Churchill Downs Unveils $500 Million Buyback Plan

Posted on: March 12, 2025, 05:38h. 

Last updated on: March 12, 2025, 05:38h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Churchill Downs could repurchase up to $500 million of its stock
  • Replaces buyback plan announced in September 2021

Shares of Churchill Downs (NASDAQ: CHDN) traded higher in Wednesday’s after-hours session after the gaming company announced a new $500 million share repurchase program.

TwinSpires, Michigan, Churchill Downs, MGCB
The twin spires at Churchill Downs racetrack in Kentucky. The operator announced a $500 million share buyback plan today. (Image: Churchill Downs)

The owner of the iconic racetrack that hosts the Kentucky Derby said the new buyback scheme replaces one of the same amount announced in September 2021. As of today, there is $125.6 million remaining on the old buyback program.

The new share repurchase program includes and is not in addition to any unspent amount remaining under the prior authorization,” according to a press release issued by the gaming company.

Said another way, Churchill Downs is essentially adding $374.4 million to the repurchase plan announced in 2021.

Church Downs Likely to Be Pragmatic in Buying Back Shares

With the stock down 20.25% year-to-date and 29.10% below the 52-week high, Churchill Downs would likely extract some value if it were to buy back shares at current levels or if the stock continues faltering.

It’s possible the operator will purchase some of its stock over the near-term, but given the cadence of the prior buyback plan and upcoming capital expenditures, the company is likely to take a conservative approach to buying its own equity.

When it delivered fourth-quarter results last month, Churchill Downs forecast spending of up to $920 million over the next several years aimed at enhancing its eponymous racetrack in an effort to lure more patrons to the Kentucky Derby. The company estimated it could spend $350 million to $400 million on those projects this year.

“Share repurchases may be made at management’s discretion from time to time in the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time,” according to the statement.

In addition to being a dedicated buyer of its own stock, Churchill Downs pays a dividend — a payout that has steadily risen for more than a decade.

Church Downs Joins Gaming Industry Buyback Binge

Even with a 1% tax on buybacks imposed by President Biden’s Inflation Reduction Act (IRA), this form of shareholder reward has remained popular in Corporate America for multiple reasons. First, repurchase programs are seen as signs that management teams view their stocks as undervalued. Second, unlike dividends, investors pay no taxes when a company repurchases its own shares.

Those are likely among the reasons why so many gaming companies have recently announced new buyback plans or additions to previously existing repurchase programs.

Prior to today’s announcement from Churchill Downs, DraftKings (NASDAQ: DKNG), Flutter Entertainment (NYSE: FLUT), Rush Street Interactive (NYSE: RSI), and Wynn Resorts (NASDAQ: WYNN) were among the gaming companies that unveiled buyback plans in recent months.