Churchill Downs' Long-Term Value Creation: Premium Event-Driven Revenue and Strategic Asset Optimization Ahead of the 2026 Kentucky Derby

Churchill Downs Incorporated (CHDN) is poised to capitalize on its iconic status in the horse racing industry and strategic financial positioning to drive long-term value creation ahead of the 2026 Kentucky Derby. With a bullish outlook reiterated by JMP Securities and a robust pipeline of growth initiatives, the company's focus on premium event monetization and asset optimization positions it as a compelling investment opportunity.

Undervalued Valuation and Growth Catalysts

JMP Securities has maintained a “Market Outperform” rating for CHDN, assigning a $142 price target based on the company's undervalued multiples. As of September 2025, CHDN trades at just 9.4x 2027 expected EBITDA, significantly below its historical averageJMP Securities Reiterates Bullish Outlook on Churchill Downs …^[1]. This discount reflects the market's underappreciation of the company's growth catalysts, including the expansion of historical racing machines (HRMs), strategic financing decisions, and strong return on invested capital (ROIC) expectationsJMP Securities Reiterates Bullish Outlook on Churchill Downs …^[2]. Additionally, the firm's 90% equity stake in the Casino Salem project in New Hampshire—a $300 million development—further diversifies its revenue streams and underscores its long-term growth trajectoryChurchill Downs stock rating reiterated at Market Outperform by …^[3].

Premium Event-Driven Revenue Strategies

Churchill Downs has demonstrated a clear commitment to maximizing revenue from its flagship events. In Q2 2025, the company reported record net revenue of $934.4 million, driven by increased wagering, sponsorship deals, and the record-breaking all-sources handle during the 151st Kentucky DerbyChurchill Downs outlines $400M in 2025 capital projects with focus on premium Derby upgrades^[4]. CEO Bill Carstanjen highlighted the potential of premium ticketing, broadcast rights, and facility expansions to further monetize these events. For instance, the prime-time NBC broadcast of the 2026 Kentucky Oaks is expected to boost visibility and attract new audiences, directly translating to higher sponsorship and wagering revenueEven with record revenue, Churchill Downs CEO sees potential for more earnings^[5].

A $400 million investment in capital projects for the 2026 Derby underscores this strategy. These upgrades, including enhanced hospitality offerings and infrastructure improvements, aim to elevate the visitor experience while capturing incremental spending from premium guestsChurchill Downs Incorporated Reports 2025 Second Quarter Results^[6]. Such initiatives align with the company's broader goal of transforming high-profile events into multi-day revenue generators, leveraging both on-site and digital engagement.

Asset Optimization and Operational Efficiency

Beyond event monetization, Churchill Downs is prioritizing asset optimization to drive profitability. The company's strategic use of HRMs—regulated gaming devices that generate steady cash flows—has already proven effective in markets like Florida and Texas. By expanding these machines to new jurisdictions, CHDN can replicate its success while maintaining low operational costs. Additionally, disciplined capital allocation and a focus on high-ROIC projects ensure that investments are directed toward initiatives with the highest returns, further enhancing shareholder value.

Strategic Expansion into New Markets

The acquisition of Casino Salem in New Hampshire exemplifies Churchill Downs' ability to scale its model into new markets. This project, expected to open in 2026, combines horse racing, gaming, and entertainment under one roof, creating a diversified revenue base. By replicating this formula in other states, CHDN can reduce reliance on its core racing operations and insulate itself from regulatory or economic headwinds.

Conclusion

Churchill Downs' combination of undervalued fundamentals, premium event-driven revenue strategies, and strategic asset optimization positions it for sustained growth. With the 2026 Kentucky Derby serving as a catalyst, the company's ability to monetize its iconic brand and expand into new markets offers a compelling case for long-term investors. As JMP Securities' analysis suggests, CHDN's current valuation presents an attractive entry point for those seeking exposure to a business with both near-term momentum and durable competitive advantages.