CHDN · Churchill Downs

The thesis

Churchill Downs' shares are more likely than not to beat the S&P 500 over the next three months. Growing Kentucky machine profit, a record third quarter and a new $750 million buyback outweigh a Virginia machine business that is still shrinking. Monthly state revenue figures through December and the fourth-quarter report, expected around 25 February 2027, show whether the Virginia decline stays contained.

The rating is Medium because the most recent state figures narrowed the Virginia decline while Kentucky kept growing. On 5 November 2026 CDC Gaming reported that revenue from Virginia's historical racing machines (HRMs), all of which Churchill Downs owns, fell 5.6% in October at a blended rate and 2% excluding Richmond. CDC Gaming had reported a 10% same-store fall for August.

The 28 October 2026 release showed record net revenue of $696 million, up 2%, and adjusted earnings per share (EPS) of $1.23, against $1.09 a year earlier and Benzinga's $1.15 estimate. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $264 million, against $262 million.

The price already reflects the report: the shares closed at $100.64 on 11 November 2026, up 13.1% over three months from the 7 October 2026 closing low of $73.95, and within $5 of BofA Securities' $105 target.

Bullish and bearish views on Churchill Downs, Incorporated

The bull case on Churchill Downs, Incorporated (CHDN), in brief: Virginia's decline narrowed in October. The bear case: Richmond is still falling fast.

Bull case

• Virginia's decline narrowed in October. CDC Gaming reported a 5.6% blended fall for October on 5 November 2026, after same-store falls of 11.7% in July and 10% in August. The Rose in Northern Virginia led the state with $15.2 million of October revenue, up 5.7%.
• Kentucky machines are still growing. Kentucky HRM revenue rose $11 million and adjusted EBITDA rose $6 million year on year in the third quarter, according to the 28 October 2026 release. CDC Gaming reported on 29 October 2026 that Kentucky HRM revenue rose 11% in September.
• Gaming and wagering both grew profit. Gaming adjusted EBITDA rose to $128 million from $123 million in the third quarter (28 October 2026 release). Wagering Services and Solutions rose to $48 million from $46 million, on TwinSpires horse-racing handle of $485 million against $472 million.
• Capital return is getting bigger. On 27 October 2026 the board approved a $750 million repurchase program, replacing the old plan with $306 million remaining. The quarterly dividend rises 7% to $0.469 per share, payable 5 January 2027.
• Nine-month earnings grew. Adjusted EBITDA for the first nine months of 2026 was $998 million, against $958 million a year earlier, and adjusted EPS was $5.89, against $5.26 (Q3 2026 release).
• Virginia footprint is being upgraded. On 29 October 2026 the company announced it will move its Rosie's Game Room in Henry County, Virginia, to a new, larger venue near Martinsville Speedway.
• Analyst targets sit at or above the last close. BofA Securities raised its target to $105 from $100 on 2 November 2026. JPMorgan moved to $120, Mizuho to $126 and Barclays to $133 on 30 October 2026.

Bear case

• Richmond is still falling fast. CDC Gaming reported on 5 November 2026 that Richmond-area Rosie's revenue fell 17.8% in October to $10.4 million, or $284 per machine per day, the lowest in the state. Colonial Downs fell 18.1% to $3.5 million and Emporia fell 16.3% to $1.8 million.
• Virginia profit is already shrinking. Virginia HRM adjusted EBITDA fell $6 million year on year in the third quarter, mostly in Central Virginia (28 October 2026 release). The company blamed new competition and a $5 million tax effect from a structure effective 1 July 2026; CDC Gaming tied the July revenue fall to the Petersburg casino.
• Virginia growth sites were rejected. Unofficial results reported by Virginia Business on 4 November 2026 showed 50.66% of Amherst County voters and 56.46% of Pulaski voters opposed parimutuel wagering. Both proposed Rosie's venues are off the table unless certification changes the Amherst result, where the margin was under 200 votes.
• Online casino competition is a live 2027 question. Virginia's General Assembly session in early 2027 is expected to take up online casino gaming, which would add a competitor to the HRM venues.
• Revenue growth is thin. Third-quarter net revenue of $696 million rose 2% and came in just under Benzinga's $696.6 million estimate on 28 October 2026; profit growth leans on Kentucky and cost control.

Price setup

The shares closed at $100.64 on 11 November 2026, after $101.96 on 10 November 2026, the highest close since the third-quarter report. The 3-month change is 13.1%, measured from a close of $88.99 on 13 August 2026.

On adjusted daily closes, the 50-day moving average was $84.53 and the 200-day moving average $87.98 as of 11 November 2026. The shares trade above both, and the 50-day average is still below the 200-day after the decline into the 7 October 2026 closing low of $73.95.

The 52-week high is $118.35, set intraday on 16 December 2025; the last close is 15.0% below it. Recovering that gap depends on Virginia stabilizing, since the analyst targets above $105 assume it.

SEC filings show no insider sales in the past month; the only recent Form 4 is a 454-share grant to director Douglas Grissom on 30 September 2026.

Catalysts ahead

• ~30 November 2026 (est.): Kentucky HRM revenue for October 2026, as reported by CDC Gaming. Shows whether Kentucky growth, up 11% in September, keeps offsetting Virginia.
• ~4 December 2026 (est.): Virginia HRM revenue for November 2026, as reported by CDC Gaming. Shows whether October's narrower 5.6% blended decline continues or widens again.
• December 2026 (est.): Certification of the Amherst County and Pulaski referendum results. Makes the rejection of both proposed Rosie's venues official; the Amherst margin was under 200 votes.
• ~January 2027 (est.): Virginia 2027 legislative session on online casino gaming. Legalization would add an online competitor to Churchill Downs' Virginia HRM venues.
• ~25 February 2027 (est.): Fourth-quarter 2026 report. Shows whether Virginia HRM profit keeps falling and whether Kentucky growth and repurchases continue to offset it.

What would change the view

A daily close below $88, near the 200-day moving average, which would give back a large part of the post-report advance. A second straight year-on-year decline in Virginia HRM adjusted EBITDA at the Q4 2026 report would also break the case.

The risks this note tracks, each with what would confirm it:

• Competition from the Petersburg casino keeps eroding Central Virginia HRM profit. Confirmed by: another year-on-year decline in Virginia HRM adjusted EBITDA at the Q4 2026 report.
• The narrower October decline in Virginia proves temporary. Confirmed by: a monthly Virginia HRM decline above August's 10% in CDC Gaming's November or December figures.
• Kentucky HRM growth slows and stops offsetting Virginia. Confirmed by: flat or negative year-on-year Kentucky HRM revenue in CDC Gaming's monthly figures.
• Virginia legalizes online casino gaming in 2027, adding competition for HRM venues. Confirmed by: an online casino bill passing the Virginia General Assembly in the 2027 session.
• Debt-funded capital return pushes leverage higher. Confirmed by: net bank leverage reported above 3.8x at a future quarter-end.

What it trades with

Churchill Downs trades with regional gaming and leisure stocks and with consumer discretionary spending more broadly. Its company-specific drivers are state-level: Virginia and Kentucky HRM revenue, state tax structures and local referendums. The Kentucky Derby makes the second quarter its largest, so first-half 2027 trading will also respond to Derby week ticket and wagering news.