As Churchill Downs Inc. winds down its online sports betting operations, the company’s latest earnings call gave more clarity to its B2B plans for TwinSpires.
Churchill Downs CEO Bill Carstanjen gave kudos to employees for shutting down TwinSpires‘ online sports betting during last week’s Q3 earnings call. Carstanjen provided insight into TwinSpires’ B2B horse racing plans, which started with a September deal with FanDuel Sportsbook, slated to start in January 2023.
“We are still very committed to our B2C TwinSpires horse racing online wagering business,” Carstanjen said during the call. “Our online offering has delivered very high customer retention metrics over a long period of time and our connection to the Kentucky Derby should continue to help attract new and casual players.
“As we exited the online sports and casino business, we sought to build relationships with some of the major online sports betting companies who want to introduce their significant customer base to horse racing, which is actually an important part of the content offering in many European markets like those in the United Kingdom.”
FanDuel was quick in acting
FanDuel, which owns TwinSpires’ competitor TVG, wanted a horse racing tab in its sports betting app. Carstanjen said Churchill Downs’ TwinSpires was able to help with that backend technology.
He does not expect other sportsbook operators to be as ready to quickly integrate horse racing into their app.
“Others will not be ready quite as quickly with that middleware and that integration so that the wagering can happen immediately on their sports plan and there will be an interim step where they are essentially being provided by us with a white-label accounts deposit wagering platform,” he said. “From there they will then transition their customers ultimately to a fully integrated product on their sports plan.
“So, we’re prepared to move as fast or as slow as people are wanting us to move.”
More B2B TwinSpires deals coming
Carstanjen said the FanDuel partnership shows the company’s commitment to its new offering.
The TwinSpires team is working on other partnerships, he said.
“As we look towards the end of the year and into 2023, we are very excited about the many growth opportunities in front of us,” Carstanjen said.
No two TwinSpires deals the same
There are multiple pieces Churchill Downs can offer sportsbook partners, from race sponsorships, including the Kentucky Derby, to broadcast rights to parimutuel betting technology.
Each individual deal will be different, Carstanjen said.
“Most of them will want content. They will want us to source the content from them,” he said. “Others may want us to do settlements for them. Some will be interested in sponsorships. There is a variety of commercial and operational tools and options that we Weill offer.”
Kentucky Derby is crown jewel
When looking at the variable pieces of potential deals, Carstanjen unsurprisingly highlighted the Kentucky Derby as the most important asset. He said that one race will create several streams of revenue.
To take bets on a horse race, sportsbooks must pay a track owner, like Churchill Downs, for the Kentucky Derby. There is also money for other content provided through their B2B platform.
“We will get a piece — a marginal piece of every single track that goes through the platform, regardless of whether we own that track or not,” he said. “When we do own that track, of course, another additional piece flows through to the track.
“So the margins, of course, are really good. We’re providing a technology solution, and we’re also delivering content for those that need us to and the economic structure for that is always a piece of the wagering transaction.”
Cannibalization risk for Churchill Downs?
When asked by an analyst if there are cannibalization concerns regarding the B2B plans, Carstanjen essentially said no. He said serious customers drive TwinSpires and this new route gives access to “millions of customers.”
“We know there are a lot more casual fans out there than there are more serious fans,” he said. “I do think this is a much bigger opportunity and better overall for the company.”
There is also hope that casual horse bettors turn into more serious customers on TwinSpires. For now, TwinSpires generates revenue from a “relatively modest number of people.”
Churchill Downs property movement
Outside of its online gaming business, executives also detailed real estate dealings.
Construction has started on its Terre Haute Casino in Indiana, with plans to open it in Q1 2024 with a cost of $290 million. Churchill Downs also received approval from the Iowa Racing and Gaming Commission to acquire the Hard Rock Hotel and Casino in Sioux City and is waiting to see if it can acquire the del Lago Resort Casino in New York.
Churchill Downs is also on track to sell its 326-acre Arlington Park, Illinois, site to the Chicago Bears for $197 million.