Like clockwork, the NFL’s big game is played in February. The NCAA Tournament tips off in March, and those who follow the “sport of kings,” that being horse racing, know that the Kentucky Derby takes place on the first Saturday of May.
Get your mint juleps ready because that’s right around the corner. The “Run for the Roses” has been held every year for 151 straight years, making it the longest-running uninterrupted sporting event in the U.S. It takes place at iconic Churchill Downs racetrack in Kentucky.
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There’s more to the Churchill Downs story than the Kentucky Derby. Image source: Getty Images.
Now let’s talk about Churchill Downs (NASDAQ: CHDN), the stock. Not surprisingly, the Kentucky Derby puts eyeballs on this sports betting stock, and this pun is very much intended, but it isn’t a one-trick pony. In fact, there’s a broader story that market participants may want to wake up to, and one that signals a pre-Derby opportunity in the stock.
Yes, the first event in the Triple Crown is a marquee event and one that Churchill Downs investors follow. Last year’s handle of $473.9 million topped the previous high set in 2024, and with Churchill Downs’ plans to expand its namesake track, it’s possible that Derby betting will smash records for years to come.
However, the fortunes of this consumer discretionary stock don’t hinge on a single event. Churchill Downs generated 2025 revenue of $2.92 billion on earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.2 billion, of which the Derby was a small part.
The operator’s big moneymakers are historical racing machines (HRMs) and regional casinos. An HRM is akin to a slot machine, but in this case, the bettor is wagering on a previously run horse race. HRMs aren’t nearly as common as slots, but they’re allowed in Kentucky and Virginia, where…
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