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Segment Information | 6 Months Ended
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Jun. 30, 2020
Segment Reporting [Abstract] |
Segment Information | SEGMENT INFORMATION We manage our operations through three reportable segments: •Churchill Downs The Churchill Downs segment includes live and historical pari-mutuel racing related revenue and expenses at Churchill Downs Racetrack and Derby City Gaming. Churchill Downs Racetrack is the home of The Kentucky Derby and conducts live racing during the year. Derby City Gaming is a historical racing machine facility that operates under the Churchill Downs pari-mutuel racing license at its ancillary training facility in Louisville, Kentucky. Churchill Downs Racetrack and Derby City Gaming earn commissions primarily from pari-mutuel wagering on live races at Churchill Downs and on historical races at Derby City Gaming; simulcast fees earned from other wagering sites; admissions, personal seat licenses, sponsorships, television rights, and other miscellaneous services (collectively "racing event-related services"), as well as food and beverage services. •Online Wagering The Online Wagering segment includes the revenue and expenses for TwinSpires and the online sports betting and iGaming business. TwinSpires operates our online horse racing wagering business on TwinSpires.com, BetAmerica.com and other Company platforms; facilitates high dollar wagering by international customers (Velocity); and provides the platform for horse racing statistical data generated by our information business that provides data and processing services to the equine industry (Brisnet). Our sports betting and iGaming business includes the online BetAmerica sports betting and casino gaming operations. •Gaming The Gaming segment includes revenue and expenses for the casino properties and associated racetrack or jai alai facilities which support the casino license. The Gaming segment has approximately 11,000 slot machines and VLTs and 200 table games located in eight states. The Gaming segment revenue and Adjusted EBITDA includes the following properties: ◦Calder ◦Fair Grounds and VSI ◦Harlow’s ◦Lady Luck Nemacolin management agreement ◦Ocean Downs ◦Oxford ◦Presque Isle ◦Riverwalk The Gaming segment Adjusted EBITDA also includes the Adjusted EBITDA related to the Company’s equity investments in the following: ◦61.3% equity investment in Midwest Gaming, the parent company of Rivers Des Plaines ◦50% equity investment in MVG The Gaming segment generates revenue and expenses from slot machines, table games, VLTs, video poker, retail sports betting, ancillary food and beverage services, hotel services, commission on pari-mutuel wagering, racing event-related services, and / or other miscellaneous operations. We have aggregated the following businesses as well as certain corporate operations, and other immaterial joint ventures in "All Other" to reconcile to consolidated results: •Arlington •United Tote •Oak Grove Racing and Gaming •Turfway Park •Corporate We conduct our business through these reportable segments and report net revenue and operating expense associated with these reportable segments in the accompanying condensed consolidated statements of comprehensive income. 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. Adjusted EBITDA excludes: •Transaction expense, net which includes: ◦Acquisition and disposition related charges; ◦Calder racing exit costs; and ◦Other transaction expense, including legal, accounting, and other deal-related expense; •Stock-based compensation expense; •Midwest Gaming's impact on our investments in unconsolidated affiliates from: ◦The impact of changes in fair value of interest rate swaps; and ◦Recapitalization and transaction costs; •Asset impairments; •Gain on Ocean Downs/Saratoga Transaction; •Legal reserves; •Pre-opening expense; and •Other charges, recoveries and expenses 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 and intercompany revenue from each of our segments, net revenue from external customers for each group of similar services, Adjusted EBITDA by segment, and a reconciliation of comprehensive (loss) income to Adjusted EBITDA:
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
(in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Net revenue from external customers: |  |  |  |  |  |  |
Churchill Downs: |  |  |  |  |  |  |
Churchill Downs Racetrack | $ | 15.6 |  |  | $ | 161.0 |  |  | $ | 17.5 |  |  | $ | 163.3 |
Derby City Gaming | 7.7 |  |  | 21.2 |  |  | 29.3 |  |  | 39.9 |
Total Churchill Downs | 23.3 |  |  | 182.2 |  |  | 46.8 |  |  | 203.2 |
Online Wagering: |  |  |  |  |  |  |
TwinSpires | 119.9 |  |  | 95.6 |  |  | 186.5 |  |  | 158.6 |
Online Sports Betting and iGaming | 1.3 |  |  | — |  |  | 2.0 |  |  | 0.1 |
Total Online Wagering | 121.2 |  |  | 95.6 |  |  | 188.5 |  |  | 158.7 |
Gaming: |  |  |  |  |  |  |
Fair Grounds and VSI | 11.1 |  |  | 30.9 |  |  | 42.7 |  |  | 68.4 |
Presque Isle | 2.0 |  |  | 37.1 |  |  | 29.6 |  |  | 66.8 |
Calder | 5.7 |  |  | 25.6 |  |  | 27.5 |  |  | 51.0 |
Oxford | 0.1 |  |  | 26.3 |  |  | 20.2 |  |  | 50.2 |
Ocean Downs | 3.1 |  |  | 21.9 |  |  | 17.9 |  |  | 40.3 |
Riverwalk | 7.4 |  |  | 14.2 |  |  | 20.1 |  |  | 30.5 |
Harlow’s | 5.6 |  |  | 13.3 |  |  | 17.3 |  |  | 28.6 |
Lady Luck Nemacolin | 2.3 |  |  | 8.3 |  |  | 9.6 |  |  | 10.6 |
Total Gaming | 37.3 |  |  | 177.6 |  |  | 184.9 |  |  | 346.4 |
All Other | 3.3 |  |  | 22.0 |  |  | 17.8 |  |  | 34.5 |
Net revenue from external customers | $ | 185.1 |  |  | $ | 477.4 |  |  | $ | 438.0 |  |  | $ | 742.8 |
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
(in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Intercompany net revenue: |  |  |  |  |  |  |
Churchill Downs | $ | 6.9 |  |  | $ | 10.9 |  |  | $ | 7.2 |  |  | $ | 11.3 |
Online Wagering | 0.4 |  |  | 0.4 |  |  | 0.8 |  |  | 0.7 |
Gaming | — |  |  | 0.2 |  |  | 1.5 |  |  | 1.5 |
All Other | 2.9 |  |  | 3.4 |  |  | 5.9 |  |  | 5.6 |
Eliminations | (10.2) |  |  | (14.9) |  |  | (15.4) |  |  | (19.1) |
Intercompany net revenue | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
| Three Months Ended June 30, 2020 |  |  |  |  |  |  |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming |  | Total Segments |  | All Other |  | Total
Net revenue from external customers |  |  |  |  |  |  |  |  |  |  |
Pari-mutuel: |  |  |  |  |  |  |  |  |  |  |
Live and simulcast racing | $ | 14.9 |  |  | $ | 115.6 |  |  | $ | 1.7 |  |  | $ | 132.2 |  |  | $ | 0.8 |  |  | $ | 133.0 |
Historical racing(a) | 7.3 |  |  | — |  |  | — |  |  | 7.3 |  |  | — |  |  | 7.3 |
Racing event-related services | 0.5 |  |  | — |  |  | 0.7 |  |  | 1.2 |  |  | — |  |  | 1.2 |
Gaming(a) | — |  |  | 1.5 |  |  | 33.3 |  |  | 34.8 |  |  | — |  |  | 34.8 |
Other(a) | 0.6 |  |  | 4.1 |  |  | 1.6 |  |  | 6.3 |  |  | 2.5 |  |  | 8.8 |
Total | $ | 23.3 |  |  | $ | 121.2 |  |  | $ | 37.3 |  |  | $ | 181.8 |  |  | $ | 3.3 |  |  | $ | 185.1 |
| Three Months Ended June 30, 2019 |  |  |  |  |  |  |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming |  | Total Segments |  | All Other |  | Total
Net revenue from external customers |  |  |  |  |  |  |  |  |  |  |
Pari-mutuel: |  |  |  |  |  |  |  |  |  |  |
Live and simulcast racing | $ | 41.3 |  |  | $ | 91.1 |  |  | $ | 5.5 |  |  | $ | 137.9 |  |  | $ | 12.2 |  |  | $ | 150.1 |
Historical racing(a) | 19.7 |  |  | — |  |  | — |  |  | 19.7 |  |  | — |  |  | 19.7 |
Racing event-related services | 113.4 |  |  | — |  |  | 0.8 |  |  | 114.2 |  |  | 2.2 |  |  | 116.4 |
Gaming(a) | — |  |  | — |  |  | 150.2 |  |  | 150.2 |  |  | — |  |  | 150.2 |
Other(a) | 7.8 |  |  | 4.5 |  |  | 21.1 |  |  | 33.4 |  |  | 7.6 |  |  | 41.0 |
Total | $ | 182.2 |  |  | $ | 95.6 |  |  | $ | 177.6 |  |  | $ | 455.4 |  |  | $ | 22.0 |  |  | $ | 477.4 |
(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to gamble or through the redemption of our customers' loyalty points are recorded at their estimated standalone selling prices in Other revenue with a corresponding offset recorded as a reduction in historical pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $0.8 million for the three months ended June 30, 2020 and $7.9 million for the three months ended June 30, 2019.
| Six Months Ended June 30, 2020 |  |  |  |  |  |  |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming |  | Total Segments |  | All Other |  | Total
Net revenue from external customers |  |  |  |  |  |  |  |  |  |  |
Pari-mutuel: |  |  |  |  |  |  |  |  |  |  |
Live and simulcast racing | $ | 15.9 |  |  | $ | 179.5 |  |  | $ | 11.6 |  |  | $ | 207.0 |  |  | $ | 10.7 |  |  | $ | 217.7 |
Historical racing(b) | 27.7 |  |  | — |  |  | — |  |  | 27.7 |  |  | — |  |  | 27.7 |
Racing event-related services | 0.5 |  |  | — |  |  | 2.0 |  |  | 2.5 |  |  | 0.1 |  |  | 2.6 |
Gaming(b) | — |  |  | 2.2 |  |  | 154.9 |  |  | 157.1 |  |  | — |  |  | 157.1 |
Other(b) | 2.7 |  |  | 6.8 |  |  | 16.4 |  |  | 25.9 |  |  | 7.0 |  |  | 32.9 |
Total | $ | 46.8 |  |  | $ | 188.5 |  |  | $ | 184.9 |  |  | $ | 420.2 |  |  | $ | 17.8 |  |  | $ | 438.0 |
| Six Months Ended June 30, 2019 |  |  |  |  |  |  |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming |  | Total Segments |  | All Other |  | Total
Net revenue from external customers |  |  |  |  |  |  |  |  |  |  |
Pari-mutuel: |  |  |  |  |  |  |  |  |  |  |
Live and simulcast racing | $ | 42.7 |  |  | $ | 151.6 |  |  | $ | 17.7 |  |  | $ | 212.0 |  |  | $ | 19.7 |  |  | $ | 231.7 |
Historical racing(b) | 37.4 |  |  | — |  |  | — |  |  | 37.4 |  |  | — |  |  | 37.4 |
Racing event-related services | 113.4 |  |  | — |  |  | 2.3 |  |  | 115.7 |  |  | 2.2 |  |  | 117.9 |
Gaming(b) | — |  |  | 0.1 |  |  | 289.2 |  |  | 289.3 |  |  | — |  |  | 289.3 |
Other(b) | 9.7 |  |  | 7.0 |  |  | 37.2 |  |  | 53.9 |  |  | 12.6 |  |  | 66.5 |
Total | $ | 203.2 |  |  | $ | 158.7 |  |  | $ | 346.4 |  |  | $ | 708.3 |  |  | $ | 34.5 |  |  | $ | 742.8 |
(b) Food and beverage, hotel, and other services furnished to customers for free as an inducement to gamble or through the redemption of our customers' loyalty points are recorded at their estimated standalone selling prices in Other revenue with a corresponding offset recorded as a reduction in historical pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $8.4 million for the six months ended June 30, 2020 and $15.5 million for the six months ended June 30, 2019. Adjusted EBITDA by segment is comprised of the following:
| Three Months Ended June 30, 2020 |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming
Net revenue | $ | 30.2 |  |  | $ | 121.6 |  |  | $ | 37.3 |
Taxes and purses | (13.9) |  |  | (6.6) |  |  | (14.4) |
Marketing and advertising | (0.3) |  |  | (2.9) |  |  | (0.4) |
Salaries and benefits | (4.9) |  |  | (3.0) |  |  | (9.0) |
Content expense | (0.1) |  |  | (59.7) |  |  | (0.4) |
Selling, general and administrative expense | (1.2) |  |  | (1.7) |  |  | (3.9) |
Other operating expense | (5.3) |  |  | (9.0) |  |  | (11.1) |
Other income | — |  |  | 0.1 |  |  | (0.1) |
Adjusted EBITDA | $ | 4.5 |  |  | $ | 38.8 |  |  | $ | (2.0) |
| Three Months Ended June 30, 2019 |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming
Net revenue | $ | 193.1 |  |  | $ | 96.0 |  |  | $ | 177.8 |
Taxes and purses | (35.7) |  |  | (4.3) |  |  | (68.5) |
Marketing and advertising | (3.6) |  |  | (4.5) |  |  | (5.1) |
Salaries and benefits | (12.5) |  |  | (2.7) |  |  | (25.4) |
Content expense | (0.8) |  |  | (51.8) |  |  | (1.7) |
Selling, general and administrative expense | (2.0) |  |  | (1.9) |  |  | (6.9) |
Other operating expense | (16.6) |  |  | (8.6) |  |  | (21.8) |
Other income | — |  |  | — |  |  | 27.7 |
Adjusted EBITDA | $ | 121.9 |  |  | $ | 22.2 |  |  | $ | 76.1 |
| Six Months Ended June 30, 2020 |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming
Net revenue | $ | 54.0 |  |  | $ | 189.3 |  |  | $ | 186.4 |
Taxes & purses | (21.0) |  |  | (10.5) |  |  | (73.5) |
Marketing & advertising | (1.4) |  |  | (6.4) |  |  | (5.7) |
Salaries & benefits | (11.1) |  |  | (6.5) |  |  | (38.5) |
Content expense | (0.5) |  |  | (92.9) |  |  | (1.6) |
SG&A expense | (2.7) |  |  | (3.1) |  |  | (10.6) |
Other operating expense | (10.9) |  |  | (16.2) |  |  | (30.6) |
Other income | — |  |  | 0.1 |  |  | 21.1 |
Adjusted EBITDA | $ | 6.4 |  |  | $ | 53.8 |  |  | $ | 47.0 |
| Six Months Ended June 30, 2019 |  |  |  |
(in millions) | Churchill Downs |  | Online Wagering |  | Gaming
Net revenue | $ | 214.5 |  |  | $ | 159.4 |  |  | $ | 347.9 |
Taxes & purses | (41.9) |  |  | (7.6) |  |  | (133.5) |
Marketing & advertising | (4.7) |  |  | (5.5) |  |  | (10.2) |
Salaries & benefits | (17.7) |  |  | (5.2) |  |  | (49.9) |
Content expense | (1.3) |  |  | (83.9) |  |  | (2.9) |
SG&A expense | (3.7) |  |  | (3.7) |  |  | (13.3) |
Other operating expense | (21.9) |  |  | (14.4) |  |  | (40.8) |
Other income | — |  |  | — |  |  | 43.6 |
Adjusted EBITDA | $ | 123.3 |  |  | $ | 39.1 |  |  | $ | 140.9 |
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
(in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Reconciliation of Comprehensive (Loss) Income to Adjusted EBITDA: |  |  |  |  |  |  |
Net (loss) income and comprehensive (loss) income attributable to CDI | $ | (118.8) |  |  | $ | 107.1 |  |  | $ | (142.2) |  |  | $ | 118.7 |
Net loss attributable to noncontrolling interest | — |  |  | — |  |  | 0.1 |  |  | — |
Net (loss) income before noncontrolling interest | (118.8) |  |  | 107.1 |  |  | (142.3) |  |  | 118.7 |
Loss from discontinued operations, net of tax | 95.2 |  |  | 1.2 |  |  | 96.1 |  |  | 1.5 |
(Loss) income from continuing operations, net of tax | (23.6) |  |  | 108.3 |  |  | (46.2) |  |  | 120.2 |
Additions: |  |  |  |  |  |  |
Depreciation and amortization | 22.1 |  |  | 21.5 |  |  | 44.1 |  |  | 42.3 |
Interest expense | 20.3 |  |  | 19.4 |  |  | 39.6 |  |  | 33.1 |
Income tax (benefit) provision | (7.9) |  |  | 38.6 |  |  | (19.5) |  |  | 45.1 |
EBITDA | $ | 10.9 |  |  | $ | 187.8 |  |  | $ | 18.0 |  |  | $ | 240.7 |
Adjustments to EBITDA: |  |  |  |  |  |  |
Selling, general and administrative: |  |  |  |  |  |  |
Stock-based compensation expense | $ | 6.1 |  |  | $ | 7.4 |  |  | $ | 10.4 |  |  | $ | 12.1 |
Other charges | (0.1) |  |  | — |  |  | (0.1) |  |  | 0.5 |
Pre-opening expense and other expense | 1.9 |  |  | 0.9 |  |  | 3.6 |  |  | 2.2 |
Impairment of intangible assets | — |  |  | — |  |  | 17.5 |  |  | — |
Transaction expense, net | 0.2 |  |  | 0.6 |  |  | 0.5 |  |  | 4.1 |
Other income, expense: |  |  |  |  |  |  |
Interest, depreciation and amortization expense related to equity investments | 9.8 |  |  | 9.7 |  |  | 19.3 |  |  | 13.2 |
Changes in fair value of Midwest Gaming's interest rate swaps | 1.3 |  |  | 7.9 |  |  | 16.2 |  |  | 12.2 |
Midwest Gaming's recapitalization and transactions costs | — |  |  | 0.8 |  |  | — |  |  | 4.7 |
Other | — |  |  | (0.1) |  |  | — |  |  | (0.1) |
Total adjustments to EBITDA | 19.2 |  |  | 27.2 |  |  | 67.4 |  |  | 48.9 |
Adjusted EBITDA | $ | 30.1 |  |  | $ | 215.0 |  |  | $ | 85.4 |  |  | $ | 289.6 |
Adjusted EBITDA by segment: |  |  |  |  |  |  |
Churchill Downs | $ | 4.5 |  |  | $ | 121.9 |  |  | $ | 6.4 |  |  | $ | 123.3 |
Online Wagering | 38.8 |  |  | 22.2 |  |  | 53.8 |  |  | 39.1 |
Gaming | (2.0) |  |  | 76.1 |  |  | 47.0 |  |  | 140.9 |
Total segment Adjusted EBITDA | 41.3 |  |  | 220.2 |  |  | 107.2 |  |  | 303.3 |
All Other | $ | (11.2) |  |  | $ | (5.2) |  |  | $ | (21.8) |  |  | $ | (13.7) |
Total Adjusted EBITDA | $ | 30.1 |  |  | $ | 215.0 |  |  | $ | 85.4 |  |  | $ | 289.6 |
The table below presents information about equity in (loss) income of unconsolidated investments included in our reported segments:
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
(in millions) | 2020 |  | 2019 |  | 2020 |  | 2019
Gaming | $ | (11.1) |  |  | $ | 9.5 |  |  | $ | (14.4) |  |  | $ | 13.6 |
The table below presents total asset information for each of our segments:
(in millions) | June 30, 2020 |  | December 31, 2019
Total assets: |  |  |
Churchill Downs | $ | 395.2 |  |  | $ | 370.3 |
Online Wagering | 250.1 |  |  | 241.5 |
Gaming | 945.5 |  |  | 1,030.1 |
Total segment assets | 1,590.8 |  |  | 1,641.9 |
All Other | 1,625.2 |  |  | 909.1 |
Total assets | $ | 3,216.0 |  |  | $ | 2,551.0 |
The table below presents total capital expenditures for each of our segments:
| Six Months Ended June 30, |  |
(in millions) | 2020 |  | 2019
Capital expenditures: |  |  |
Churchill Downs | $ | 28.2 |  |  | $ | 21.9 |
Online Wagering | 6.1 |  |  | 4.9 |
Gaming | 4.5 |  |  | 28.2 |
Total segment capital expenditures | 38.8 |  |  | 55.0 |
All Other | 92.5 |  |  | 3.8 |
Total capital expenditures | $ | 131.3 |  |  | $ | 58.8 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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