Churchill Downs places horse racing at centre of transformation plan

Churchill Downs
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A five point plan is to form the strategic focus to “transform” Churchill Downs Incorporated over the next five years, outlined Bill Carstanjen, CEO of the group, in a second quarter earnings call.

One key facet of this will be a renewed focus on driving a profitable online TwinSpires horse racing business amid a much detailed exit from online sports betting and igaming.

This would see the group become a distributor of horse racing content through a business-to-business model that would enable “the online distribution of horse racing content to millions of new customers who have opened online sports wagering accounts”.

“We believe fundamentally that horse racing content should and will become available over time on sports wagering platforms to reach every wagering customer across the US,” Carstanjen commented.

Adding: “Given our expertise and extensive knowledge of pari-mutuel wagering on horse racing, we have the technical expertise, access to racing content, and technology to seamlessly integrate pari-mutuel wagering into existing third-party online sports wagering platforms. 

“We will also provide user interfaces and ancillary services that may be necessary or desired by online sports wagering platforms.”

With a number of key partnerships said to be forthcoming before the close of the year, CDI notes that the strategy would enable key sponsorships to be established and drive incremental content fees for its racetracks.

“Our TwinSpires strategy going forward will be to maintain and grow our existing TwinSpires platform, while growing the distribution of online horse racing content to the millions of us sports betting customers who have been acquired by sports betting platforms over the past couple of years,” it said.

Alongside this, a number of “major organic investments” were outlined which will deliver projects of $90m, $76m, and $148m at the Churchill Downs Racetrack, Derby City Gaming, and Turfway Park, respectively.

Furthermore, a $260m dollar development regarding Queen of Terre Project Haute Casino Resort, which was purchased last month, will be finalised during late 2023.

The casino will have up to 1,000 slots, 50 table games, a high limit gaming lounge and a sports bar along with several food and beverage venues. 

Carstanjen also reaffirmed that the $2.48bn purchase of substantially all of the assets” of Peninsula Pacific Entertainment is on track to close before the end of the current year, with the gain of Chasers Poker Room in Salem, New Hampshire anticipated during the third quarter.

“Our current plans contemplate opening a new facility with up to 800 gaming positions including HRM and table games, with the potential to add more after we opened,” he noted on the latter of those.

“We aren’t ready to announce the schedule yet. We will provide an update on our next earnings call.”

The final stage of the five-stage strategy saw a brief update issued on the sale of 116 acres next at the Calder Casino in Arlington Park property for $291m.

“We intend to utilise a real property we have already purchased for Derby City Gaming Downtown and the Queen of Terre Haute casino as well as real property we will be purchasing as part of the P2E acquisition and various 1031 exchange transactions to defer the tax on the gains from the sale of the Calder land,” Carstanjen closed.

“We’re also still on track to sell the 326-acre Arlington Park property to the Chicago Bears for $197m in the first quarter of 2023, pending completion of remaining conditions. We plan to utilise temporary one to change transactions to defer the tax on the gain on this sale as well.”