Churchill Downs: TwinSpires expected to show signs of growth

Churchill Downs
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Churchill Downs Incorporated has stated that it expects its TwinSpires digital business to show signs of growth as more brick-and-mortar customers shift online.

Speaking on the company’s recent earnings call for its fourth quarter and 2022 full-year financials, CEO Bill Carstanjen highlighted the pathway CDI’s online operations have already taken, and the direction they expect to go in.

Publishing its financial results, CDI declared that its TwinSpires digital operations saw revenue fall through Q4 and FY to $94.3m (2021: $101.2m) and $441.6m (2021: $457.8m) respectively, with AEBITDA up across each time frame to $25m (2021: $12.9m) and $114.1m (2021: $82.7m) respectively. 

The company noted that its decision to exit the direct online sports betting and casino business in Q1 2022 and a decline in horse racing wagering affected the result.

During the earnings call, Carstanjen was asked to elaborate on the TwinSpires results and provide growth trajectories for the medium and long term.

The CEO stated how the online business’ share in handle “greatly increased” during COVID, rising north of around 60 per cent, before sliding back to a new norm of around 52 per cent once restrictions were lifted and customers returned to brick-and-mortar venues.

While CDI is yet to publish its final numbers for its TwinSpires operations, Carstanjen believes these numbers will be around 52 per cent.

He said: “We haven’t seen the final industry numbers for 2022, but we think online will show up in those numbers at around 52 per cent or so. We think that’s stable right now, we expect it’ll start to grow with the trend that’s been going on for many years of handles shifting between brick and mortar to online. 

“We don’t know for sure what will happen, but prior to COVID, there was a consistent trend of handle moving to online, we’ve had some disruption because of COVID. Now, it’s a reasonable expectation that over time, you’ll see the trend at a new stepped-up level, in the 50-52 per cent area. It’s a reasonable expectation it might start to grow.”

However, Carstanjen made sure to highlight that online growth could be impacted by CDI’s B2C model and its pari-mutuel product, but the company has “cause for optimism”.

The CEO continued: “The only thing that affects all of this is our B2C model and our efforts to provide the pari-mutuel product directly to the sports fans out there, which ought to affect in ways that are not entirely clear, the overall online picture for horse racing. 

“It should introduce millions more customers out there that currently don’t belong to horse racing AEWs, it ought to introduce them to the product and that ought to be a good thing. But how market share shifts between providers within that whole is something that we’ll just have to watch and monitor. 

“We have a cause for optimism, but we’ll see how that plays out over the next couple of years. But generally, it’s an optimistic picture for us as it often is when you have a plan and you’re executing and you feel like you have the best strategy given all the circumstances.”