downs operates HHR institutions in Kentucky and Virginia, and it’s optimistic concerning the long-term potential of the upcoming Calvert Metropolis venue.
“Calvert Metropolis is a superb location for our eighth HRM venue in Kentucky with a inhabitants of 300,000 inside a 60-minute drive and a location close to the assembly of two Interstates that can permit quick access for purchasers from a number of surrounding cities in Southwestern Kentucky,” mentioned CEO Invoice Carstanjen on a convention name with analysts on Thursday. “We’re assured that this might be an amazing addition to our portfolio of HRM belongings.”
The brand new HHR property additionally represents one other instance of Churchill leveraging its December 2022 $250 million deal for Exacta Techniques, a Florida-based supplier of HHR methods and gaming machines.
“We plan to open in early 2026. HRMs and Exacta’s HRM expertise are a key strategic focus over the following 5 to 10 years for our firm. These high-growth, high-margin investments present a superb return on our shareholders’ capital,” added Carstanjen.
HRMs Very important Piece of Churchill Downs Development Story
Whereas many traders affiliate Churchill Downs with its namesake Kentucky racetrack and the Kentucky Derby, the gaming firm additionally runs regional casinos and a slew of HRM properties, each of that are crucial drivers of the operator’s long-term development.
Within the third quarter, Churchill’s seven HHR venues in Virginia delivered better-than-expected top-line development, in accordance with Stifel analyst Jeffrey Stantial, who famous that the Calvert Metropolis property and HRM enlargement in Virginia aren’t but factored into the agency’s estimates on the gaming firm.
Stantial additionally identified that “sequential development in high-margin Exacta revenues” could possibly be a catalyst for the shares transferring ahead. Shares of Churchill Downs are up 3.15% yr up to now, although that efficiency has just lately accelerated, as highlighted by a 5.65% acquire over the previous month.
Stantial charges the inventory a “purchase” with a $164 value goal, which means upside of virtually 18% from present ranges.
