Churchill Downs, Incorporated · NASDAQ:CHDN

Churchill Downs — Merger or Acquisition (November 2014)

17 slides from Churchill Downs's merger presentation, Nov 13, 2014

1. Slide 1: CDI to Acquire Big Fish Games

   CDI to Acquire Big Fish Games November 13, 2014

2. Slide 2: Forward-Looking Statements

   Forward-Looking Statements This document contains “forward-­‐looking statements” within the meaning of Sec9on 27A of the Securi9es Act of 1933 and Sec9on 21E of the Securi9es Exchange Act of 1934. The Private Securi9es Li9ga9on Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions

3. Slide 3: Forward-Looking Statements (cont'd)

   Forward-Looking Statements (cont’d) costs associated with customer rela9onship management ini9a9ves; a substan9al change in law or regula9ons affec9ng pari-­‐mutuel and gaming ac9vi9es; a substan9al change in alloca9on of live racing days; changes in Kentucky, Illinois, Louisiana or Ohio law or regul

4. Slide 4: CDI announced yesterday that it intends to acquire Big Fish Games

   CDI announced yesterday that it intends to acquire Big Fish Games Big Fish at a glance  Founded in 2002 by Stanford business school grad Paul Thelen, Big Fish is one of the world’s largest producers and distributors of casual games, delivering entertainment to millions of people worldwide  Through

5. Slide 5: CDI will pay $485 million upfront and up to $350 million in an earn-out

   CDI will pay $485 million upfront and up to $350 million in an earn-out Transaction structure  Upfront considera/on: $485 million, on a debt-­‐free, cash-­‐free basis • ~$392 million in cash at closing; ~$15 million paid to founder in CHDN stock at closing; ~$79 million paid to founder over three y

6. Slide 6: The transaction continues CDI's growth strategy

   The transaction continues CDI’s growth strategy Extends Churchill Downs’ presence as a leading digital entertainment provider CDI Recent Acquisition 1 Positions Churchill Downs at the forefront of the mobile and online History games industry, particularly social casino genre, which is experiencing s

7. Slide 7: The mobile and online gaming industry is growing rapidly

   The mobile and online gaming industry is growing rapidly  Large market in early growth stage with no clear, sustainable leaders established  Global mobile and online gaming revenue growth expected to continue – Social Casino is one of the largest genres of mobile and online games at ~$3 billion wo

8. Slide 8: Growth in mobile devices is driving games industry growth

   Growth in mobile devices is driving games industry growth Game sales are a leading revenue source for app stores Apple App Store (iPhone) Google Play Store Apple App Store (iPad) Sources: Digi-Capital Global Games Investment Review 3Q 2014 Summary, available at http://www.digi-capital.com/reports Kl

9. Slide 9: Big Fish is growing faster than the mobile and online games industry

   Big Fish is growing faster than the mobile and online games industry Achieved long-term growth in the games industry with superior leadership in both content and distribution Big Fish Games - Annual Bookings Since Founding ($ millions) $312 CAGR 2010 – LTM (9/30/2014) 18.9% $278 2005 – LTM 48.2% Inc

10. Slide 10: Big Fish offers three types of games

    Big Fish offers three types of games Premium Paid Free-to-Play Casino Free-to-Play Non-Casino Top Games Dark Parables Big Fish Casino Gummy Drop!  PC and Mobile games that  Casino-style games such as All non-casino game types Description customers pay upfront to blackjack, poker, slots, including

11. Slide 11: Big Fish Casino is gaining share driven by mobile growth

    Big Fish Casino is gaining share driven by mobile growth Social casino customers have better monetization and retention rates than other social games  Big Fish Casino was the top revenue generating casino app on iOS in 2013 and YTD 2014  Big Fish Casino is ranked 4th among social casino game publi

12. Slide 12: Big Fish has a diversified game portfolio with limited revenue concentration

    Big Fish has a diversified game portfolio with limited revenue concentration Game Type & Geographic Diversity1 Game Concentration  Social Casino 46%, Other Genres 54%  Largest contributor to Non-Casino F2P games is 29.2% of bookings3  U.S. 65%, Rest of World 35%  Top 5 Premium Paid PC Games cont

13. Slide 13: Big Fish has both powerful worldwide game development and distribution capabilities

    Big Fish has both powerful worldwide game development and distribution capabilities A portfolio  Five internal studios with dis/nct produc/on strategies approach to  Launch more than 100 new /tles annually game development  Large, high quality, lower cost, exclusive worldwide developer network 

14. Slide 14: A pipeline of new games supports revenue growth

    A pipeline of new games supports revenue growth Anticipate heavy marketing spend in early part of 2015 on new and recently launched games Gummy Drop!  Match-3 game  Players travel across the world and restore historical buildings  Early results encouraging Dungeon Boss  Card collecting and battl

15. Slide 15: Big Fish is an attractive acquisition and growth opportunity for CDI

    Big Fish is an attractive acquisition and growth opportunity for CDI  Games industry is a large and rapidly growing worldwide business driven by mobile device growth  Big Fish has strong worldwide game development and distribution capabilities  A seasoned, exceptional team will continue under fou

16. Slide 16: Appendix

    Appendix 16 CHURCHILL Downs

17. Slide 17: Reconciliation of Adjusted EBITDA to net income

    Reconciliation of Adjusted EBITDA to net income 17

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