During Thursday morning’s fourth-quarter results conference call, Churchill Downs CEO Bill Cartanjen painted a rosy picture of the company’s prospects based on three premises:
- Continued growth of Churchill’s signature event, the Kentucky Derby, and increased interest in the Kentucky Oaks.
- Strong results from Churchill’s historical horse racing machine operations, notably in Kentucky and Virginia, and promising results from the company’s two New Hampshire properties.
- The introduction of electronic table games at company’s properties.
“Excluding 2020 (the COVID year) we have now achieved nine consecutive years of record revenue and record Adjusted EBITDA, a clear reflection of the durability of our strategy and the consistency of our execution,” said Churchill Downs Executive Vice President and Chief Financial Officer Marcia Dall.
Churchill Downs posted revenue of $665.9 million for the fourth quarter, and reported Adjusted EBITDA of $247 million.
Carstanjen pointed to Churchill Downs racetrack improvements, including adding to its Finish Line suites; renovations to The Mansion, an exclusive hospitality space at the racetrack; and the Victory Run project, which will transform the first‑turn area of the racetrack in time for the 2028 version of the Kentucky Derby, as encouraging factors.
Plans to add an additional day of racing during Derby Week are anticipated to have a positive effect.
“We have the interest, we have the horse stock, we have the customer base, we have the fan interest and the global interest,” Carstanjen said. “We need to give our fans and our guests more of what they’re asking for. Adding the extra day, I’m excited about that. As we head through the end of February all systems are go, and now it’s about clear execution and just giving the team the resources they need to execute their jobs.”
Regarding electronic table games at Churchill Downs facilities, Carstanjen said roulette ETGs are the first product to be offered.
“That’s something that will add to our offerings, and the holistic experience of what our facilities offer,” Carstanjen said. “We’ll build on those over the course of this year and the years to come. But I think what you’re seeing is a powerful product that keeps improving and a team that keeps getting better and finding ways to harvest the market in Kentucky and surrounding Kentucky.”
Prediction markets have captured the attention of the gaming industry, but Carstanjen, noting the Interstate Horse Racing Act, does not believe they are a threat to Churchill Downs’ prospects. To wager on horse racing from Churchill Downs’ needs the company’s consent.
“We haven’t agreed to provide our content to prediction markets,” Carstanjen said. “We feel like we have plenty of distribution, and we like the terms of our distribution, so that’s our focus for delivering access to our content to the customer base out there. For the time being, that’s how we expect to proceed, and that’s what’s best for our customers and our constituents, including the horsemen. Prediction markets are not a part of the current mutual wagering on horse racing, nor what I expect them to be any time in the future.”
Churchill Downs operates five HRM sites under the banner of Rosie’s Gaming Emporiums in Virginia, and Colonial Downs, its flagship horse racing property in the state. Carstanjen admitted the company is monitoring igaming legislation in the state and is against legalization.
“We certainly have made that point clear and I think a lot of legislators, and certainly when you see the polling, that’s what the people think as well,” Carstanjen added. “I would say that when you look at any legislative process, including the one in Virginia, there’s lots of noise and there are lots of back and forth during the throes of it. But we firmly believe that igaming is a bad construct for Virginia. We think many legislators there believe that as well.”
