Although Churchill Downs Inc. is leaving online US sports betting, the company is still looking for a way to participate in the industry.
During its second-quarter earnings call Thursday, executives were bullish on the idea of selling a new horse racing product to US sportsbooks. CDI announced it was exiting sports betting and online gaming during its February earnings call.
The company announced record net revenue of $582.5 million during the quarter and record net income of $339.3 million. The solid quarter was primarily driven by the 148th running of the Kentucky Derby, which brought in an all-sources wagering record of $391.8 million.
What CDI executives said about sports betting
CDI CEO Bill Carstanjen said on the call:
“We believe fundamentally horse racing content should and will become available over time on sports wagering platforms to reach every wagering customer across the US.
“We intend to be a leading distributor, either directly to customers of TwinSpires or under a B2B model that enables the online distribution of horse racing content to millions of new customers that have opened online sports wagering accounts.
“Given our expertise and extensive knowledge of pari-mutuel wagering, we have the technical expertise, access to racing content and technology to seamlessly integrate pari-mutuel wagering into existing third-party online sports wagering platforms.”
Churchill Downs doubles down on horse racing
Carstanjen said the company would continue to build its profitable TwinSpires online horse betting business. Additionally, executives hope other sportsbook operators will look to add a CDI horse racing product to their single-wallet platforms.
“Every online sports operator has a different set of needs. Some will need more services than others,” Carstanjen said. “We have a suite of services that we can provide for people, not just technology, but content, etc. We’ll let potential partners dictate what they need.
“Ultimately, it’s not a white label standalone product, but integrating horse racing into their larger sports offering.”
The business-to-business online strategy is among the five areas the company will focus on for future growth. Other areas include expansion at Churchill Downs Racetrack in Louisville and other capital investments across its US properties.
Sports betting remains important for Churchill Downs
While CDI might not pursue online sports bettors anymore, sports betting will remain a part of the company.
The company hopes to sell sports betting sponsorship for the Kentucky Derby. Churchill Downs will also sell online market access rights for sports betting while retaining its retail sportsbooks.
CDI markets with properties tied to licenses include:
Carstanjen said he expects the company to announce deals soon.
No concern for Churchill Downs cannibalization
Carstanjen said he is not worried the new business-to-business product will take business away from its existing TwinSpires online product.
“TwinSpires is driven by committed players,” he said. “[The sportsbook] cohort is not who drives the performance of TwinSpires.”
Sports betting grew for TwinSpires
The TwinSpires segment saw an adjusted EBITDA increase 38% compared to the same quarter a year ago, up to $33.9 million. That jump came because of decreased marketing efforts in sports betting and online casino.
“[Online sports betting and casino] was almost break-even in the second quarter, reflecting the actions we have taken to quickly exit this business,” Carstanjen said.
TwinSpires, which CDI rebranded from its BetAmerica brand in 2021, struggled to secure much sports betting market share in its active states.