Kentucky Racing Acquisition to Purchase Kentucky Downs

Kentucky Racing Acquisition ("KRA"), a new company co-founded by Ron Winchell and Marc Falcone, announced Nov. 13 that it has entered into a definitive agreement to purchase all the assets of Kentucky Downs from parent company Kentucky Downs Partners, the investment group that has owned the race track since 2007. Financial terms were not disclosed.

Located near the Kentucky and Tennessee border, approximately 45 miles from Nashville, Tenn., Kentucky Downs features more than 750 Historical Horse Racing ("HHR") machines and conducts live turf racing each September, including the annual running of the Kentucky Turf Cup (G3T). Kentucky Downs is a pioneer in modern historic horse racing, the electronic form of pari-mutuel betting. 

Before the addition of the machines, Kentucky Downs handled about $20 million in pari-mutuel handle in 2010. With its five race dates in 2018 ending in September, Kentucky Downs saw record all-sources handle of $36.4 million. The meet followed a fiscal year 2018 (ending in June) in which its historical horse racing saw $722.5 million in handle, up 26% from FY2017.

The co-founders of KRA are well-known within the horse racing and casino gaming industries. Ron Winchell oversees his family's Winchell Thoroughbreds, a prominent racing and breeding operation located in Lexington, Ky., that currently owns more than 120 horses including racing and breeding stock.

Marc Falcone brings significant financial and gaming experience to Kentucky Downs, having previously served as executive vice president, chief financial officer, and treasurer of Red Rock Resorts and Station Casinos from 2011 to 2017. His previous investment business background includes Goldman Sachs & Co., where he focused on restructuring transactions in the hospitality and gaming sectors; Deutsche Bank Securities, where as managing director he was recognized as one of the gaming, lodging, and leisure industry's top analysts; and Bear, Stearns & Co.

The Winchell name is immediately recognizable in racing circles having campaigned 2017 Horse of the Year Gun Runner  and champion Untapable as well as grade 1 winner and three-time leading sire Tapit . Winchell also operates more than 20 gaming locations across Nevada. His passion for racing is a tribute to his late father Verne's commitment to and history in Kentucky horse racing and breeding.

"Some of my fondest early memories are of visiting race tracks with my father and thoroughbred racing has been a passion of mine ever since. As such, I am personally thrilled to be carrying our family name into this exciting opportunity to take the reins of Kentucky Downs, one of American racing's great success stories of the past decade," Winchell said. "This represents the first step in KRA's plan to further advance racing and HHR in the Commonwealth.

"Kentucky Downs is a great facility with a hard-working team of more than 200 employees and a bright future," Winchell continued. "The total commitment of Kentucky Downs to the horse racing industry, the Commonwealth and its guests and employees has been conclusively demonstrated by continuous reinvestment in the facility and the development of the blueprint for HHR elsewhere in the state. Marc and I are committed to leveraging our passion and love for this great sport and our knowledge of gaming operations to help Kentucky Downs and Kentucky racing to continue to thrive." 

Ray Reid, president of Kentucky Downs Management and Kentucky Downs Partners, said he sees KRA, Winchell, and Falcone as a "perfect fit" for the next chapter in the track's history.

"We purchased Kentucky Downs in 2007 with the goal of reversing the business fortunes of Kentucky racing, and I believe we have done that," Reid said. "Kentucky Downs Partners is confident that Ron and Marc are the right people to continue to expand on this momentum, so much so that many of our current owners intend to be part of and support the new investment group moving forward."  

Marc Falcone commented, "Our agreement to acquire Kentucky Downs represents a terrific opportunity that is consistent with our business plan to grow through strategic investments in racing facilities and apply our operational and management expertise to support future growth. Our commitment to horse racing extends beyond this announced plan to acquire Kentucky Downs as Ron and I believe there are other opportunities where our combined expertise and experience can help foster consistent growth for the sport."

"KRA is committed to continually improve and enhance the business at Kentucky Downs by investing new capital in additional food, beverage, and hospitality offerings as well as in technology and property infrastructure to grow the customer's entertainment experience," Falcone added. "KRA also is focused on the potential opportunity to develop a new facility in Oak Grove, Ky., if awarded that license by KHRC. An Oak Grove property under the umbrella of the new Kentucky Downs ownership would enable constructive marketing and operational synergies, optimizing market development, and economic return to the Commonwealth of Kentucky and the many stakeholders in Kentucky racing, including owners, trainers, breeders, and other professionals. With Kentucky Downs' familiarity and understanding of the Nashville market, KRA would be strategically positioned to maximize that market for Kentucky."

The KRA transaction is expected to close early in Q1 2019, subject to regulatory approvals from Kentucky Horse Racing Commission (KHRC) and other customary closing conditions.