The State of Maryland’s decision to acquire the Preakness Stakes and Black-Eyed Susan Stakes intellectual property, matching an $85 million price, places Churchill Downs (CHDN) in focus as investors reassess its horse racing and wagering asset mix.

At a share price of $86.32, Churchill Downs has seen momentum soften recently, with the share price return down 22.89% year to date and the 1 year total shareholder return down 13.41%. This points to cooling enthusiasm despite the Maryland IP news and the upcoming Q2 2026 results.

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With Churchill Downs shares down sharply over 1 year and trading below some published valuation estimates, the key question now is simple: is this recent pullback creating an opening, or is the market already pricing in future growth?

Most Popular Narrative: 35.9% Undervalued

Compared with the last close at $86.32, the most followed Churchill Downs narrative points to a fair value of $134.75, framing a sizeable valuation gap for investors to unpack.

Expansion and ramp-up of high-margin Historical Racing Machine (HRM) properties in Kentucky and Virginia, along with new projects in New Hampshire and potential new markets, will increase Churchill Downs' exposure to experiential gaming and drive recurring revenue and margin growth, as consumer preferences continue shifting toward destination entertainment and integrated gaming.

Curious what assumptions sit behind that fair value for Churchill Downs? The narrative focuses on measured top line growth, rising margins, and a richer earnings multiple over time. Want to see exactly how those ingredients are combined to arrive at the $134.75 figure?

Result: Fair Value of $134.75 (UNDERVALUED)

However, Churchill Downs still faces key risks, including regulatory pressure around horse racing and iGaming, as well as heavy spending on new venues that may not meet return expectations.

Next Steps

With mixed sentiment around Churchill Downs, both risk and reward are in play. It makes sense to review the data quickly and reach your own conclusion using the 4 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.