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Churchill Downs Incorporated Reports 2022 Fourth Quarter and Full Year Results

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Churchill Downs Incorporated reported business results for the quarter and full year ended December 31, 2022.

Company Highlights

  • Record 2022 net revenue of $1,809.8 million, up 13% compared to $1,597.2 million in the prior year
  • Record 2022 net income of $439.4 million, up 76% compared to $249.1 million in the prior year
  • Record 2022 Adjusted EBITDA of $763.6 million, up 22% compared to $627.0 million in the prior year
  • We successfully ran the 148th Kentucky Derby on the first Saturday in May generating record Adjusted EBITDA
  • We completed the acquisition of substantially all the assets of Peninsula Pacific Entertainment LLC with a purchase price of $2.75 billion on November 1, 2022 (“P2E Transaction”)
  • We completed the acquisition of Chasers Poker Room in Salem, New Hampshire on September 2, 2022, which will enable the Company to expand its historical racing machine (“HRM”) strategy with table games to the New England market (“Chasers Transaction”)
  • We completed the acquisition of Ellis Park Racing & Gaming on September 26, 2022, which includes the rights to build a HRM entertainment venue in Owensboro, Kentucky (“Ellis Park Transaction”)
  • We closed the sale of the excess Calder land for $291.0 million on June 17, 2022
  • We closed the sale of our Arlington Heights, Illinois property to the Chicago Bears for $197.2 million on February 15, 2023
CONSOLIDATED RESULTS
Fourth Quarter Years Ended December 31,
(in millions, except per share data) 2022 2021 2022 2021
Net revenue $ 480.1 $ 364.8 $ 1,809.8 $ 1,597.2
Net income $ 1.0 $ 43.3 $ 439.4 $ 249.1
Diluted EPS $ 0.03 $ 1.11 $ 11.42 $ 6.35
Adjusted EBITDA(a) $ 180.7 $ 127.0 $ 763.6 $ 627.0
(a) This is a non-GAAP measure. See explanation of non-GAAP measures below.
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SEGMENT RESULTS

During the first quarter of 2022, we updated our operating segments to include the results of our United Tote business in the TwinSpires segment. Results of our United Tote business were previously included in our All Other segment. During the fourth quarter of 2022, we also updated our operating segments to reflect the geographies in which we operate. The summaries below present net revenue from external customers and intercompany revenue from each of our reportable segments.

Live and Historical Racing

Fourth Quarter Years Ended December 31,
(in millions) 2022 2021 2022 2021
Net revenue $ 180.9 $ 93.9 $ 646.4 $ 430.6
Adjusted EBITDA 61.2 30.6 287.5 175.0

Fourth Quarter 2022

  • Net revenue for the fourth quarter of 2022 increased $87.0 million from the prior year quarter primarily due to $62.4 million in revenue attributable to the Virginia properties acquired in the P2E Transaction, $6.9 million in revenue attributable to properties acquired in the Ellis Park and Chasers Transactions, and a $17.7 million increase driven primarily by continued growth at our Oak Grove property and the opening of Turfway Park in September 2022.
  • Adjusted EBITDA for the fourth quarter of 2022 increased $30.6 million from the prior year quarter primarily due to a $30.1 million increase attributable to the Virginia properties acquired in the P2E Transaction and a $0.5 million increase attributable to the Chasers Transaction. Adjusted EBITDA growth from our Oak Grove property was offset by a decrease from Turfway Park associated with its first quarter of operation and from Derby City Gaming due to disruption from construction associated with the gaming floor and hotel expansion.

Total Year 2022

  • Net revenue for 2022 increased $215.8 million primarily due to $62.4 million in revenue attributable to the Virginia properties acquired in the P2E Transaction, $8.0 million in revenue attributable to properties acquired in the Ellis Park and Chasers Transactions, $77.6 million in increased revenue at Churchill Downs Racetrack primarily due to the running of the 2022 Kentucky Derby without capacity restrictions that were in place in 2021, and a $67.8 million increase driven primarily by growth at our Oak Grove property and at Derby City Gaming as well as the opening of Turfway Park in September 2022.
  • Adjusted EBITDA for 2022 increased $112.5 million due to a $30.1 million increase attributable to the Virginia properties acquired in the P2E Transaction, a $0.7 million increase attributable to properties acquired in the Ellis Park and Chasers Transactions, a $59.1 million increase at Churchill Downs Racetrack primarily due to the running of the 2022 Kentucky Derby without capacity restrictions that were in place in 2021, and a $22.6 million increase primarily due to the continued growth at our Oak Grove property and at Derby City Gaming.

TwinSpires

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Fourth Quarter Years Ended December 31,
(in millions) 2022 2021 2022 2021
Net revenue $ 94.3 $ 101.2 $ 441.6 $ 457.8
Adjusted EBITDA 25.0 12.9 114.1 82.7

Fourth Quarter 2022

  • Net revenue for the fourth quarter of 2022 decreased $6.9 million from the prior year quarter primarily due to the decision to exit the direct online Sports and Casino business in the first quarter of 2022 and due to a decline in Horse Racing wagering.
  • Adjusted EBITDA for the fourth quarter of 2022 increased $12.1 million from the prior year quarter due to a $14.3 million increase from our Sports and Casino business primarily due to decreased marketing and promotional activities and a $2.2 million decrease attributable to lower Horse Racing net revenue.

Total Year 2022

  • Net revenue decreased $16.2 million primarily due to a decrease in pari-mutuel handle as a higher portion of our patrons returned to wagering at brick-and-mortar facilities instead of wagering online and the decision to exit the direct online Sports and Casino business in the first quarter of 2022.
  • Adjusted EBITDA for 2022 increased $31.4 million primarily due to a $40.0 million increase from our Sports and Casino business primarily due to decreased marketing and promotional activities and an $8.6 million decrease attributable to lower Horse Racing net revenue.

Gaming

Fourth Quarter Years Ended December 31,
(in millions) 2022 2021 2022 2021
Net revenue $ 212.2 $ 172.8 $ 761.8 $ 698.4
Adjusted EBITDA 112.4 99.0 421.9 411.9

Fourth Quarter 2022

  • Net revenue for the fourth quarter of 2022 increased $39.4 million from the prior year quarter primarily due to $46.5 million attributable to the New York and Iowa properties acquired in the P2E Transaction and a $7.1 million decrease from seven of our existing wholly-owned properties in five states that was partially offset by growth at our Ocean Downs property in Maryland.
  • Adjusted EBITDA for the fourth quarter of 2022 increased $13.4 million from the prior year quarter driven by a $17.9 million increase attributable to the New York and Iowa properties acquired as part of the P2E Transaction, a $1.2 million increase from our equity investments, and a $5.7 million decrease at our existing wholly-owned properties.

Total Year 2022

  • Net revenue increased $63.4 million primarily due to $46.5 million attributable to our New York and Iowa properties acquired in the P2E Transaction, $25.5 million in Maine, Florida, and Maryland as a result of certain capacity restrictions during the first half of 2021 and a $9.7 million increase in Louisiana as a result of the 2022 Jazz Festival that was not held in the prior year due to COVID-19 and shutdowns in 2021 due to Hurricane Ida that did not recur. Partially offsetting these increases was a decrease of $18.3 million primarily from our Mississippi and Pennsylvania properties due to the current economic conditions.
  • Adjusted EBITDA for 2022 increased $10.0 million driven by a $17.9 million increase in New York and Iowa from the properties acquired as part of the P2E Transaction, an $11.6 million increase primarily from our properties in Maine, Florida, and Louisiana as a result of capacity restrictions in 2021 that did not recur, and a $2.8 million increase from our equity investments. Partially offsetting these increases was a decrease of $22.3 million primarily from our Mississippi and Pennsylvania properties due to the current economic conditions.

All Other

Fourth Quarter Years Ended December 31,
(in millions) 2022 2021 2022 2021
Net revenue $ 1.1 $ 4.2 $ 3.3 $ 49.2
Adjusted EBITDA (17.9 ) (15.5 ) (59.9 ) (42.6 )

Fourth Quarter 2022

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  • Net revenue for the fourth quarter of 2022 decreased $3.1 million from the prior year quarter primarily as a result of Arlington International Racecourse (“Arlington”) ceasing racing and simulcast operations at the end of 2021.
  • Adjusted EBITDA for the fourth quarter of 2022 decreased $2.4 million from the prior year quarter due to a $3.8 million increase in Corporate compensation related expenses driven by enterprise growth and increased legal fees that was partially offset by the elimination of the $1.4 million operating loss related to Arlington.

Total Year 2022

  • Net revenue for 2022 decreased $45.9 million primarily as a result of Arlington ceasing racing and simulcast operations at the end of 2021.
  • Adjusted EBITDA for 2022 decreased $17.3 million primarily due to the elimination of the $9.7 million operating income related to Arlington as a result of ceasing racing and simulcast operations at the end of 2021 and a $7.6 million increase in Corporate compensation related expenses, legal fees, and charitable donations.
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Canada

Glitnor Group expands IBIA’s betting integrity presence in Ontario

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Glitnor Group, operating under the LCKY Group in Ontario, has joined the International Betting Integrity Association (IBIA). Glitnor Group’s luckycasino.ca brand sportsbook will feed into IBIA’s world leading betting integrity monitoring platform. The operator joins over 50 companies and 125 leading sports betting brands in IBIA and further cements the association’s position as the leading sports betting integrity monitoring body in Ontario and globally.

David Schwieler LCKY Group CEO, said: “At Glitnor Group, we’re dead serious about keeping our betting games fair and square. That’s why teaming up with IBIA is a big deal for us. We know how crucial it is to protect the spirit of sports, and we’re ready to roll up our sleeves and work closely with the IBIA to make sure sports betting stays exciting, speedy, and above all, fair.”

Khalid Ali, CEO of IBIA, said: “I am delighted to welcome Glitnor Group as IBIA’s latest member in Ontario. Glitnor and IBIA share a common goal to maintain the integrity of the sports betting marketplace and to protecting consumers and sports from match-fixing. Ensuring product integrity is paramount to our approach and we look forward to integrating Glitnor within our leading global sports betting integrity monitoring system.”

IBIA is a not-for-profit body that has no competing conflicts with the delivery of commercial services to other sectors and is run by operators for operators to protect regulated sports betting markets from match-fixing. IBIA’s global monitoring network is a highly effective anti-corruption tool, detecting and reporting suspicious activity in regulated betting markets.

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Through the IBIA global monitoring network it is possible to track transactional activities linked to individual customer accounts. IBIA members have over $300bn per annum in betting turnover (handle), accounting for approximately 50% of the global commercial regulated land-based and online sports betting sector, and in excess of 50% for online alone.

IBIA recently released a report on the Availability of Sports Betting Products which highlighted Ontario as a leading regulated gambling jurisdiction, with an expected onshore channelisation for sports betting of 92% in 2024 forecast to rise to 97% in 2028. IBIA currently represents over 60% of the private sports betting operators licensed in the province. All online sports betting operators licensed in Ontario are required to be part of a betting integrity monitoring body.

IBIA’s 2023 annual integrity report detailed 184 alerts reported in the year, which represents a decrease of 101 (or 35%) on the revised 2022 figure of 285 alerts. IBIA alerts contributed to the investigations and subsequent successful sanctioning of 21 clubs, players and officials in 2023, an increase on the 15 sanctioned in 2022.

The post Glitnor Group expands IBIA’s betting integrity presence in Ontario appeared first on European Gaming Industry News.

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Bragg Gaming Group

Bragg Gaming Announces Resignation of Chief Financial Officer

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Bragg Gaming Group Inc., a global B2B gaming technology and content provider, announced that Chief Financial Officer (CFO), Ronen Kannor, has notified Bragg’s board of directors (Board) that he will resign from his position to pursue other career opportunities, effective June 3, 2024. The Company confirms that the search for a replacement CFO has commenced.

Matevž Mazij, Chief Executive Officer and Chair of the Board, commented: “We thank Ronen for his dedication and commitment to Bragg over the past four years and for his unwavering service as a pivotal member of the leadership team.

“During his tenure as CFO, the Company has undergone huge positive transformation including being uplisted to the Toronto Stock Exchange, dual listed on the NASDAQ and successfully completing two acquisitions, all while reporting consecutive years of revenue, gross profit and adjusted EBITDA growth. We wish Ronen all the very best in his future endeavors.”

Ronen Kannor commented: “It has been an honor to be part of the Bragg team which has successfully navigated many challenges and continued to deliver consistent growth over the past four years. I thank the Board for their support throughout my time with Bragg, and I am now fully focused on ensuring a smooth handover to my successor.

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“Special thanks goes to my finance team, who work tirelessly to deliver the positive change and financial growth that the Company continues to achieve. I wish them and all of my colleagues continued success with Bragg now and in the future.”

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Canada

Rivalry Reports Preliminary Fourth Quarter and Year-End 2023 Results

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  • Betting handle of $423.2 million in FY 20231 increased 82% year-over-year, while reducing marketing spend 15%.
  • Revenue of $35.7 million in FY 2023 increased 34%.
  • Gross profit of $16.2 million in FY 2023, up 66% year-over-year.
  • FY23 sets all-time records for average handle per customer, up nearly 30% year-over-year, average revenue per customer up 38% year-over-year, and record low cost of customer acquisition, down 15% year-over-year.
  • Total player registrations eclipsed 2 million in FY23 while extending Gen Z market leadership.
  • FY24 off to a strong start as the capital raised late Q4 is being effectively deployed – delivering strong KPIs, supported by betting margin trending toward a more than 20% increase over the average of FY23.
  • To meet growing consumer demand the Company is adding greater support for cryptocurrency and exploring implementation of adjacent crypto-enabled technologies.
  • Rivalry is seeing a rise in demand to license its in-house casino games, accelerating the advancement of its B2B vertical.
  • Company re-affirms guidance, anticipates achieving profitability in H1 2024.

Rivalry Corp. (the “Company” or “Rivalry”) (TSXV: RVLY) (OTCQX: RVLCF) (FSE: 9VK), the leading sportsbook and iGaming operator for Gen Z, today announced preliminary and unaudited financial results for the three and 12-month periods ended December 31, 2023. All dollar figures are quoted in Canadian dollars.

“Rivalry exited 2023 as an increasingly diversified company – both geographically and across our product suite,” said Steven Salz, Co-Founder and CEO of Rivalry. “Last year we gained meaningful traction in new segments such as traditional sports, casino, and fantasy, which is widening our opportunity set and positioning us for sustainable growth in the medium- to long-term. We’re happy to have finished the year with all-time high customer economics, diversified revenue streams, and a reinforced competitive moat around Gen Z betting entertainment and experiences.”

“During Q1 we have been strategically deploying capital from our fourth quarter investment in areas that are driving customer acquisition and revenue – such as amplifying proven marketing strategies, releasing higher margin products, and developing proprietary betting experiences – that we expect will begin materializing in our results throughout the first half of 2024 and beyond,” added Salz.

“Our operational excellence across product and brand marketing last year are seen across positive KPI trends and continued year-over-year growth. Ultimately, we are proving that we can acquire and retain a coveted Gen Z demographic through an entertainment-led product set, culturally relevant brand, and a team unafraid of pushing past a long-standing industry status quo.”

Preliminary Full-Year 2023 Highlights2

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  • Betting handle was $423.2 million in the year ended December 31, 2023, an increase of $190.4 million or 82% from $232.8 million in 2022.
  • Revenue was $35.7 million in 2023, an increase of $9.0 million or 34% compared to $26.6 million in the previous year.
  • Gross profit was $16.2 million in 2023, an increase of $6.4 million or 66% from $9.8 million of gross profit in 2022.
  • The Casino segment was a significant driver of growth in 2023, with revenues of $6.4 million up 92% from 2022, and representing 52% of betting handle in the year.
  • The Company expanded its casino offering significantly during 2023, including the release of a new original game Cash & Dash in September, entry into the slots category in October, and the launch of its iOS mobile app in Ontario, enhancing the mobile casino experience and its accessibility.
  • Diversified revenue streams through new segments including traditional sports, which has grown by 60% since FY22, and fantasy, highlighting the elasticity of Rivalry’s brand among Gen Z and broadening TAM.
  • Total operating expenses of $38.9 million in 2023 decreased by $1.0 million year-over-year. The decrease was driven by a reduction in marketing expense, offsetting increases in general & administration and technology & content expense incurred to support the growth of the business.
  • Net loss was $24.3 million for 2023, a reduction of 22% or $6.9 million from the net loss of $31.1 million in 2022.

Fourth Quarter 2023 Highlights

  • Betting handle for the three-month period ended December 31, 2023 was $85.2 million, an increase of $1.2 million or 1.5% from $83.9 million in the fourth quarter of 2022 while marketing spend decreased by 32%.
  • Revenue was $6.5 million in the Q4 2023, representing a decrease of $3.0 million or 32% from $9.4 million of revenue in Q4 2022 due to less favorable sportsbook outcomes compared against an abnormally favorable result experienced in Q4 2022. The Company notes that revenue as a percentage of betting handle was near the average achieved throughout FY23, highlighting the abnormally favorable margin outcome in the comparable quarter, Q4 2022.
  • Gross profit was $3.0 million in Q4 2023, a decrease of $2.0 million or 40% from $5.0 million of gross profit in Q4 2022. The year-over-year decline follows the relative margin impact noted previously. Gross profit as a percentage of betting handle in Q4 2023 was equal to the average in FY23. Rivalry is also pleased to note that its ongoing efforts to stabilize and improve margin are yielding results, with Q1 2024 trending toward a more than 20% improvement over the average in FY23.
  • Net loss was $9.0 million in Q4 2023, a reduction of $3.3 million compared to a net loss of $12.3 million in Q4 2022. Net loss adjusting for accruals, other non-cash items, and one-time expenses, would have been approximately $7.0 million.
  • On November 15, 2023, Rivalry strengthened its balance sheet with the announcement of a private placement offering of $14 million principal amount senior secured convertible debentures to scale several strategic verticals across marketing, product development, and geographic expansion.
  • Released Rivalry Ultimate Fan, a free-to-play NBA fantasy app, to acquire new users and engage existing customers within the product suite.
  • First-party game ‘Cash & Dash’ released in September demonstrated next generation appeal as it became the fifth most-played casino game on our platform and among the top ten highest-grossing by revenue with momentum carrying into Q1, creating downstream licensing opportunities for Rivalry’s IP.

Outlook

“The year ahead is rife with new, innovative product releases arriving in Q2 and continuing throughout 2024,” Salz added. “In addition to the strength of our core roadmap, we are in the process of unlocking what we believe to be two of the most material developments to our business model since launching Rivalry in 2018. The first is a B2B vertical to license our in-house developed games, and the second is exploration and development within the crypto ecosystem – each representing an impactful growth catalyst on our path to profitability this year.”

“I have never had more confidence in our product roadmap and what Rivalry is building this year. Apart from new products, original games, and proprietary features, we have been working to dial-up the overall feel and entertainment value of our core product to provide a tech-savvy, next generation customer with a tailored experience that is well-differentiated within the larger sports betting marketplace.”

Investor Conference Call

Management will host a conference call at 10:00 a.m. EDT on Friday, April 5, 2024 to discuss the Company’s preliminary unaudited year-end and fourth quarter 2023 financial results.

Dial-in: 800-717-1738 (toll free) or (+1) 289-514-5100 (local or international calls)
Webcast:         A live webcast can be accessed from the Events section of the Company’s website
A replay of the webcast will be archived on the Company’s website for one year.

Rivalry expects to file its audited financial statements and management discussion and analysis for the period ended December 31, 2023 by the end of April 2024. The documents will be available on SEDAR+ at sedarplus.ca, and on the Company’s website.

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Related Party Transaction

On April 17, 2022 the Company entered into a secured demand loan (the “Loan”) with Kevin Wimer, the Chief Operating Officer and a Director of the Company. Pursuant to the terms of the Loan, the Company loaned Mr. Wimer US$385,000 which amount bears interest at 3.2% per annum and was repayable on demand by the Company and in any event by April 17, 2024 (the “Maturity Date”). The Loan was entered into to assist Mr. Wimer with the funding of certain tax obligations and is secured by a pledge of Mr. Wimer’s subordinate voting shares of the Company. The Company announces today that it has entered into an amendment to the Loan (the “Loan Amendment”) to extend the Maturity Date to April 17, 2026. The Loan Amendment was approved by the non-interested directors of the Company.

Mr. Wimer is a “related party” of the Company within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). As a result, the Loan Amendment is considered to be a “related party transaction” as such term is defined by MI 61-101. The Company is relying on an exemption from the minority shareholder approval requirement set out in MI 61-101 as the fair market value of the transaction does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Company did not file a material change report more than 21 days before entering into the closing of the Loan Amendment as the details of the Loan Amendment were not settled until shortly prior to the entering into thereof.

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