Dan Politzer: Hey. Good morning everyone and thank you for taking my question. Bill, Marcia, I wanted to ask about the regulatory environment. I mean there has been a lot of news flow, particularly in Virginia, as it relates to the skill-based games and some news flow on the competitive environment as far as Petersburg. So, maybe I know this is a unique form to comment, but to the extent that you can, any way to think about broad strokes, how you see this shaping up over the next kind of year or maybe even longer term into the future?
Bill Carstanjen: We expect an additional Class III license to happen in Petersburg. We have expected that for a while, and all our plans really are constructed expecting that, so no issue there. That’s expected, and that’s part of the state’s two-pronged approach with HRMs and then also traditional Class III – limited Class III gaming license. With respect to other things that can happen in a jurisdiction, including Virginia, we roll with those punches. We participate in the regulatory and legislative process. We feel really comfortable with the business we have in Virginia, and we will look at and address any regulatory or legislative opportunities that we see or any risks that we see. And certainly across the different jurisdictions that we participate in, it’s fairly common to see legislation you like or don’t like in any given session, and it’s just part of the construct of the modern gaming company to evaluate those and participate rigorously in the legislative and political process to best shape your opportunities as a company to the extent that you best can.
Dan Politzer: Understood. Thanks so much.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Daniel Guglielmo with Capital One Securities.
Daniel Guglielmo: Hi everyone. Thank you for taking my question. The B2B deals with DraftKings and FanDuel have been in full affect for over a year now. Can you just talk about those relationships and how they have gone compared to your expectations? And are they doing anything different for this year’s Derby versus last year?
Bill Carstanjen: Yes. Thanks Dan. Good question. The relationships have gone very well. Our – ability of our teams to work together and make progress together has really been very satisfying. I think it’s fair to say that the marketing around recruiting players, whether it be for – when it’s for horse racing, whether it be for a product like TwinSpires, that’s a single product asset just focuses on horse racing or if it with the case to DraftKings or FanDuel, a multiproduct platform. When it comes to horse racing, it’s all about the Derby. That’s the opportunity to really reach deep into a broader customer base to recruit customers and interest them in horse racing. So, I think as we approach 2024, we have already seen some of the activities of not just DraftKings and FanDuel, but others around horse racing and around the Derby.
And we encourage that, and I think a real check-in point on the progress really will come after we get a chance to reflect on the results we see for this year’s Derby.
Daniel Guglielmo: Great. Thank you.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Shaun Kelley with Bank of America.
Shaun Kelley: Hi. Good morning everyone. Just two relatively small ones for me going back to Exacta. First, I was just hoping you could give us a little bit more of a sense of some of the optimization initiatives in Kentucky. You talked about converting roughly 10% of the gaming floors there, and that that’s going well. How are we seeing that change manifest itself? Is that revenue boost? Is that margin? Is a little bit of both? And then kind of the second part, and this is a very high level one. But Bill, in your prepared remarks, I felt like maybe just tone wise, I might be reading way too much into it, but it sounded like maybe your experience with B2B here has been successful or could be a little bit of a proving ground for something bigger on the strategic side. So, I kind of wanted to see if I was on to something there, and you could elaborate at all there?
Bill Carstanjen: Well, with respect – sure. Thanks Shaun. So, with respect to the first question, in Kentucky, to the extent we can modify and introduce new content, it improves our top line. So, that’s part of our focus there. And I had made a remark in my prepared remarks about how there is a bunch of good things going on when you talk about HRMs. There are a bunch of good factors. And if you try to slice and dice those factors and say, well, everything is attributable to this factor or that factor, it really becomes somewhat artificial. So, of the things that are going on with respect to HRMs that are positive, we are learning how to optimize Exacta products and competitor Ainsworth product on our floor. We are learning how to introduce more products and then optimize with respect to that products.
We are also generally seeing better acceptance of and familiarity with HRM products by our gaming customers. It’s, I think becoming increasingly accepted as a very competitive gaming product. And we are getting better at marketing it, and we are getting better at operations. So, there are a number of factors in general those to name, but a few that are contributing to the general ramp-up that you see. And while we spent a lot of time at moments in our companies trying to slice and dice and figure out why this do taste so good. The truth is there are a number of good ingredients that are contributing to a very good soup for us at this point. So, it’s more than one thing. The second question with respect to B2B for Exacta, and just my experience over my career in business, when you have a company that is both a B2B company and a B2C company, those can present cultural challenges.
So, for us, we really focus on it with TwinSpires and Exacta, providing great service to us, to Churchill Downs in the businesses that we vertically integrated, but also meeting the expectations of third-party customers out there. And I am thrilled with how Exacta so far has been accepted and how the team is performing. And I do think that when it comes to HRMs and the central determinant technology, there are lots of opportunities that we won’t be able to always participate in as a B2B operator ourselves. It’s just not always – we are not always going to see the stars aligned such that we have a great B2B opportunity, yet we still have a great business that can help provide returns with respect to those opportunities as a technology service provider.
