Churchill Downs outlines five-point business transformation plan

During Churchill Downs’ Q2 earnings call, CEO Bill Carstanjen outlined a five-point plan as part of the group’s strategic focus to “transform” its business.
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During Churchill Downs Incorporated’s Q2 earnings call, CEO Bill Carstanjen outlined a five-point plan as part of the group’s strategic focus to “transform” its business.

A key component of the transformation 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.

As a result, Churchill Downs will become a horse racing content distributor through a B2B model that would facilitate “the online distribution of horse racing content to millions of new customers who have opened online sports wagering accounts”.

Carstanjen commented: “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.

“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.”

Churchill Downs notes that the strategy transformation would allow for key sponsorships to be selected 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.

Churchill Downs’ Investments

Several “major organic investments” were detailed by Churchill Downs as well, outlining projects at the Churchill Downs Racetrack, Derby City Gaming, and Turfway Park, worth $90m, $76m, and $148m respectively.

A $260m development is also planned for Queen of Terre Project Haute Casino Resort, which was purchased by the business last month.

The development, set to be finalized in late 2023, will see the casino feature 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 added that the $2.48bn purchase of substantially all of the assets of Peninsula Pacific Entertainment should be completed before the end of the year, with the gain of Chasers Poker Room in Salem, New Hampshire expected during Q3.

“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.

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

The last component of the five-point strategy provided an update on the $291m sale of 116 acres next to the Calder Casino in Arlington Park.

Carstanjen concluded: “We intend to utilize 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.

“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 utilize a temporary one to change transactions to defer the tax on the gain on this sale as well.”