Churchill Downs Incorporated (CDI) has revealed that it will abandon its online sports betting and online gaming business within the next 6 months, in what it described as the “next step forward” for the company.
The news came as part of an earnings call for CDI’s 2021 financial results. Its online product TwinSpires – which includes horse racing as well as sports betting and igaming – brought in $431.7m in total revenue for the year. However, TwinSpires also accounted for $325.4m in costs.
Bill Carstanjen, CEO of CDI, explained that the company’s sports betting and online gaming business had not performed as expected, emphasising the competitiveness of the space.
“When the US Supreme Court overturned the federal ban on sports betting in May of 2018, we had high hopes for the potential to build a profitable business in this space,” said Carstanjen. “Our initial strategy was to leverage a variable cost technology model and be disciplined in our marketing spend with a focus on bottom line profitability as states legalised online sports wagering and online gaming.”
“However, the online sports betting and online casino space is highly competitive with an ever-increasing number of participants that the states have licensed.
“Because we do not see for us a path in which this business model delivers predictable and acceptable margins for at least several years, if ever, we have decided to exit the B2C online sports betting and igaming space over the next 6 months.”
Carstanjen went on to explain that CDI will now place focus on its retail sports betting offerings, “where we [CDI] are profitable”, adding that this decision is in part due to ensuring solid returns for shareholders.
“We have proven with our past decisions that we are willing to walk away from businesses where we do not see a secure enough path to consistent profitable growth with an acceptable return for our shareholders,” said Carstanjen.
“This isn’t the result we wanted when we started this business back in late 2018, but it is the prudent next step forward for our company.”
Elsewhere CDI announced a number of executive promotions in its gaming sector. Tim Bryant and Michael Meagher have both been named co-vice presidents of gaming operations, where they will oversee CDI’s gaming properties.
Bryant has been with CDI for the past 10 years, where he held the roles of president and general manager of Derby City Gaming in Louisville and president of the Fair Ground Racecourse in New Orleans, Louisiana.
“Tim has successfully led the Derby City Gaming team from the grand opening through a time of unprecedented growth,” said Bill Mudd, president and chief operating officer of CDI. “His commitment to operational excellence and team culture will be a valuable benefit to the properties he will lead with this promotion.”
Most recently, Meagher held the position of CDI’s president of finance for gaming. He was involved in analysing CDI’s financial decisions and driving business results for its gaming properties.
“Michael has been a key leader for this company and brings deep operational understanding to the role of VP of gaming operations,” Mudd shared. “With his involvement and oversight at the property level, I am confident we will see increased efficiencies and continued success.”
Bryant and Meagher both replace Maureen Adams, who was promoted to SVP of gaming operations earlier this month.
Russ Stokes was also promoted to vice president of casino technology. In this role he will oversee the operation of management systems at CDI properties. Stokes joined CDI in 2015 as director of casino technology.
“As CDI’s gaming footprint continues to grow, the analytics and marketing expertise, coupled with technology expertise brought by John and Russ take on even greater importance,” said Mudd. “It’s gratifying and exciting to see this incredible team take the lead during this unprecedented time of growth for our company.”