Topline
Churchill Downs’ four-year marquee project—announced just two months ago—is already off the burner due to economic uncertainty and a surprising “hesitancy” in ticket sales for its marquee race.
Mystik Dan #3, ridden by jockey Brian J. Hernandez Jr. (R), crosses the finish line ahead of Sierra … More
Key Facts
The parent company of the Kentucky Derby racetrack is temporarily pausing a $920 million four-year expansion of the iconic horseracing venue due to “increased general economic uncertainty and risk of significant inflation” driven by President Trump’s tariffs, which “has created unanticipated and currently unquantifiable expected cost increases in most materials,” William Carstanjen, CEO of Churchill Downs Inc., told investors on an earnings call Thursday.
The project was first announced in the company’s previous quarterly financial report in February, but “a lot has changed in the world in the past nine weeks since that earnings call, including increased general economic uncertainty and risk of significant inflation,” Carstanjen told Wall Street analysts.
The Louisville-based gambling and racing company made the announcement as it released first-quarter earnings, which were overall positive with record net revenue up 9% compared to the same period in 2024.
“Derby is their number one asset, and they just don’t want to use shareholder capital at the wrong time, particularly when their stock price is where it is,” Chad Beynon, a senior analyst covering gaming, lodging and theaters for Macquarie Capital, told Forbes.
Shares of Churchill Downs cratered 16% since Thursday’s earnings announcement, and are down 33% year to date.
Key Background
On Churchill Downs’ earnings call in late February, the company announced the nearly $1 billion four-year project, which included tearing down and rebuilding the racetrack’s Skye Terrace, building new permanent infield venues for premium ticket holders and upgrading amenities for general admissions guests. But President Donald Trump’s tariffs have “created unanticipated and currently unquantifiable expected cost increases in most materials,” Carstanjen told investors. Consequently, Churchill Downs is pausing the project “to let things settle down so that we can better determine any permanent changes in the cost of this project and better evaluate any changes in the overall economic environment.” Company executives told Wall Street analysts the pause “could literally mean a quarter or it could mean several quarters,” Beynon said. “So I think they’re just being very disciplined, where this project will get done at some point.”
Big Number
$210.7 million. That was the record amount bet on the 2024 Kentucky Derby race, representing roughly two-thirds of the record $320.5 million wagered on all the races run at Churchill Downs on derby day.
Crucial Quote
“Year-over-year growth for the event ticket sales subindustry decelerated by approximately 10 percentage points between April 2nd and April 19th, suggesting that consumers are tightening their wallets when it comes to this expensive, very discretionary area—at least for the time being,” Michael Gunther, VP and head of insights at Consumer Edge, told Forbes. His firm analyzes credit and debit card data to track event ticket sales through platforms like Ticketmaster, Stubhub, Seatgeek, Axs, Front Gate, among others. “The step-down in growth after April 2nd’s larger-than-expected tariff announcement is notable, with continued economic uncertainty continuing to pressure spending.”
What We Don’t Know
Whether in an environment of reduced discretionary spending, the Derby will draw the enormous crowds it has historically. “In 2025, in my opinion, [we] took a little bit of a jolt because we didn’t have the endless pool of demand that we’ve seen in prior years,” Carstanjen told investors, noting some “hesitancy” in sales, particularly for lower-tier tickets, which he pointed out are “not inexpensive tickets, call them $1,000-plus tickets.” In a note to investors, Beynon wrote: “For the Kentucky Derby this year, [Churchill Downs] management expects roughly flat EBITDA; recall that this is comping against an impressive $30 million EBITDA increase from last year’s Kentucky Derby.”
Further Reading
What’s On The Kentucky Derby Menu? Chef Robert Lopez Breaks It Down (Forbes)
