Churchill Downs Incorporated - Riding the Winning Horse

Churchill Downs Incorporated CHDN (NASDAQ) Pitch Deck

Churchill Downs is an interesting case study of how a horse track operator could expand into the Casino business following post pandemic deregulation. The growth prospect, however, was clouded by increased competition due to continued deregulation on casino licensing. It’s interesting how Casino operators can tell investors how much they are going to generate on average per slot machine, per table, per room. The odds are set and the house always wins. I recommend all gamblers or those who considered gambling for a career to look at casino operators’ 10K, they would probably learn some disheartening facts.

At the time we were researching Churchill Downs, we noticed that it is collaborating with a Virginia Black Owned Radio station operator called Urban One in a joint bid to pass a legislation allowing a new casino to be built in Richmond, VA. And no one has noticed this legislation and the significant impact it might have on Urban One’s stock price, since transitioning from unprofitable radio operator to a part owner of casino would double or triple Urban One’s value overnight. We were able to capitalize on this market dislocation through an option straddle trade.