What the changes say
- Churchill Downs added comprehensive risk disclosures covering machine supply costs, vendor tariffs, catastrophic technology failures, and real estate environmental liabilities.
What changed since the prior 10-K
New
- NewStrategic Risks
The prices of new machines may escalate, and manufacturers could refuse to sell us machines featuring the most popular games, instead requiring participating lease arrangements to acquire the machines. Such agreements may be substantially more expensive over the long term than the cost of purchasing a new machine
Machine manufacturers may force us into expensive lease arrangements rather than direct purchases for popular gaming machines.
- NewStrategic Risks
We rely on vendors that may use components produced in foreign countries. Restrictions on international trade, such as tariffs and other controls on imports or exports, could impact the pricing and availability of slot and HRM machines
International tariffs on components could increase slot machine prices, and failing to renew agreements with horsemen groups could halt live racing.
- NewOperational Risks
Catastrophic events, system failures, errors, defects, or disruptions with respect to our technology or technology services could cause a significant and continued disruption to our operations
Cybersecurity incidents, weather events, or earthquakes could disrupt our technology systems and cause significant operational and financial losses.
- NewOperational Risks
We pursue acquisitions to grow our business, and we pursue divestitures based on our long-term strategy
We face integration challenges, debt burdens, and management strain when pursuing acquisitions or development projects.
- NewOperational Risks
geographic areas, may require that we increase our managerial resources. The process of integrating new operations may also interrupt the activities of those businesses, which could have a material adverse impact on our business
Acquired businesses may carry undisclosed liabilities or fail to meet our financial expectations and regulatory requirements.
- NewOperational Risks
The acquisition or divestiture of businesses may also be delayed by external factors beyond our control including federal, state, and local issues
External regulatory issues can delay acquisitions or divestitures, and restructuring costs may prevent us from realizing intended benefits.
- NewOperational Risks
Ownership and development of our owned and leased real estate is subject to risk, including risks related to environmental liabilities
We face extensive real estate ownership risks, including high maintenance expenditures and environmental cleanup liabilities for hazardous materials.
- NewOperational Risks
may be subject to fines and higher transaction fees or possibly lose our ability to accept credit or debit cards, or other forms of payment from customers which could have a material adverse impact on our business
Customers seeking chargebacks for online gaming losses could result in higher transaction fees or loss of credit card processing abilities.
- NewFinancial Risks
If an event of default requires us to repay borrowings before their due date, we may be forced to refinance these borrowings on less favorable terms or may be unable to refinance these borrowing. As a result, our results of operations and financial condition could be adversely affected
If lenders accelerate our debt repayments due to a default, our pledged assets may be insufficient to cover our indebtedness.
Dropped
- DroppedOperational Risks
penalties. If we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs
- DroppedOperational Risks
We pursue acquisitions, divestitures, development of new venues, and expansion of existing facilities to grow our business
- DroppedOperational Risks
We may experience difficulty in integrating recent or future acquisitions into our operations
Reworded
- 81% rewrittenStrategic Risks
advancements, such as using artificial intelligence and machine learning, to pursue new products, services and approaches more quickly, successfully, and effectively than the Company
Added artificial intelligence and machine learning to the discussion of technological advancements and competitor product development.
Was: especially those with greater financial resources. The Company's competitors may adopt new technologies and technological advancements, such as using artificial intelligence and machine learning, to pursue new products, services and approaches more quickly, successfully, and effectively than the Company
- 59% rewrittenStrategic Risks
Our Company faces significant competition, and we expect competition levels to increase
Expanded online competition details to explicitly include i-lotteries and prediction markets alongside iGaming and sports betting.
- 44% rewritten
Lower consumer confidence or reductions in consumers’ discretionary spending could result in fewer patrons spending money at our racetracks, our online wagering sites and gaming and wagering facilities, and reduced consumer spending overall
Added specific risks regarding seasonality and unfavorable weather conditions such as extreme temperatures, storms, and hurricanes reducing wagering.
- 23% rewrittenFinancial Risks
Our debt facilities contain restrictions that limit our flexibility in operating our business
Minor wording adjustment regarding limitations on how the company conducts its business under debt covenants.
All 21 risk factors
Headings as the filing states them, in filing order.
Other
- 01Lower consumer confidence or reductions in consumers’ discretionary spending could result in fewer patrons spending money at our racetracks, our online wagering sites and gaming and wagering facilities, and reduced consumer spending overall44% rewritten
Strategic Risks
- 02Our Company faces significant competition, and we expect competition levels to increase59% rewritten
- 03We pursue certain license opportunities, development projects, and other strategic business opportunities through equity investments, joint ventures, license arrangements, and other alliances with third parties
- 04We may not be able to respond to rapid technological changes in a timely manner, which may cause customer dissatisfaction
- 05advancements, such as using artificial intelligence and machine learning, to pursue new products, services and approaches more quickly, successfully, and effectively than the Company81% rewritten
- 06The prices of new machines may escalate, and manufacturers could refuse to sell us machines featuring the most popular games, instead requiring participating lease arrangements to acquire the machines. Such agreements may be substantially more expensive over the long term than the cost of purchasing a new machineNew
- 07We rely on vendors that may use components produced in foreign countries. Restrictions on international trade, such as tariffs and other controls on imports or exports, could impact the pricing and availability of slot and HRM machinesNew
Operational Risks
- 08Catastrophic events, system failures, errors, defects, or disruptions with respect to our technology or technology services could cause a significant and continued disruption to our operationsNew
- 09We pursue acquisitions to grow our business, and we pursue divestitures based on our long-term strategyNew
- 10geographic areas, may require that we increase our managerial resources. The process of integrating new operations may also interrupt the activities of those businesses, which could have a material adverse impact on our businessNew
- 11The acquisition or divestiture of businesses may also be delayed by external factors beyond our control including federal, state, and local issuesNew
- 12Ownership and development of our owned and leased real estate is subject to risk, including risks related to environmental liabilitiesNew
- 13Horse racing is an inherently dangerous sport, and our racetracks are subject to personal injury litigation
- 14may be subject to fines and higher transaction fees or possibly lose our ability to accept credit or debit cards, or other forms of payment from customers which could have a material adverse impact on our businessNew
- 15Work stoppages and other labor problems could negatively impact our properties and limit our operational flexibility
Legal and Regulatory Risks
- 16We face risks related to pending or future legal proceedings and other actions
- 17Our operations are highly regulated and changes in the regulatory environment could adversely affect our business
Financial Risks
- 18Our debt facilities contain restrictions that limit our flexibility in operating our business23% rewritten
- 19If an event of default requires us to repay borrowings before their due date, we may be forced to refinance these borrowings on less favorable terms or may be unable to refinance these borrowing. As a result, our results of operations and financial condition could be adversely affectedNew
- 20While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, interest rate increases, disruption in the credit markets, or changes to our credit ratings could negatively impact the availability or cost of funding
- 21Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or significantly increase our cost of capital
Other Churchill Downs 10-Ks
- FY2024 10-K risk factors15 risks
Company faces intense competition across physical, online, and mobile gaming and wagering platforms. Operations depend heavily on continuous technological advancements and software advantages. Heavy regulation, unionized labor, and debt covenants restrict operational flexibility.
Filed Feb 20, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.