Churchill Downs Inc. Wants to Sell Horse Racing Content to Other Sportsbooks

Market access for online sports betting in nine US states could be up for grabs, as CDI lays out plans to keep retail TwinSpires Sportsbooks operational in at least five states.
Churchill Downs Inc. Wants to Sell Horse Racing Content to Other Sportsbooks
By
August 10, 2022

Churchill Downs Incorporated (CDI) is working toward making a complete exit from online casino gaming and sports betting. However, the company said it still wants to be active in the latter vertical and is planning to do so by providing horse racing content to other sportsbooks.

As the company’s plans to retain some of its profitable TwinSpires retail sportsbooks come into focus, it appears CDI is likely to sell market access for online sports betting in nine US states and for online casino gaming in three.

CDI Wants to Sell Horse Racing Content to Sportsbooks

We intend to be a leading distributor of horse racing content During an earnings call last month to discuss Q2 2022, CEO William Carstanjen said the company firmly believes that over time, horse racing content should be available on all sports wagering platforms in the US.

“We intend to be a leading distributor of horse racing content, either directly to convert to customers of TwinSpires or under a B2B model that enables the online distribution of horse racing content to millions of new customers who have opened online sports wagering accounts,” Carstanjen said in a July 28 call with analysts.

“Given our expertise and extensive knowledge of parimutuel wagering on horse racing, we have the technical expertise, access to racing content, and technology to seamlessly integrate parimutuel 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.”

Carstanjen said CDI’s strategy to sell horse racing content would open the door for sports wagering partnerships for the Kentucky Derby. Content fees would go toward supporting the company’s racetracks, including Churchill Downs. The CEO said the company expects to “announce some key partnerships before the end of the year” and “will provide an update on our progress on [the] next earnings call.”

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Two TwinSpires Online Casinos Still Operational

As of Tuesday, TwinSpires was still live with online casino gaming and sports betting in Michigan and Pennsylvania. It was also still offering online wagers in Arizona.

But CDI has shut down TwinSpires’ online sportsbooks in Colorado, Indiana, New Jersey, and Tennessee since late April, shortly after the company announced in Q1 2022 that it would exit online casino gaming and sports betting. The announcement scuttled plans to launch an online sportsbook in Louisiana.

In the online casino vertical, CDI’s plans to sell market access in three states — Michigan, New Jersey, and Pennsylvania — are pretty straightforward. TwinSpires Casino MI operates under the license of Island Resort & Casino, while TwinSpires Casino PA is on the Presque Isle Downs & Casino license, and TwinSpires Casino NJ (now defunct) was a partner of Golden Nugget Atlantic City.

CDI Will Keep Retail Books in At Least Five States

Things get a little more complicated in the sports betting vertical. The retail side is less complex.

In an investor presentation from June, CDI listed properties in four states — Louisiana, Maryland, Mississippi, and Pennsylvania — where it plans to keep its retail TwinSpires Sportsbooks operational:

  • Louisiana — Fair Grounds Race Course & Slots (New Orleans)
  • Maryland — Ocean Downs Casino (Berlin)
  • Mississippi — Harlow’s Casino Resort & Spa (Greenville) and Riverwalk Casino (Vicksburg)
  • Pennsylvania — Presque Isle Downs & Casino (Erie)

CDI is also planning to open a retail TwinSpires sportsbook at the Queen of Terre Haute Casino Resort in Indiana, which is under development.

The presentation did not list TwinSpires’ retail sportsbook in Arizona, so its future is unclear. The retail book is located at the Mazatzal Hotel & Casino in Payson, owned and operated by the Tonto Apache Tribe.

Market Access in Nine States Could Be Up for Grabs

In the online sportsbook arena, CDI could sell market access in nine states — Arizona, Colorado, Indiana, Louisiana, Maryland, Michigan, New Jersey, Pennsylvania, and Tennessee.

Three skins could be up for grabs in Indiana since casinos in the state are allowed two skins each, and the Queen of Terre Haute will be no exception. The third skin would replace TwinSpires Sportsbook IN, one of two skins for the Rising Star Casino.

An opportunity to open online and retail sportsbooks in Colorado is available through a partnership with Bronco Billy’s Casino. An online license is also available in Tennessee, which does not tether online licenses to brick-and-mortar facilities. Meanwhile, Maryland has yet to launch online sports betting.

Presumably, special circumstances in four additional states — Illinois, Kentucky, Maine, and Ohio — will be unaffected by CDI’s plans.

In Illinois, CDI owns a 61% stake in Rivers Casino Des Plaines, a property managed by minority partner Rush Street Interactive (RSI). RSI operates online and retail sportsbooks under its BetRivers brand there. TwinSpires can accept online wagers on horse racing in Kentucky but not on other sports, and there are no retail sportsbooks or kiosks in the state.

Sports betting is legal but not yet operational in Maine and Ohio. CDI has market access in Maine through the Oxford Casino Hotel. It owns a 50% stake in Miami Valley Gaming in Lebanon, Ohio, with Delaware North owning the other half.

CDI Triples Net Income

CDI reported that its TwinSpires segment had adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $33.9 million in Q2 2022, up 38% from the year-ago quarter ($24.6 million).

Net revenue for the segment totaled $138.5 million, down 2.9% year-over-year ($142.6 million). The $4.1 million loss included a $2.2 million decrease in casino and sports revenue, while horse racing saw a $1.9 million decrease. CDI attributed the decline to its decision to exit online casino gaming and sports betting, which it announced during the first quarter.

CDI recorded net revenue of $582.5 million, up 13.1% year-over-year ($515.1 million). Net income more than tripled, reaching $339.3 million in Q2 2022, up from $108.3 million in the year-ago quarter.

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