BUSINESS

Churchill Downs CEO calls racing unsustainable; stable boy takes Bet365 for £1m

TAGs: Cheltenham, churchill downs incorporated, Nicky Henderson

churchill-downs-bet365-cheltenhamChurchill Downs Inc. (CDI) earned record revenue in Q4 2011, pushing full year results to record levels as well. The Louisville, Kentucky-based racetrack/casino/online wagering outfit reaped $149.3m in Q4 revenues, a 9% boost over the previous year. Profits were $7.6m, compared to a $1.9m loss in Q4 2010. Full year revenues were up 19% to $696.9m, while annual profits were up almost four-fold to $64.4m.

Online wagering and casino operations were chiefly responsible for the profit rise, outstripping the returns from CDI’s traditional racing operations. The company acquired online betting operation Youbet.com in 2010, which it subsequently merged with its own TwinsSpires.com. Land-based gaming operations benefited from the 2010 acquisition of Mississippi’s Harlow’s Casino, which contributed full-year results for the first time. Meanwhile, net racing revenues were off 13% in Q4 and down 3% for the year.

CDI CEO Robert Evans told analysts that while consumers may associate the Churchill Downs brand with racing, “it is no longer our business model … In order to keep operating live racing and operating simulcasting when we aren’t racing live, we have to invest new cash on which we get negative returns.” Evans says this is not only “a really bad business model,” it’s also “unsustainable.” CDI acquired the assets of Bluff Media in February with an eye towards expanding its online operations to include poker, if/when the US finally gets its act together.

BET365 DONE IN BY STABLE BOY
On Wednesday, UK bookmakers were singing the praises of horse trainer Nicky Henderson after several of his nags beat some heavily-backed favorites to the finish line at Cheltenham. Heading into this year’s event, bookies had been using all sorts of apocalyptic language to describe the fate that awaited them if too many of last year’s winners put in repeat performances. But their tune changed following Wednesday’s action, in which four of Henderson’s horses – Simonsig, Bobs Worth, Finian’s Rainbow and Une Artiste – rode to glory. Paddy Power said the upsets of favorites Grand Crus and Sizing Europe had “turned the tide back in our favor and catapulted us ahead … bookies are in front.” However, the Paddster cautioned it “could all change tomorrow.” (This is what we refer to as ‘foreshadowing’.)

Enter Conor Murphy, a 31-year-old stable lad at Henderson’s Seven Barrows yard. On Thursday, the Daily Mail revealed that Murphy had managed to roll a £50 accumulator bet with Bet365 into a cool £1m when Barry Geraghty rode Henderson-trained Riverside Theatre across the finish line. The other horses in Murphy’s winning five were none other than Simonsig, Bobs Worth, Finian’s Rainbow and Tuesday’s winner Sprinter Sacre – all Henderson’s beasts. So while most bookies may be singing Henderson’s praises, the Stoke crowd is singing an entirely different tune (in a minor key). Although Bet365’s Pat Cooney told the Racing Post that it was company policy not to discuss individual accounts, he conceded it had been “a horrible day for us … we lost on every single race.” As for Murphy, this is one Irishman who can expect to be paying for many a pint on St. Paddy’s this Saturday.

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