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Churchill Downs Inc. is positioning itself for a world with legal sports betting.
CDI is set to acquire the Presque Isle Downs & Casino in Erie. The current owner, Eldorado Resorts, announced the sale this week, a cash transaction of $178.9 million.
Presque Isle is one of PA’s smallest casinos by revenue, but it’s still a big step for CDI. The property was initially a horse racing track, and it still hosts about 100 race days annually. It became a racino when Pennsylvania expanded gaming more than a decade ago.
The casino is the primary business now, though, running almost 1,600 slots and 40 table games, plus a full poker room. Slots were responsible for more than $100 million of Presque Isle’s revenue in February, according to numbers from the Pennsylvania Gaming Control Board.
Also in the announcement, CDI said it plans to purchase a second Eldorado property. It will take over the Lady Luck Casino in Vicksburg, Miss. for an additional $50.6 million. Lady Luck has a 25,000-square-foot gaming floor with about 600 machines and nine tables, plus an 89-room hotel.
CDI CEO Bill Carstanjen offered his thoughts in a press release:
We are excited about welcoming both of these properties to the Churchill family. Presque Isle will give us a foothold in Pennsylvania which has recently passed legislation authorizing real money online gaming. The Lady Luck Vicksburg is immediately adjacent to our Riverwalk facility and offers us operational efficiencies in a stable region. Both properties fit our investment criteria and will be immediately accretive to our shareholders.
Both deals are expected to close later this year.
CDI’s new footprint in Pennsylvania is particularly eye-opening.
The state recently became the fourth to legalize online gambling, and PA sports betting could be on the horizon. That same gaming law from 2017 also legalized sports betting, should the US Supreme Court strike down the federal ban this spring. That would include mobile wagering as well as betting on sports at casinos.
Land-based casino gaming is profitable, but the upcoming online rollout is almost certainly the motive for CDI’s entry. It’s had ambitions in the space for several years.
In 2013, the group tried to get into the NJ online casino business by purchasing the Showboat in Atlantic City. The sale fell through, but the underlying plans remained intact. After the deal was dissolved, former CEO Bob Evans confirmed that online gaming would remain a key part of CDI’s endeavors. The company continued to invest in its in-house betting platforms, finally selling off its social gaming product recently.
CDI could develop/roll out a real-money online casino and/or sports betting platform. Short of that, it could partner with an existing platform provider to launch online gambling and sports betting in PA.
The company is already in the online wagering space, with an online horse betting platform called TwinSpires. Mobile wagers accounted for more than $250 million of its revenue last year. Leveraging that database of users would make for a potentailly quick transition for CDI into sports betting.
With its new purchases, CDI now owns land-based properties in Illinois, Kentucky, Louisiana, Mississippi and Pennsylvania — five states all moving toward legal sports betting. There are active sports gambling bills in all of those states.