Derby Provides Some Lift for Churchill Downs Inc.

While 2020 continues to be a difficult year for Churchill Downs Inc. because of the COVID-19 pandemic, the track and casino owner saw some positive trends to build on in the third quarter as it was able to conduct the Kentucky Derby Presented by Woodford Reserve (G1), saw its online properties thrive, and open more of its casinos.

With the Derby moved from the first Saturday in May to the first Saturday in September, Churchill Downs racetrack saw a $26 million improvement in third quarter revenue to $34.9 million. Of course in the second quarter CDI saw losses of not having the year's biggest race in May, but still the third quarter revenue was welcomed as the track found a way to conduct the event in a difficult environment.

Even more encouraging for CDI was the ability of its advance-deposit wagering platform, TwinSpires.com, to capitalize on the rescheduled Derby, which did not allow fans. CDI reports that its ADW enjoyed record third quarter revenue of $116 million, up 77% from last year as handle rocketed to more than $730 million, a 69% increase from the third quarter of 2019.

That performance helped CDI's online wagering platforms more than double their adjusted earnings for the third quarter, when compared with the same three months of 2019, to $31.9 million.

The company saw its casino operations improve adjusted earnings to $75.4 million compared with the third quarter of 2019, which saw $71.7 in adjusted earnings.

It all added up to a third quarter in which CDI saw $43.2 million in net income, nearly tripling the $14.8 million in net income for the third quarter of 2019.

While a recent Kentucky Supreme Court decision has raised concerns about the future of historical horse racing in the state, CDI opened two HHR gaming facilities during the quarter: the Oak Grove Racing, Gaming & Hotel in Oak Grove, Ky., which eventually will offer Standardbred racing; and the Newport Racing & Gaming in Newport, Ky., which will generate purse revenues for CDI-owned Turfway Park.

"Our properties' extensive operating protocols have been extremely effective and have allowed us to operate safely during the pandemic," said CEO Bill Carstanjen. "We have continued to refine and improve our efficiencies and safety protocols in the fourth quarter." 

For the year, CDI, because of the pandemic, continues to face significant challenges as total revenues have declined from nearly $1.05 billion for the first nine months of 2019 to $775.8 million for the first nine months of 2020. The company reports a $99 million loss in net income for the year through Sept. 30.