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How Churchill Downs Diversifies Its Business

Like so many stocks, Churchill Downs hit a new high on Friday. But, it's how the company got to this point that makes it so intriguing.

Horse racing is not a growth industry. Outside of the Kentucky Derby—and the other Triple Crown races if there's a chance for a winner—the sporting public pays no attention to the sport.

So how has the company managed to do so well?

First and foremost, it has diversified well beyond horse racing. The company is involved in gaming both at physical casinos and online.

CEO Bob Evans has also balanced investing in the Derby while also acknowledging the challenges of the horse-racing industry.

(Read More: Flying Million-Dollar Racehorses to Churchill Downs)

Specifically, at the Derby, the company maximizes almost all possible revenue stream, hauling in at least $300 million during the week of events and races leading up to the Kentucky Derby itself.

At least half of that revenue comes from tickets, which is a surprise in the 2013 television and sponsorship dominated culture.

This year, Churchill Downs built the "Mansion," a high end invitation-only space on the track's highest floor.

It sold out and is profitable—in year number one.

(Read More: Kentucky Derby: A Billionaire's Bonanza)

But the Derby is successful because fans can also pay $50 for the infield, so both ends of the economic spectrum can come to the races, be happy and spend money.

Right now, the Derby's popularity appears sacrosanct. We shall see if that holds true if the other 51 weeks of the year continue to weaken for the sport.

—By CNBC's Brian Shactman. Follow him on Twitter: @bshactman

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