CDI Race Betting Surge Fails To Offset Gaming During Pandemic

In the first quarter of 2020, casino and betting operator Churchill Downs Incorporated (CDI) lost $23.4 m as online betting expansion struggled to counter the pandemic closures of its gaming facilities.

Figures released Wednesday show CDI generated revenue of $252.9 m in the three months ended March 31, a decrease of 4.7 percent from last year’s same time. Worse, the company posted adjusted profits falling 26 percent to $55.3 million and booked a net loss of $23.5 million against a profit of $11.6 million in Q1 2019.

The net loss was blamed for a $12 m non-cash depreciation of its Pennsylvania Presque Isle Downs and Casino, plus a $7.6 m after-tax cost associated with some Midwest Gaming interest rate swaps and, you know, the whole pandemic thing.

CDI CEO Bill Carstanjen said the solid balance sheet of the company – bolstered by drawing $675.4 million from its revolving credit facility last month – will help it ride “at least the next 12 months,” by which time the COVID-19 storm would hopefully have passed.

Once almost entirely dependent on its racing activities, CDI now makes the bulk of its bones from casino operations, and that ‘Gaming’ segment saw its sales drop 12.5 percent to $147.6m, while earnings fell one-quarter to $49m. The COVID-19 closures began in mid-March and as of March 25th CDI started furloughing employees.

CDI’s online wagering division had a respectable quarter, with sales rising 6.7 percent to $67.7 million, but profits fell nearly $2 million to $15 million, due to $4.1 million in costs from CDI’s fledgling online sports betting and casino company BetAmerica. BetAmerica remains a minnow income at just $700k, but that’s $600k more than Q1 2019, and given the pandemic, the sports calendar is pretty much clearing out.

CDI’s longstanding TwinSpires advance deposit wagering platform had a far more impressive display, with sales growing 5.7 percent to $66.6 m as handle rose 8.3 percent amid a more small racing schedule. Active player numbers were up 11.6 percent year-on-year, while net profit per player fell 3.5 percent.

The category of ‘Churchill Downs’ posted sales up 12 percent to $23.5 m while earnings rose over a third to $1.9 m. Revenue from the eponymous racetrack was down to just $1.9 m after the simulcasting suspension. Derby City Gaming, the neighbouring venue selling pseudo-slots for ‘historical racing,’ posted revenue rising 15.5 percent to $23.5 million before it was also forced to close.

The fabled racetrack marquee Kentucky Derby event was supposed to occur this Saturday (May 2) but was postponed for obvious reasons until September 5. Last week, CDI revealed it had teamed up with virtual racing / sports stars Influenced Entertainment to air a simulated race it calls Triple Crown Showdown, urging viewers to donate to COVID-19 relief.

On Wednesday, Kentucky officials allowed CDI to open the stable areas at Churchill Downs Racetrack and its Trackside Auxiliary Training Center as of May 11 under “strict guidelines to effectively mitigate the impact of COVID-19.” CDI said its 2020 Spring Meet opening day “with spectator-free racing will be communicated in the coming days.”