Churchill Downs Inc

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. DESCRIPTION OF BUSINESS

Basis of Presentation

Churchill Downs Incorporated (the "Company" or "CDI") financial statements are presented in conformity with the requirements of this Quarterly Report on Form 10-Q and consequently do not include all of the disclosures normally required by U.S. generally accepted accounting principles ("GAAP") or those normally made in our Annual Report on Form 10-K. The December 31, 2025 Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.

The following information is unaudited. All per share amounts assume dilution unless otherwise noted. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025. In the opinion of management, all adjustments necessary for a fair statement of this information have been made, and all such adjustments are of a normal, recurring nature.

In August 2026, the Company completed the re-acquisition of the 49% outstanding equity interests of the United Tote Company ("United Tote") from NYRA Content Management Solutions, LLC. Refer to Note 11, Redeemable Noncontrolling Interest for further information on the transaction.

In August 2025, the Company completed the acquisition of 90% of the outstanding equity interests of PPE Casino Resorts NH Holdings, LLC in Salem, New Hampshire ("Casino Salem"). The Company has assumed responsibility for the development of a charitable gaming, entertainment and dining destination at this location. The Company announced in January 2026 that Casino Salem will be redeveloped as Rockingham Grand Casino. Refer to Note 3, Acquisitions, and Note 11, Redeemable Noncontrolling Interest, for further information on the transaction.

We conduct our business through three reportable segments: Live and Historical Racing, Wagering Services and Solutions, and Gaming. The Wagering Services and Solutions segment was previously known as the TwinSpires segment. We aggregate our other businesses as well as certain corporate operations in All Other. We report net revenue and operating expense associated with these reportable segments in the accompanying Condensed Consolidated Statements of Comprehensive Income.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements - effective in 2026 or thereafter

In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s ("SEC") Disclosure Update and Simplification Initiative, to amend certain disclosure and presentation requirements for a variety of topics within FASB's Accounting Standards Codification ("ASC"). These amendments align the requirements in the ASC regarding the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures.

In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Under ASU 2024-03, a public entity would be required to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses. This standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses: Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326). The update permits entities to elect a practical expedient for estimating expected credit losses on current trade receivables and current contract assets by assuming that conditions existing at the balance sheet date will remain unchanged over the life of those assets. The updated standard is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software. The update removes all references to software development stages and requires capitalization of software costs when management has committed to the software project and it is probable the software will be completed and perform its intended use. This standard is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies certain interim reporting guidance. The update is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures.

3. ACQUISITIONS

Casino Salem

On August 27, 2025, the Company completed its acquisition of 90% of the outstanding equity interests of Casino Salem (the "Salem Transaction") for a base purchase price of $180 million, and the transaction was treated as an asset acquisition because substantially all the value of the gross assets acquired was concentrated in the gaming rights. In conjunction with the acquisition, the Company recorded a $197 million indefinite-lived gaming rights intangible, which represented the fair value of the gaming rights at the date of acquisition.

The fair value of the gaming rights acquired in the transaction was determined using the Greenfield Method, which is an income approach methodology that calculates the present value of the gaming rights intangible asset based on a projected cash flow stream. This method assumes that the gaming rights intangible asset provides the opportunity to develop a gaming facility in a specified region, and that the present value of the projected cash flows is a result of the realization of advantages contained in these rights. Under this methodology, the acquirer is expected to absorb all start-up costs, as well as incur all expenses pertaining to the acquisition and/or the creation of all tangible and intangible assets. The estimated future revenue, future operating expenses, start-up costs, and discount rate were the primary inputs in the valuation. The gaming rights intangible asset was assigned an indefinite useful life based on the Company's expected use of the asset and determination that no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of the gaming rights.

4. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was $900 million as of September 30, 2026 and December 31, 2025.

We performed our annual goodwill impairment analysis as of April 1, 2026, and no adjustment to the carrying value of goodwill was required. We assessed goodwill for impairment by performing qualitative or quantitative analyses for each reporting unit. We concluded that the fair values of our reporting units exceeded their carrying values, and therefore no impairments were identified.

Other intangible assets are comprised of the following:

We performed our annual indefinite-lived intangible assets impairment analysis as of April 1, 2026. We assessed our indefinite-lived intangible assets for impairment by performing qualitative or quantitative analyses for each asset. Based on the results of these analyses, no indefinite-lived intangible asset impairments were identified in connection with our annual impairment testing.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Chasers Poker Room Impairment

During the third quarter of 2025, the Company concluded that the completion of the Salem Transaction qualified as a trigger event for impairment testing related to the Chasers Poker Room ("Chasers") indefinite-lived gaming rights intangible. At the time the Company acquired Chasers, the valuation of the gaming rights contemplated a future expansion of the existing operations in Salem, New Hampshire. Given the completion of the Salem Transaction, the Company refocused on the redevelopment of Casino Salem as Rockingham Grand Casino and currently does not plan to expand Chasers.

Because the Company does not intend to expand Chasers, the Company settled an outstanding liability owed to the former owners of Chasers, related to the Chasers' gaming rights, in the amount of $10 million. The settlement of the noncurrent liability resulted in a gain of $40 million in the third quarter of 2025.

Given the completion of the Salem Transaction and the settlement of the liability related to the Chasers' gaming rights, the Company evaluated and subsequently updated the projected cash flows and discount rate related to the Chasers' gaming rights. The fair value of the Chasers' gaming rights intangible was determined using the Greenfield Method, an income approach methodology that calculates the present value based on a projected cash flow stream. This method assumes that the gaming rights intangible assets provide the opportunity to develop a casino or historical racing facility in a specified region, and that the present value of the projected cash flows is a result of the realization of advantages contained in these rights. Under this methodology, the acquirer is expected to absorb all start-up costs, as well as incur all expenses pertaining to the acquisition and/or the creation of all tangible and intangible assets. The estimated future revenue and operating expenses, start-up costs, and discount rates were the primary assumptions and estimates in the valuation of the gaming rights intangible. As a result of this assessment, the Company recognized a non-cash impairment charge of $85 million in the third quarter of 2025 for the entire value of the Chasers' gaming rights, which are included in the Live and Historical Racing segment.

The $40 million gain on settlement of the noncurrent liability and the $85 million impairment charge of the gaming rights intangible are included in Asset impairments, net in the Condensed Consolidated Statements of Comprehensive Income.

5. INCOME TAXES

The Company’s effective income tax rates were 27.7% for the three months and 26.6% for the nine months ended September 30, 2026. The effective income tax rates for these periods were higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes and non-deductible expenses.

The Company’s effective income tax rate was 35.9% for the three months ended September 30, 2025, and was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes, increased future tax expenses from the remeasurement of deferred income tax liabilities related to the Salem Transaction, and nondeductible officers’ compensation, partially offset by the excess tax benefit from restricted stock compensation distributed in the third quarter of 2025. The Company’s effective income tax rate was 25.6% for the nine months ended September 30, 2025, and was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes and non-deductible officers’ compensation.

6. SHAREHOLDERS' EQUITY

Stock Repurchase Programs

On July 22, 2025, the Board of Directors of the Company approved a common stock repurchase program of up to $500 million (the "July 2025 Stock Repurchase Program"). The July 2025 Stock Repurchase Program includes and is not in addition to the $169 million previously remaining under the March 2025 Stock Repurchase Program. Share repurchases may be made at management’s discretion from time to time in the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. We had approximately $382 million of repurchase authority remaining under the July 2025 Stock Repurchase Program at September 30, 2026, based on trade date.

On March 12, 2025, the Board of Directors of the Company approved a new common stock repurchase program of up to $500 million (the "March 2025 Stock Repurchase Program"). The March 2025 Stock Repurchase Program included and was not in addition to any unspent amount remaining under the prior authorizations from the 2021 Stock Repurchase Program. As described above, the March 2025 Stock Repurchase Program has since been replaced by the July 2025 Stock Repurchase Program.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

During the three and nine months ended September 30, 2026 and 2025, we repurchased the following shares under our stock repurchase programs:

As of September 30, 2026 and December 31, 2025, we had $4 million and $1 million, respectively, accrued for the future cash settlement of executed repurchases of our common stock.

7. STOCK-BASED COMPENSATION PLANS

On February 18, 2025, our Board of Directors approved the replacement of the Churchill Downs Incorporated 2016 Omnibus Stock Incentive Plan (the "2016 Plan") with a new plan, the Churchill Downs Incorporated 2025 Omnibus Stock and Incentive Plan (the "2025 Plan"). The 2025 Plan was approved by shareholders at the Company's 2025 Annual Meeting of Shareholders held on April 22, 2025, and no further awards will be granted under the 2016 Plan. We have stock-based employee compensation plans with awards outstanding under the 2016 Plan, the 2025 Plan, and the Executive Long-Term Incentive Compensation Plan, which was adopted pursuant to the 2016 Plan. Our total stock-based compensation expense, which includes expenses related to restricted stock awards ("RSAs"), restricted stock unit awards ("RSUs"), performance share unit awards ("PSUs"), and stock options associated with our employee stock purchase planwas $6 million and $19 million for the three months and nine months ended September 30, 2026 and $7 million and $18 million for the three months and nine months ended September 30, 2025, respectively. At September 30, 2026 and December 31, 2025, the Company had $14 million and $21 million, respectively, recorded as liability-classified awards, which are included in accrued expenses and other liabilities in the accompanying Condensed Consolidated Balance Sheets.

During the nine months ended September 30, 2026, the Company awarded RSUs to employees, as well as RSUs and PSUs to certain named executive officers, and RSAs and RSUs to directors. The vesting criteria for the PSU awards granted in 2026 were based on athree-year service period withtwo performance conditions and a market condition related to relative total shareholder return ("TSR") consistent with prior year grants. The total compensation cost we will recognize under the PSUs is determined using the Monte Carlo valuation methodology, which factors in the value of the TSR market condition when determining the grant date fair value of the PSU. Compensation cost for each PSU is recognized during the performance and service period based on the probable achievement of thetwo performance criteria. The PSUs can be converted into shares of our common stock at the time the PSU award value is finalized.

A summary of the RSAs, RSUs and PSUs granted during 2026 is presented below (units in thousands):

(1)PSUs reflect the target number of units for the original PSU grant.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

8. DEBT

The following table presents our total debt outstanding:

Credit Agreement

On September 30, 2026, the Company’s senior secured credit facility (as amended from time to time, the "Credit Agreement") consisted of a $1.2 billion revolving credit facility (the "2031 Revolver"), $1.1 billion senior secured term loan A (the "2031 TLA"), $500 million senior secured term loan B (the "2033 TLB"), and a $100 million swing line commitment. The Company had $1.1 billion available borrowing capacity, after consideration of $10 million in outstanding letters of credit, under the 2031 Revolver as of September 30, 2026.

On September 25, 2026, the Company closed the eighth amendment to the Credit Agreement to (i) extend the maturity date of the 2031 Revolver and the 2031 TLA from July 2029 to September 2031 subject to an earlier “springing maturity” if certain indebtedness in respect to outstanding notes or other material indebtedness having a maturity prior to September 25, 2031, is not refinanced or extended to a date after September 25, 2031, at least 91 days prior to such other debt’s stated maturity date, (ii) eliminate the 10 basis points credit spread adjustment previously applicable, and (iii) amend certain other provisions of the Credit Agreement.

Prior to September 25, 2026, the 2031 Revolver and 2031 TLA bore interest at the Secured Overnight Financing Rate ("SOFR") plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio. As of September 30, 2026, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company is required to pay a commitment fee on the unused portion of the 2031 Revolver, as determined by a pricing grid based on the consolidated total net secured leverage ratio of the Company. For the period ended September 30, 2026, the Company's commitment fee rate was 0.25%. The 2031 TLA requires quarterly payments of 1.25% of the $1.1 billion balance and is subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the Credit Agreement.

The Company capitalized $2 million of debt issuance costs associated with the amendment which will be amortized as interest expense over the remainder of the term.

On September 25, 2026, the Company entered into a new $500 million 2033 TLB under its Credit Agreement. The 2033 TLB was issued at 99.875% of the principal amount and has a maturity date of September 25, 2033. The 2033 TLB bears interest at SOFR plus 175 basis points, requires quarterly payments of 0.25% of the original $500 million balance, and may be subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the Credit Agreement. The Company capitalized $5 million of debt issuance costs associated with the debt which will be amortized along with the amortization of the original issue discount over the 7-year term. The Company used a portion of the net proceeds from the 2033 TLB to repay indebtedness outstanding under its Term Loan B-1 due 2028 (the "2028 TLB"), repay indebtedness outstanding under its 2031 Revolver, to fund related transaction fees and expenses, and for working capital and other general corporate purposes. The Company recognized expenses related to repayment of the 2028 TLB of $1 million, which is included in miscellaneous, net in the accompanying Condensed Consolidated Statements of Comprehensive Income.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On February 14, 2025, the Company announced that it closed the seventh amendment of the Credit Agreement. The seventh amendment to the Credit Agreement (i) reduced the interest rate margin applicable to the 2028 TLB by 0.25% from SOFR plus 200 basis points to SOFR plus 175 basis points, (ii) eliminated the 10 basis points credit spread adjustment previously applicable to the 2028 TLB, and (iii) made certain other amendments to the Credit Agreement.

The 2028 TLB required quarterly payments of 0.25% of the original $300 million balance and was subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the Credit Agreement.

2027 Senior Notes

As of September 30, 2026, we had $600 million in aggregate principal amount of 5.50% senior unsecured notes that mature on April 1, 2027 (the "2027 Senior Notes"). The 2027 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year. The Company may redeem some or all the 2027 Senior Notes at redemption prices set forth in the 2027 Indenture. On September 18, 2026, the Company issued a conditional redemption notice to redeem the 2027 Senior Notes on October 19, 2026.

2028 Senior Notes

As of September 30, 2026, we had $700 million in aggregate principal amount of 4.75% senior unsecured notes that mature on January 15, 2028 (the "2028 Senior Notes"). The 2028 Senior Notes consist of $500 million notes issued at par and $200 million notes issued at 103.25%. The 2028 Senior Notes were issued in a private offering to qualified institutional buyers, with interest payable in arrears on January 15th and July 15th of each year. The 3.25% premium is being amortized through interest expense, net over the term of the notes. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the 2028 Indenture.

2030 Senior Notes

As of September 30, 2026, we had $1.2 billion in aggregate principal amount of 5.75% senior unsecured notes that mature on April 1, 2030 (the "2030 Senior Notes"). The 2030 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year. The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the 2030 Indenture.

2031 Senior Notes

As of September 30, 2026, we had $600 million in aggregate principal amount of 6.75% senior unsecured notes that mature on May 1, 2031 (the "2031 Senior Notes"). The 2031 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on May 1st and November 1st of each year. The Company may redeem some or all the 2031 Senior Notes at redemption prices set forth in the 2031 Indenture.

9. REVENUE FROM CONTRACTS WITH CUSTOMERS

Performance Obligations

As of September 30, 2026, our Live and Historical Racing segment had remaining performance obligations on contracts with a duration greater than one year relating to television rights, sponsorships, personal seat licenses, and admissions, with an aggregate transaction price of $218 million. The revenue we expect to recognize on these remaining performance obligations is $1 million for the remainder of 2026, $74 million in 2027, $45 million in 2028, and the remainder thereafter.

As of September 30, 2026, our remaining performance obligations on contracts with a duration greater than one year in segments other than Live and Historical Racing were not material.

Contract Assets and Contract Liabilities

As of September 30, 2026 and December 31, 2025, contract assets were not material.

As of September 30, 2026 and December 31, 2025, contract liabilities were $60 million and $80 million, respectively, which are included in current deferred revenue, non-current deferred revenue, and accrued expenses in the accompanying Condensed Consolidated Balance Sheets. Contract liabilities primarily relate to the Live and Historical Racing segment and the decrease was primarily due to the recognition of previously deferred revenue related to the 152nd Kentucky Derby. We recognized $2 million and $57 million of revenue during the three months and nine months ended September 30, 2026, respectively, which was included in the contract liabilities balance at December 31, 2025. We recognized $2 million and $56 million of revenue during the three months and nine months ended September 30, 2025, respectively, which was included in the contract liabilities balance at December 31, 2024.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Disaggregation of Revenue

The Company has included its disaggregated revenue disclosures as follows:

•For the Live and Historical Racing segment, revenue is disaggregated between Churchill Downs Racetrack and historical racing properties given that Churchill Downs Racetrack revenue primarily revolves around live racing events, while our other Live and Historical Racing properties' revenues primarily revolve around historical racing. This segment is also disaggregated by location given the geographic economic factors that affect the revenue of service offerings. Within the Live and Historical Racing segment, revenue is further disaggregated between live and simulcast racing, historical racing, racing event-related services, gaming, and other services.

• For the Wagering Services and Solutions segment, revenue is disaggregated between live and simulcast racing, gaming, and other services.

• For the Gaming segment, revenue is disaggregated by location given the geographic economic factors that affect the revenue of Gaming service offerings. Within the Gaming segment, revenue is further disaggregated between live and simulcast racing, historical racing, racing event-related services, gaming, and other services.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

We believe that these disclosures depict how the amount, nature, timing, and uncertainty of cash flows are affected by economic factors. The tables below present net revenue from external customers and intercompany revenue from each of our segments:

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for historical racing machines ("HRMs") or gaming revenue for our casino properties. These amounts were $16 million for the three months ended September 30, 2026 and $15 million for the three months ended September 30, 2025.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $48 million for the nine months ended September 30, 2026 and $45 million for the nine months ended September 30, 2025.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

10. SUPPLEMENTAL BALANCE SHEET INFORMATION

Accounts receivable, net

Accounts receivable is comprised of the following:

Other current assets

Other current assets is comprised of the following:

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:

11. REDEEMABLE NONCONTROLLING INTEREST

In April 2024, the Company closed on the sale of 49% of United Tote, a wholly-owned subsidiary of CDI, to the New York Racing Association, Inc. ("NYRA"). NYRA's interest included certain embedded redemption features, such as a put right, that were not exclusively within the Company’s control. In August 2026, the Company re-acquired NYRA's interest of United Tote. Prior to this acquisition, NYRA's interest was treated as redeemable noncontrolling interest and was presented outside of permanent equity on the Company’s Condensed Consolidated Balance Sheets.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

In August 2025, the Company closed on the purchase of 90% of Casino Salem, a joint venture with SL Salem, LLC and JPF Casino Enterprises, LLC (collectively, the "Casino Salem Minority Interest Holders"). The Casino Salem Minority Interest Holders' interests include certain embedded redemption features, such as put rights, that are not exclusively within the Company’s control. The Casino Salem Minority Interest Holders' interests are treated as redeemable noncontrolling interest and are not included in the permanent equity on the Company’s Condensed Consolidated Balance Sheets.

The redeemable noncontrolling interest is initially accounted for at fair value and subsequently adjusted to the greater of the redemption value or the carrying value. Redeemable noncontrolling interest adjustments of carrying value to redemption value are reflected in retained earnings and are also included as an adjustment to income available to the Company’s shareholders in the calculation of earnings per share (See Note 15, Net Income Per Common Share Computations). The table below depicts changes in the Company’s redeemable noncontrolling interest balance.

12. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

Investments in and advances to unconsolidated affiliates as of September 30, 2026 and December 31, 2025, primarily consisted of interests in Rivers Casino Des Plaines ("Rivers Des Plaines") and Miami Valley Gaming and Racing ("MVG").

Rivers Casino Des Plaines

The ownership of Rivers Des Plaines is comprised of the following: (1) the Company owns 61.3%, (2) High Plaines Gaming, LLC ("High Plaines"), an affiliate of Rush Street Gaming, LLC, owns 36.0%, and (3) Casino Investors, LLC owns 2.7%. Both the Company and High Plaines have participating rights over Rivers Des Plaines, and both must consent to certain operating, investing and financing decisions. As a result, we account for Rivers Des Plaines using the equity method. As of September 30, 2026, the net aggregate basis difference between the Company’s investment in Rivers Des Plaines and the amounts of the underlying equity in net assetswas $833 million.

Our investment in Rivers Des Plaines was $583 million and $573 million as of September 30, 2026 and December 31, 2025, respectively. The Company received distributions from Rivers Des Plaines of $68 million and $56 million for the nine months ended September 30, 2026 and 2025, respectively.

Miami Valley Gaming and Racing

The Company owns a 50.0% interest in MVG and Delaware North Companies Gaming & Entertainment Inc. ("DNC") owns the remaining 50.0% interest in MVG. Since both the Company and DNC have participating rights over MVG, and both must consent to certain operating, investing and financing decisions, we account for MVG using the equity method.

Our investment in MVG was $111 million and $112 million as of September 30, 2026 and December 31, 2025, respectively. The Company received distributions from MVG of $38 million and $35 million for the nine months ended September 30, 2026 and 2025, respectively.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Summarized Financial Results for our Unconsolidated Affiliates

Summarized below are the financial results for our unconsolidated affiliates.

13. FAIR VALUE OF ASSETS AND LIABILITIES

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate.

Restricted Cash

Our restricted cash accounts held in money market and interest-bearing accounts qualify for Level 1 in the fair value hierarchy, which includes unadjusted quoted market prices in active markets for identical assets.

Debt

The fair value of the Company’s 2031 Senior Notes, 2030 Senior Notes, 2028 Senior Notes, and 2027 Senior Notes are estimated based on unadjusted quoted prices for identical or similar liabilities in markets that are not active and as such are Level 2 measurements. The fair values of the Company's 2031 Revolver, 2031 TLA, 2033 TLB, and 2028 TLB under the Credit Agreement approximate the gross carrying value of the variable rate debt and as such are Level 2 measurements.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The carrying amounts and estimated fair values by input level of the Company's financial instruments are as follows:

14. CONTINGENCIES

We are involved in litigation arising in the ordinary course of conducting business. We carry insurance for workers' compensation claims from our employees and general liability for claims from independent contractors, customers, and guests. We are self-insured up to an aggregate stop loss for our general liability and workers' compensation coverages.

We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in the early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our consolidated financial condition, results of operations, or cash flows. Legal fees are expensed as incurred.

If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

estimable. In the event that a legal proceeding results in a substantial judgment against us, or settlement by us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse impact on our business.

15. NET INCOME PER COMMON SHARE COMPUTATIONS

The following is a reconciliation of the numerator and denominator of the net income per common share computations:

16. SEGMENT INFORMATION

We manage our operations through three reportable segments: Live and Historical Racing, Wagering Services and Solutions, and Gaming. Our operating segments reflect the internal management reporting used by our chief operating decision maker, our Chief Executive Officer, to evaluate results of operations and to assess performance and allocate resources.

Eliminations include the elimination of intersegment transactions. We utilize non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. Adjusted EBITDA includes the following adjustments:

Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to noncontrolling interests.

Adjusted EBITDA excludes:

•Transaction expense, net, which includes:

–Acquisition, disposition, and property sale related charges; and

–Other transaction expense, including legal, accounting, and other deal-related expense;

•Stock-based compensation expense;

•Rivers Des Plaines' impact on our investments in unconsolidated affiliates from legal reserves and transaction costs;

•Asset impairments, net;

•Gain on property sales;

•Legal reserves;

•Pre-opening expense; and

•Other charges, recoveries and expenses.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the accompanying Condensed Consolidated Statements of Comprehensive Income.

The tables below present net revenue from external customers, Adjusted EBITDA by segment and reconcile net income to Adjusted EBITDA:

Net revenue by segment is comprised of the following:

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Adjusted EBITDA by segment is comprised of the following:

(1) Other operating expense primarily includes supplies, regulatory licenses and fees, property taxes, and third-party service fees and costs.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1) Other operating expense primarily includes supplies, regulatory licenses and fees, property taxes, and third-party service fees and costs.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The table below reconciles net income to Adjusted EBITDA:

The table below presents total capital expenditures for each of our segments:

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

Churchill Downs Incorporated

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Our chief operating decision maker does not review disaggregated assets by segment. The measure of segment assets is reported on the balance sheet as total consolidated assets.

17. SUBSEQUENT EVENTS

On October 27, 2026, the Board of Directors of the Company declared an annual cash dividend on the Company's common stock of $0.469 per outstanding share, to be paid on January 5, 2027, to shareholders of record as of the close of business on December 4, 2026, with the aggregate cash dividend to be paid to each shareholder rounded to the nearest whole cent.

On October 27, 2026, the Board of Directors of the Company approved a common stock repurchase program of up to $750 million (the "October 2026 Stock Repurchase Program"). The October 2026 Stock Repurchase Program includes and is not in addition to the $306 million remaining under the prior July 2025 Stock Repurchase Program as of the closing of trading on October 27, 2026.

On October 19, 2026, the Company redeemed the 2027 Senior Notes with borrowings from the 2031 Revolver.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026