Churchill Downs, the racetrack and gaming operator, has issued its third quarter update showing higher earnings with adjusted net income for the quarter up to $21.9m from $13.6m in Q3 2017. The increase in net income was, inter alia, due to a: $42.3m net of tax gain on the acquisition of the remaining 50% equity interest in Ocean Downs in exchange for the 25% equity interest in Saratoga New York and Saratoga Colorado properties.
Also contributing to the uplift was a $6.2m decrease in income tax provision excluding the book tax on the Ocean Downs/Saratoga transaction primarily from the reduction in the federal statutory corporate tax rate from 35% to 21% as a result of the Tax Cuts and Jobs Act. Additionally, the firm cited a $2.7m decrease in net interest expense associated with lower outstanding debt balances and a $0.2m increase from other sources as influencing factors.
Revenue from racing fell from $41.9m in Q3 2017 to $41m for the current year which was driven primarily, said the firm, by lower attendance at Arlington due to inclement weather. This decrease was partially offset by a $0.5m increase at Churchill Downs due to a $0.9m increase primarily from increased handle, partially offset by a $0.4m decrease from timing of the impact of revenue recognition under ASC 606.
Casino take, however, was ahead significantly to $105m compared to $87.5m in Q3 2017. Said the company: “For the third quarter of 2018, net revenue increased $17.5m from the prior year primarily driven by: $8.1m increase at Ocean Downs due to the Ocean Downs/Saratoga Transaction, which resulted in the company consolidating Ocean Downs results beginning on September 1, 2018;
“$4m increase at Calder due to competitor disruptions and the addition of a new smoking and gaming patio; $3.7m increase at Oxford primarily due to the hotel opening in December 2017 and the expanded gaming floor; and $1.7m increase at our Louisiana properties primarily from successful marketing and promotional activities.”