Churchill Plans to Add Historical Racing at Trackside

Churchill Downs racetrack plans to spend $50 million to $60 million in a historical racing venue at its nearby Trackside training track property, and Churchill Downs Inc. plans to produce those historical racing machines.

At its regular meeting June 20, the Kentucky Horse Racing Commission approved an initial plan to add a completely new 85,000-square-foot facility in the Trackside parking lot area that would house 600-650 machines at the planned launch in late summer 2018. Churchill said it would come back to the commission with a more detailed plan at a later date, but Tuesday's approval will allow the company to begin construction this summer.

Perhaps the biggest regulatory point of concern Tuesday is the planned location, as the Churchill facility would be the first in the state not located at the racetrack site. KHRC general counsel John Forgy advised that the location on Churchill Downs property meets the legal standard, noting that there is no requirement that a historical gaming operation be located on property contiguous to the actual racetrack.

Churchill Downs racetrack president Kevin Flanery said the site's games will be produced by parent company Churchill Downs Inc. CDI technology properties already include social gaming company Big Fish Games and advance-deposit wagering site TwinSpires.com, as well as the tote company United Tote. The $50—$60 million project estimate includes development of the games.

Three other Kentucky Thoroughbred tracks already have historical gaming operations. Kentucky Downs and Ellis Park's games are located on site, while Keeneland has a joint venture with the Red Mile on the games located at the Lexington Standardbred track. The state's other Thoroughbred track, Turfway Park, has been looking into adding the games as well. 

Historical racing machines offer a customer experience similar to slot machines, but payoffs are pari-mutuel in nature and winning combinations are determined by previously run horse races. Efforts in recent years to add slot machines or casinos in Kentucky have come up short, and there is virtually no chance of casino-type gaming being added anytime soon in the state.

Churchill, which faces competition for the gambling dollar from nearby Indiana riverboat casinos, is ready to move forward with historical racing.

"We've been very deliberate in how we've analyzed historical racing and what it means," Flanery said. "We're in a unique marketplace. We're in the state's largest city. There are a lot of entertainment options, including a lot of opportunities to wager in the city and across the river. We wanted to make sure we did it at a time that we could be competitive with those other options and invest in a way that was significant and made the experience what the guest really wants."

He noted that Churchill is comfortable that Louisville will support historical racing.

"We've looked at the games all along and thought, 'Is it something the customers will enjoy?' We're in the process of developing games that we'll bring back to the commission," Flanery said. "We're comfortable that we can create an experience the customer will enjoy."

Located near the Tennessee border and facing little other gambling competition, Kentucky Downs has enjoyed success with its historical racing. Flanery said while Churchill Downs has more competition, it does have the advantage of being located in a large market. The company also will draw on its knowledge as a casino owner in constructing a top-notch facility.

"When you look at the investment we're making, we understand that we're in a more competitive market than some others," Flanery said. "For us, it's about doing it right, doing it in a way that's responsible for Kentucky horsemen."

Flanery wanted to be conservative in estimates in how much the gaming would add to Churchill purses, but said it would be significant, perhaps 10% or more. The new operation has the support of the Kentucky Horsemen's Benevolent and Protective Association and the Kentucky Thoroughbred Association/Kentucky Thoroughbred Owners and Breeders.

Flanery said if the historical gaming facility opens in late summer 2018, purses could benefit as early as late 2018 (Churchill offers racing in September and November) or the 2019 spring meet.

"Kentucky's racing needs to be competitive year-round at all of the facilities," Flanery said. "When we look at this, we look at it as an opportunity to keep horsemen in Kentucky racing at Churchill Downs and then going to the other facilities; making sure they can make a living in our state."

Churchill has no plans to offer historical gaming until the new facility is ready to launch; there would be no temporary facility. The company expects the surface parking available at the site to meet demands. 

Flanery said the addition of the gaming will not impact training operations at Trackside, which he said would continue. Plans call for simulcast wagering to be offered, although Flanery noted that the focus of Churchill's simulcast operations will continue to be on-site, where the track recently invested $16 million in improvements to its second floor where its main simulcast operations are located.

The planned historical racing facility would house two quick-service, walk-up food venues, as well as a bar with seating for 50 and large-format televisions for guests to take in all the best sporting action year-round.

Commissioner Mark Simendinger commended Churchill on the addition of historical racing, saying it would benefit Kentucky racing and horsemen as well as the state. Flanery estimates the project will see 250 construction jobs followed by about 100 full-time, permanent jobs.

KTA/KTOB executive director Chauncey Morris said Churchill's plans are great news for Kentucky racing and breeding.

"We're extremely grateful," Morris said. "Everything Churchill Downs does is always first class. They already have a hugely important footprint on live race dates and the year-round circuit in the state. They're crucial. Anything we can do that innovates that in the Louisville market, which is arguably the most important market in the commonwealth, is hugely important."