Slot machine giant International Game Technology said Monday it will sell 1,250 historical racing machines to casino operator Churchill Downs.
The games will operate on a proprietary historical horse racing system supplied by Ainsworth’s Game Technology, which utilizes race data under an exclusive license with Churchill Downs.
Financial details were not disclosed.
Churchill Downs said it will utilize the machines at its Kentucky gaming facilities, including Derby City Gaming in Louisville, and two projects under development – Oak Grove Racing, Gaming & Hotel in Oak Grove, which opens in September, and Newport Racing & Gaming in Newport, which is expected to open toward the end of the year. Churchill Downs said the IGT games would be used in future facilities.
Churchill Downs Senior Vice President of Gaming Operation Austin Miller said the machines have “top-rated themes” and IGT offers a “vast content library.”
IGT joins Ainsworth and Scientific Games as gaming suppliers for Churchill Down’s gaming facilities in Kentucky.
Historical racing machines allow players to wager on previously run horse races, although the identities of horses and riders are changed. Players can manually handicap the races using handicapping information provided in the games.
After a wager is placed, an animated replay of the race finish is shown, and the result of the player’s wager is depicted as part of a slot-type game theme, with cascading symbols and spinning reels.
The games are approved by the Kentucky Horse Racing Commission
“Adding historical racing machines to IGT’s vast portfolio further strengthens our position as an end-to-end solutions provider and creates new opportunities to help drive our customers’ growth,” IGT COO for Gaming Nick Khin said in a statement.
Deutsche Bank gaming analyst Carlo Santarelli told investors the games are on one of the company’s cabinets that has a higher margin for product sales.
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“We expect margins on these sales will be at or above the 40% level, implying (cash flow) to IGT of over $10 million,” Santarelli said in a note investors Monday afternoon. “We would note that IGT is also looking at potential historical racing unit sales in Virginia at present.”
Also Monday, IGT announced it has placed $750 million in 5.25% senior secured notes, due in 2029. The deal, which will finalize on June 19, will allow the gaming equipment manufacturer to pay down a portion of the principal and interest of $1.5 billion of the company’s debt due in 2022.
Shares of IGT, traded on the New York Stock Exchange, closed at $11.62 Monday, up 82 cents or 7.59%. Churchill Downs shares rose $11.44, or 8.09%, to close at $153 on the Nasdaq.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
