Churchill Downs Q1 profit falls despite record revenue

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churchill-downs-record-revenueHorseracing and online betting operator Churchill Downs Inc. reported record revenue of $148.1m (+7%) in Q1 2013, but profit fell to $1.1m from $1.4m in the same period last year. The revenue boost was almost wholly provided by the October acquisition of the Riverwalk Casino in Vicksburg, Mississippi, and the additional $14.1m revenue helped push CDI’s casino and other gambling revenue up 21% to $72.9m.

Equibase stats showed race betting across the US fell 2.8% during the quarter, but CDI’s mainstay horseracing operations saw revenue fall 8% to $27.8m, for which CDI blames lower host days at its Arlington Park track outside Chicago. On a less gloomy note, CDI CFO William E. Mudd told analysts that leading metrics suggest “another record year” for the upcoming Kentucky Derby meet on May 3-4.

CDI’s online betting revenue via its advance deposit wagering (ADW) site fell 3% to $43m, while online handle fell 2.6%. TwinSpires’ numbers have been negatively affected by Illinois legislators having let their state’s ADW law expire Jan. 1. Factoring out the Illinois numbers, online handle actually increased 4.5%. CDI president/COO Bill Carstanjen said the lack of Illinois ADW was “frustrating” but said CDI was “working very hard to position that issue to get resolved legislatively as soon as possible.” Earlier this week, contract negotiations between Arlington Park and the Illinois Thoroughbred Horsemen’s Association (ITHA) were blamed for the decision to strip the online gambling language from the state’s gambling expansion bill.

Online earnings were also negatively impacted by $800k in expenses attributed to “continued development in marketing” of CDI’s nascent lucky-numbers gaming site That’s $300k more than the previous year, but Carstanjen said the company “have not to-date really kicked off marketing in any serious way” because CDI wants to ensure that the site is truly ready for primetime, a benchmark Carstanjen expects will arrive sometime around the beginning of Q3. CDI CEO Robert Evans said he was encouraged by the fact that the players Luckity has managed to attract so far are “better customers” who “play a significant amount of money” and redeposit rather than “just doing it once and stopping there.”


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