Churchill Downs To Spend Up To $50M On New Kentucky HRM Venue

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Churchill Downs (NASDAQ: CHDN) said it will spend as much as $50 million to build a new historical racing machine (HRM) establishment in Calvert City, Ky.

Churchill Downs Derby City Gaming Louisville HHR — Churchill Downs’ Derby City Gaming Downtown historical horse racing venue in Louisville. The company is opening another such venue in Calvert City, Ky. (Image: *The Courier-Journal*)

The gaming company forecast expenditures of $40 million to $50 million on the HRM facility, which is being positioned as “an extension” of Oak Grove Racing, Gaming, and Hotel.

Churchill Downs plans to open the new 23,000 square-foot facility with 250 HRMs, a sports bar and a sportsbook, and a simulcast center in early 2026,” according to a statement issued by the Kentucky-based gaming operator.

The company said the HHR facility will be its eighth in its home state. The announcement of the new property was made in conjunction with Churchill’s third-quarter earnings report.

Churchill Downs Bullish Outlook on New HRM Property

Churchill Downs operates HHR establishments in Kentucky and Virginia, and it’s optimistic regarding the long-term potential of the upcoming Calvert City venue.

“Calvert City is a great location for our eighth HRM venue in Kentucky with a population of 300,000 within a 60-minute drive and a location near the meeting of two Interstates that will allow easy access for customers from several surrounding cities in Southwestern Kentucky,” said CEO Bill Carstanjen on a conference call with analysts on Thursday. “We are confident that this will be a great addition to our portfolio of HRM assets.”

The new HHR property also represents another example of Churchill leveraging its December 2022 $250 million deal for Exacta Systems, a Florida-based provider of HHR systems and gaming machines.

“We plan to open in early 2026. HRMs and Exacta’s HRM technology are a key strategic focus over the next five to 10 years for our company. These high-growth, high-margin investments provide an excellent return on our shareholders’ capital,” added Carstanjen.

HRMs Vital Piece of Churchill Downs Growth Story

While many investors associate Churchill Downs with its namesake Kentucky racetrack and the Kentucky Derby, the gaming company also runs regional casinos and a slew of HRM properties, both of which are critical drivers of the operator’s long-term growth.

In the third quarter, Churchill’s seven HHR venues in Virginia delivered better-than-expected top-line growth, according to Stifel analyst Jeffrey Stantial, who noted that the Calvert City property and HRM expansion in Virginia aren’t yet factored into the firm’s estimates on the gaming company.

Stantial also pointed out that “sequential growth in high-margin Exacta revenues” could be a catalyst for the shares moving forward. Shares of Churchill Downs are up 3.15% year to date, though that performance has recently accelerated, as highlighted by a 5.65% gain over the past month.

Stantial rates the stock a “buy” with a $164 price target, which implies upside of almost 18% from current levels.

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