Casino and betting operator Churchill Downs Incorporated (CDI) lost $23.4m in the first quarter of 2020 as online race betting growth failed to offset the pandemic-related closures of its gaming venues.
Figures released Wednesday show CDI generated revenue of $252.9m in the three months ending March 31, a 4.7% decline from the same period last year. Worse, the company reported adjusted earnings falling 26% to $55.3m and booked a net loss of $23.5m versus an $11.6m profit in Q1 2019.
The net loss was blamed on a $12m non-cash impairment of its Presque Isle Downs and Casino in Pennsylvania, plus a $7.6m after-tax expense related to some Midwest Gaming interest rate swaps plus, you know, the whole pandemic thing.
CDI CEO Bill Carstanjen said the company’s strong balance sheet – buoyed by drawing $675.4m from its revolving credit facility last month – would help it ride out “at least the next 12 months,” by which time the COVID-19 storm will have hopefully passed.
Once almost wholly reliant on its racing operations, CDI now makes the bulk of its bones from casino operations, and that ‘Gaming’ unit saw its revenue fall 12.5% to $147.6m, while earnings fell one-quarter to $49m. The COVID-19 closures began in mid-March and CDI began furloughing employees as of March 25.
CDI’s Online Wagering division had a decent quarter, with revenue rising 6.7% to $67.7m but earnings fell nearly $2m to $15m, thanks to $4.1m in costs from CDI’s fledgling BetAmerica online sports betting and casino business. BetAmerica remains a revenue minnow at just $700k, but that’s $600k better than Q1 2019, and despite the pandemic pretty much clearing the sports calendar.
CDI’s longstanding TwinSpires advance deposit wagering site had a much more impressive showing, with revenue rising 5.7% to $66.6m as handle grew 8.3% despite a more limited racing slate. Active player ranks were up 11.6% year-on-year although net revenue per player was down 3.5%.
The ‘Churchill Downs’ segment reported revenue up 12% to $23.5m while earnings were up more than one-third to $1.9m. Revenue from the eponymous racetrack fell to just $1.9m following the suspension of simulcasting. Derby City Gaming, the adjacent venue offering ‘historical racing’ pseudo slots, reported revenue rising 15.5% to $21.6m before it too was required to close.
The fabled racetrack’s marquee Kentucky Derby event was supposed to happen this Saturday (May 2) but was postponed until September 5 for obvious reasons. CDI announced last week that it had teamed up with virtual racing/sports stars Inspired Entertainment to air a simulated race it’s calling Triple Crown Showdown, with viewers being encouraged to donate to COVID-19 relief.
On Wednesday, CDI received approval from Kentucky officials 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 opening day of its 2020 Spring Meet “with spectator-free racing will be communicated in the coming days.”
