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.