Chad Beynon: Thank you very much. Appreciate it.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Jordan Bender with JMP Securities.
Jordan Bender: Good morning, thanks for taking my question. I want to kind of follow on David’s question. There’s been a lot of positive talk around upcoming Derby. You’ve mentioned in the past, just the step function growth in ‘24. But as we think to ‘25, you mentioned incremental project for next year, but can you just talk to the pieces that you’re putting in place to kind of ensuring that you’re growing off of this outsized growth this year. Thank you.
Bill Carstanjen: Yes. I think that’s a really good question. I think one of the things that’s always most meaningful to me and what I’m most proud of is how our organization learns, our organization really prides itself on learning and improving. So I think when we introduced a project of the magnitude of the Paddock object, we’re going to see a bunch of things that we can do better this year, and we’re going to see a bunch of ancillary opportunities that we can pursue based on the footprint we are just establishing with the Paddock project. So I view significant projects like this one as a beginning. I think it will unlock a lot of learnings for us, and our team we’ll be hungry to find those areas where we can grow and improve move on.
So part of what comes forward in the subsequent years is that piece, learning to use what we’ve done better, but also we’ll be looking at other projects and other parts of the facilities, and we’ll be looking for other ways to monetize everything about our facilities sponsorships, TV rights, better wagering opportunities, all the different categories that go into driving the entire pie. So it’s a process of constant improvement, but the key to unlocking it is the physical facility and the energy that our guests bring to that when they interact with it.
Jordan Bender: Great. And good luck next week.
Bill Carstanjen: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Jeff Stantial with Stifel.
Jeff Stantial: Hey, great. Good morning, Bill, Marcia. Thanks for taking our question. Maybe just one quick one from us on the Kentucky HRM business. I think it’s about 5 months now that you have under your belt operating Derby City Downtown. Just curious to get your thoughts on how you think the ramp there is progressing. Anything surprising so far relative to your underwriting and operationally any challenges that kind of popped up that you’re still working through? Just any thoughts there would be great.
Bill Carstanjen: Derby City Downtown love the facility, love what our team has done there. We thought it would start relatively modestly because a big component of its business is going to be driven by tourism and downtown traffic. And opening in December and the height of winter in Louisville is not the ideal time to open. So what we’re seeing is pretty consistent ramping. And I go back to what I said in response to one of the other questions. We always underwrite the deals or the greenfields that we build to a 3-year EBITDA model. So here, this is one where we’re going to have to ramp and continuously improve and get better. So I’d say it started relatively modest. It’s not a material contributor to the Kentucky engine, the Kentucky HRM engine that we’ve established, but it’s moving in the right direction, and it’s about where we thought it would be, and let’s get some of the spring and summer months under our belts and then we can really have a much better sense of what to expect in the long-term.
Jeff Stantial: Great. Thanks very much. Good luck next week.
Bill Carstanjen: Thank you.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Joe Stauff with Susquehanna. Pardon me, Joe please check your mute button.
Joe Stauff: Yes. How about that? Still learning. Good morning, Bill. Good morning, Marcia. I just wanted to follow-up maybe on just trying to understand, again, kind of like the amount of say tailwind in the HRM margins and wanted to ask how Turfway factored in that? It seems as though you are gaining some momentum. And I was wondering if you could kind of provide an update on kind of where you see Turfway relative to targeted margins? And then just quickly on the electronic table games that you were talking about, Bill, is that more ‘25 or ‘26? And do those electronic table games count relative to the limit of machines in the various jurisdictions?
Bill Carstanjen: Thanks, Joe. Thanks for those questions. I am going to start with the last one and work backwards. So, first, when I was talking about the categories for Exacta, I should have mentioned electronic table games. I think that’s an important one. I mentioned it in my script, but that’s one we have worked really hard on. And I do feel pretty good about that. And remember, before a product like that reaches fruition, it goes through testing, it goes through the regulatory process, it goes through iterations. So – and there are also numerous products that fall under the definition of electronic table games. So, that’s one that I can just tell you that we are very engaged on. We are very focused on, and it’s coming along according to our plans.
But I don’t want to give you a time and date on when you will see that for the first time because that’s not entirely with our control. I just want to illustrate that it’s a focus of ours. And we have good expectations for the timing and the quality of what we can deliver there. Secondly, with respect to Turfway, Turfway is still ramping. It still has room to grow. It’s improving every quarter. It’s improving on all fronts. Certainly, one of the categories that can lend to its improved performance over time is the flexibility and additional product we get from Exacta, but it’s a much bigger puzzle and equation than that. So, that’s one that I think our team is making consistent quarter-to-quarter progress, and I am satisfied with that and have high expectations for continued improvement there.
But I wouldn’t describe that as anywhere close to a mature property. That’s one that’s more consistent with what we have seen over a long period of time of a slow and steady ramp to maturity.
Joe Stauff: I see. And just to clarify, the electronic table games, that would be considered – I assume it’s obvious, so I just want to confirm, it’s and HRM, therefore it would be subject to the cap in terms of the various machines that you have in each jurisdiction.
Bill Carstanjen: Yes. Kentucky doesn’t have a cap, Virginia does. The Virginia cap has 5,000 machines under the current formulation of the law. Kentucky doesn’t have the same construct. So, every jurisdiction has a slightly different construct. There are no two jurisdictions that are the same. Some have caps, some don’t. But certainly, the premise of the question I completely agree with an HRM electronic table game is exactly that. It’s an HRM machine and it will be subject to any caps that are there under the law.
Joe Stauff: Thanks a lot.
Bill Carstanjen: Sure.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Dan Politzer with Wells Fargo.
