M&A Strategy
Q: Discuss your M&A strategy and pipeline?
A: M&A has been a significant driver of our growth in recent years. We're focused on acquiring businesses where we can improve operations and enter new markets, emphasizing organic growth over mere synergies. " Our pipeline feels promising in the current favorable M&A environment, though we can't guarantee deals will be completed. " We remain patient and thoughtful, pursuing opportunities that make sense and where we're confident we can enhance what we acquire. "

Growth Opportunities with Stronger Balance Sheet
Q: Does a stronger balance sheet enable larger growth projects?
A: As our company grows, we're able to undertake bigger projects. We're finalizing projections and costs for the Derby projects with confidence. " Having completed projects like Dumfries and Owensboro, we expect increased cash flow and plan to delever relatively quickly, giving us more capacity to pursue significant opportunities. " Our focus remains on delivering returns to our shareholders as we execute larger projects. "

Virginia Revenue Growth Sustainability
Q: What's driving Virginia's significant revenue growth and its sustainability?
A: Virginia's growth is driven by several positive factors occurring simultaneously. " Our improved operations, enhanced game offerings, and analytics have made a difference. " Enforcement actions against illegal "gray games" provide a tailwind. " The market isn't mature yet, and as awareness of HRMs grows, we're reaching more customer segments. " These factors contribute to sustained performance improvement in Virginia. "

Virginia Progress and Opportunities
Q: Update on Virginia progress and opportunities?
A: We're optimistic about Virginia following our P2E acquisition, where we've increased HRMs from about 300 to an authorized 5,000. " We've completed and opened the complex property in Dumfries and will ramp up over the next several quarters and years. " We're seeing positive impacts from improvements in operations, game layouts, and the state's efforts to curb illegal gray games. " Overall, we're focused on building the market around Dumfries. "

Managing Expansion Challenges
Q: How do you ensure successful expansions given Derby City Downtown challenges?
A: Our experience with HRMs has been overwhelmingly positive, though not every property ramps up as expected. " Derby City Downtown faced headwinds due to post-COVID changes in downtown Louisville, with fewer people returning to work downtown. " We've adjusted by rightsizing the cost structure and focusing on marketing to build the database. " We expect to see immediate and consistent improvement starting next quarter. " For new projects like Richmond and Henrico, we feel confident due to our data and understanding of the markets. "

Strong HRM Demand
Q: Why is HRM demand strong in Kentucky and Virginia?
A: The HRM product is still new and not mature in these markets. " We're continually improving it with more games, better variety, and enhanced math models, increasing product awareness and market penetration. " HRMs offer high margins, and their unique attributes differentiate them from traditional regional gaming, providing a tailwind for financial performance. "

Expanding Beyond 5,000 HRMs in Virginia
Q: Can you expand beyond 5,000 HRMs in Virginia?
A: We believe the Virginia model works well and hope to discuss expanding with the state if they're interested. " We'd like to see more racing days and deploy more HRMs to support that. " However, we operate at the discretion of the state and focus on delivering on our current commitments. "

Dumfries Ramp-Up and Q4 Impact
Q: How will Dumfries' ramp-up progress and impact Q4?
A: Dumfries is a large property with approximately 450 employees to start. " We anticipate a gradual ramp-up as we focus on delivering exceptional customer experiences and training our new team. " Bigger properties tend to ramp slower, but we're playing for long-term growth. " Success isn't defined in Q4 2024 but in building quarter-to-quarter over the next several years. "

Exacta's Growth Plans
Q: Update on Exacta's international and ETG growth plans?
A: Our plans with Exacta are progressing, including deployment in Malta through a partnership. " While not material at our current scale, this is part of our long-term growth strategy for Exacta. " We anticipate more opportunities both internationally and potentially within the United States, though nothing material to announce at this time. "

Impact of Expanded Race Calendar
Q: Will the expanded race calendar impact profitability in Virginia?
A: Racing is integral to our commitments in Virginia, supporting the state's desire to revive Thoroughbred racing. " While higher-quality racing and more Derby prep races will improve performance, the financial impact is harder to isolate given the deployment of 5,000 HRMs. " Racing, though not a major economic driver alone, contributes positively and strengthens our relationship with the state. "