Churchill Downs posted revenue and earnings per share for the three months ending in March of $559.5 million and $1.96. That excludes the dispersion of assets such as the $86.2 million after-tax gain on the sale of its Arlington Park property in Illinois to the Chicago Bears. Wall Street had been looking for revenue of $545 million and earnings per share of $1.73.
On a year-over-year basis, revenue was up 54% and earnings 66%. The main reason: Revenue from gaming in the first quarter rose 40%, to $251.6 million, while Ebitda (earnings before interest, taxes, depreciation and amortization) for that segment increased 42%, to $129.5 million. Indeed, gaming generated $35.8 million more in revenue than horse racing and $47.4 million more in Ebitda.
How completely times have changed. It was only 15 years ago that the company’s casinos threw off $61 million in revenue, just 13% of the top line. Last year’s figures: $756 million, or 42% of total revenue.
That trend should continue after Churchill Downs closed on its deal to buy most of Peninsula Pacific Entertainment’s casinos and gaming centers for $2.75 billion in November. That same month, the New York State Gaming Commission approved the state casino license changeover to Churchill Downs Inc., giving the property’s new owner control over the upstate casino.
Those deals paid off in the first quarter, with New York and Iowa properties acquired in the Peninsula Pacific transaction contributing $26.5 million in Ebitda to Churchill Downs. Of the eight states where Churchill Downs now has gaming operations, New York contributed the most revenue, with $44.5 million.
Wall Street cheered the results in after-hours trading, sending shares of Churchill Downs up 1.5%, to $255.61.
The renowned racetrack Churchill Downs, based in Louisville, Kentucky, is now increasingly staking its bets on casinos. With the help of state governments, the iconic racetrack and betting corporation is leveraging its successful record of horse racing to offer an array of new gaming experiences.
On October 5th, Churchill Downs opened its first casino in Oxford, Mississippi. Showcasing more than 400 slot machines and 10 table games, the venue, estimated at $70 million, is an example of the efforts of Churchill Downs’ strategy of diversifying its services.
The introduction of this venue has allowed the racetrack to expand its services and attract customers from nearby Mississippi cities such as Tupelo, all of which will now be able to access gaming and entertainment options in a single destination. The casino also enables Churchill Downs to join in the expanding market of Southern gaming, as neighboring states such as Arkansas have begun to embrace casino operations.
The move by Churchill Downs is set to pay off in the long run. The company is already working on future projects such as the opening of Turf Club at the Hard Rock Hotel & Casino near Tulsa, Oklahoma, and the Churchill Downs Racetrack in Birmingham, Alabama.
The racetrack is also considering other large-scale projects and partnerships that could further expand its customer base and revenue stream, putting it in a competitive position on the casino market.
By providing more than just horse racing, Churchill Downs is capitalizing on the increasing demand for casino gaming across the US South. Through its casino endeavors, the company is bringing more gamers to the state and offering a wide variety of gaming experience for its fanbase. It is no wonder that Churchill Downs’ bets on casinos are paying off.