Churchill Downs Posts Record Q2, Still Exiting US Online Gambling Space

Churchill Downs Posts Record Q2, Still Exiting US Online Gambling Space

Churchill Downs Inc. is leaving behind the US online gambling and sports betting industry. During its Q2 earnings call, executives laid out plans to sell a new horse racing product to US sportsbooks. For a time, CDI was a major player in the online casino and sports betting space having market access in several jurisdictions. 

The company also announced record net revenue and net income for the quarter, fueled by the 148th running of the Kentucky Derby. 

After ditching US online casinos, a new path forward for Churchill Downs

Speaking to Wall Street analysts on Thursday, CDI CEO Bill Carstanjen said that every US sports betting customer should have access to horse racing content. 

“We believe fundamentally horse racing content should and will become available over time on sports wagering platforms to reach every wagering customer across the US. We intend to be a leading distributor, either directly to customers of TwinSpires or under a B2B model that enables the online distribution of horse racing content to millions of new customers that have opened online sports wagering accounts.”

Carstanjen continued: 

“Given our expertise and extensive knowledge of pari-mutuel wagering, 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.”

CDI first revealed its plan to exit the sports betting and online casino space in February. At the time, Carstanjen said, “this isn’t the result we wanted, but its is the prudent next step.”

New direction for Churchill Downs’ US online gambling plans

CDI laid out a few areas the company will focus on moving forward. 

Expansion at Churchill Downs Racetrack in Louisville
Capital investments across US properties
Further Twinspires developments

“Every online sports operator has a different set of needs. Some will need more services than others,” Carstanjen said. “We have a suite of services that we can provide for people, not just technology, but content, etc. We’ll let potential partners dictate what they need.”

The company’s capital investment strategy includes selling online market access rights for sports betting. Additionally, the company hopes to sell sports betting sponsorships for the Kentucky Derby. 

CDI has market access in several states, including:

Illinois
Indiana
Louisiana
Ohio
Pennsylvania

Carstanjen also touched briefly on expansion plans including the acquisition of Chasers Poker Room in New Hampshire. The company intends on expanding charitable gaming at the facility to accommodate historical horse racing machines.

Churchill Downs’ Q2 numbers

For the quarter, CDI reported net revenue of $582.5 million, up from $515.1 million in Q2 2021; and net income of $339.3 million, both quarterly records. The net income is especially eye-catching since it is more than triple the $108.3 million from the same time last year. 

As of writing, shares of $CHDI were trading at $208.03.

The company’s online horse racing segment, TwinSpires, saw an adjusted EBITDA of $33.9 million, up 38% compared to Q2 2021. However, net revenue for the brand was down $4.1 million, primarily due to the company’s exit from sports betting. 

“[Online sports betting and casino] was almost break-even in the second quarter, reflecting the actions we have taken to quickly exit this business,” Carstanjen said.

Author: Tyler Gutierrez