CPHC — Q2 2026 Financial Report Analysis

Canterbury Park, the Minnesota company that runs the state's only live thoroughbred and quarter-horse racetrack plus a card casino in Shakopee, grew second-quarter 2026 revenue 3.2% to $16.17 million but still posted a net loss of $148,000 (-$0.03 per share). The loss was half last year's $327,000, and it would have been a small profit without a one-time $419,000 write-down on money the company advanced to horsemen — a write-down caused by Minnesota's legislature still not passing the sports-betting bill the company was counting on to get that money back.

At a glance

• Revenue $16.17M, +3.2%: growth came from table games (collections +11.4%) and food and beverage (+19.6%), not from racing wagers, which were roughly flat.
• Net loss $148K vs $327K a year ago: the improvement came mostly below the operating line — losses from the company's apartment joint ventures shrank by $341K — while operating income actually fell 34% because of the write-down.
• $419K write-down on a purse receivable: a direct cost of Minnesota not legalizing sports betting; $1.68M of the original $2.10M receivable is still on the books and depends on future legislation.

Results versus a year ago

Operating margin is the share of revenue left after running the business, before the joint-venture results, interest and tax. "n/m" means a percentage change is not meaningful because both periods were losses. For the first half of 2026, revenue was $29.68M (+3.0%) and the company earned $22,000 ($0.00 per share), versus a $627,000 loss in the first half of 2025.

Takeaway: The core racetrack-and-casino business improved this quarter — stripping out the one-time write-down, operating income rose about 63% to $705K — but almost every dollar of that improvement is still eaten by two things outside day-to-day operations: losses from the apartment joint ventures on its land ($1.05M this quarter) and the cost of propping up racing purses while Minnesota stalls on sports betting. Until one of those two changes, small revenue gains at the casino will keep producing results around break-even.

Where the revenue came from

Casino ($9.63M, +1.5%). Canterbury's casino runs "unbanked" card games: players bet against each other, not the house, and the casino earns a cut of the wagers (called "collection revenue"). The two halves moved in opposite directions:

Management attributes the table-games growth to "increased visitation and spend per visit," partly offset by "a lower average collection revenue rate in table games" — meaning players wagered more, but the casino kept a smaller percentage of it, which also cut the jackpot-administration fees in "other table games revenue." Poker revenue fell in both collection and tournament/jackpot fees.

Racing ($2.32M, +2.6%). Pari-mutuel revenue is the track's share of bets placed on horse races, with winners paid from a common pool. Live racing revenue rose 16.7% to $516K because there were more live race days this year (the live meet runs May through September), while simulcast revenue — bets on races at other tracks shown on screens at Canterbury — slipped 1.6% to $1.01M on fewer race days at tracks around the country.

Food and beverage ($2.47M, +19.6%). The company credits more live race days and a new point-of-sale system that sped up service and increased transactions. Cost of food and beverage and other sales rose a slower 15.7%, so the growth added to profit. Other revenue (admissions, sponsorships, rentals) fell 5.6% to $1.74M on fewer concerts.

Costs and the line below operations

Total operating expenses rose 4.3% to $15.88M. Purse expense — the prize money paid to horse owners, which Minnesota law partly funds from casino and wagering revenue — jumped 23.6% to $2.43M, but $419K of that was the write-down. Excluding it, purse expense rose only 2.2%. Elsewhere, advertising fell 26.6% (fewer promotional events and concerts), utilities fell 17%, and other operating expenses rose 13.7% on higher real-estate taxes and event-promoter fees. Salaries and benefits were nearly flat (+0.9%) despite Minnesota's mandated minimum-wage increase.

Below the operating line, the loss from the company's equity investments — its 27.4% stakes in two apartment complexes built with developer Doran on land next to the track, which it records as its share of their results rather than consolidating them — fell to $1.05M from $1.39M. Management says the improvement came from "increased leasing rates," and that the losses mainly reflect the complexes' non-cash depreciation. The first complex (Doran Canterbury I) lost the company $445K versus $840K a year earlier; the second (Doran Canterbury II) lost $485K versus $463K. Net interest income rose 13% to $542K.

What the headline numbers hide

• The Adjusted EBITDA jump is mostly the write-down being added back. EBITDA is earnings before interest, tax, depreciation and amortization; the company's "Adjusted EBITDA" goes further and excludes stock compensation, the write-down, and the depreciation and interest inside the apartment joint ventures ($1.55M combined this quarter). Of the $597K increase in Adjusted EBITDA, $419K is simply the write-down being excluded. On a like-for-like basis (without that add-back) Adjusted EBITDA would have grown about 8.7%, to $2.21M — real but modest improvement, not the 29.3% in the headline.
• Much of the interest income is accrued, not collected. In the first half, the TIF receivable grew $483K and the related-party receivable (loans to the joint ventures) grew $388K, both mainly from accrued interest, against $1.05M of total net interest income. TIF (tax increment financing) means the City of Shakopee repays the company for roads and utilities it built around the track out of future property taxes on the new development. That receivable now stands at $20.56M — about a quarter of the company's $84.0M shareholders' equity — and no payment arrived in the first half of 2026 (the first payment, $582K, came in 2025). Management still judges it fully collectible.
• Cash flow looks far better than profit, but it's seasonal. First-half operating cash flow was $7.49M against net income of $22K. Most of the gap is non-cash charges (the joint-venture losses of $2.27M and depreciation of $2.07M) plus $1.44M more owed to horsemen and $1.16M more in accounts payable — timing items from the live race season that typically reverse once the meet ends. The company also put $1.47M of cash into the second joint venture in January to help it refinance its mortgage.
• The tax line distorts the half-year. The first-half effective tax rate was 83.2% (versus 34.6% a year earlier) because non-deductible expenses such as lobbying fees and discrete items are large relative to tiny pre-tax income. For the quarter alone it was a more normal 32.9%.
• EPS got no help from buybacks — the share count went up. Weighted shares rose 1.8% to 5.15M, largely from stock issued for the 401(k) match and employee awards.
• Off-balance-sheet exposure to the apartments. Beyond the $9.15M liability already recorded for joint-venture losses beyond its investment, the company has agreed to reimburse the developer's loan guarantors up to $7.75M (Doran Canterbury I) and $2.75M (Doran Canterbury II) if the lender ever calls on those guarantees.

Balance sheet

The company has no borrowings: its $5M credit line, which matures January 31, 2027, was undrawn at June 30. Unrestricted cash was $14.03M plus $5.0M of short-term investments, and restricted cash (mostly money held for horsemen and player jackpots) was $5.41M. Shareholders' equity of $84.0M works out to about $16.21 per share. The board kept the quarterly dividend at $0.07 per share.

Outlook

Canterbury gives no financial guidance. The third quarter contains most of the live race meet (May to September) and is typically the busiest quarter, so the more live race days that lifted racing and food sales in Q2 should matter more in Q3. Three things to watch in the Q3 report (expected around early-to-mid November, based on last year's November 7 filing):

1. Table-games collection rate. Visits and spending per visit are rising, but the casino is keeping a smaller share of each dollar wagered; if that rate keeps falling, casino growth stalls.
2. Joint-venture losses. Higher rents cut the apartment losses by a quarter this quarter. Continued improvement there, plus the lower interest cost expected from the January refinancing of Doran Canterbury II, is the most direct route to consistent profit.
3. Minnesota sports betting. Management still says it is "likely" the horsemen's purse fund will eventually get money from sports-wagering taxes, but the write-down shows that confidence is weakening with each session that passes without a law. Further write-downs on the remaining $1.68M are possible if the next session also passes without action; legalization, by contrast, could add a new source of purse money and reduce what the company itself has to fund.

On the current trajectory — low-single-digit revenue growth, flat labor costs and shrinking joint-venture losses — the business looks capable of a small full-year profit, but with results this close to break-even, a single item like this quarter's write-down decides which side of zero the year lands on.