Churchill Downs Incorporated (CDI) has revealed it will be exiting its sports betting and online gaming business within the next 6 months, in what it described as the “next step forward” for the business.
The news came amid an earnings call for CDI’s 2021 financial results. Its online product TwinSpires – which includes horse racing as well as sports betting and gambling – brought in $431.7 million in total revenue for the year. However, TwinSpires also accounted for $325.4 million in costs.
Bill Carstanjen, CEO of CDI, explained that the company’s sports betting and online gaming businesses have not performed as expected, highlighting the competitiveness of the space.
“When the United States Supreme Court overturned the federal ban on sports betting in May 2018, we had high hopes for the potential to build a profitable business in this space,” Carstanjen said. “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 legalized online sports betting and gambling. “
“However, the online sports betting and online casino space is highly competitive with an ever-increasing number of participants that states have licensed.
“Because we do not see a path for ourselves in which this business model provides predictable and acceptable margins for at least several years, if ever, we have decided to exit the B2C online sports betting and gaming space over the course of for the next 6 months.”
Carstanjen went on to explain that CDI will now focus on its retail sports betting offerings, “where we [CDI] are profitable,” adding that this decision is partly due to the guarantee of strong returns for shareholders.
“We have proven with our past decisions that we are prepared to exit businesses where we do not see a sufficiently secure path to consistent profitable growth with an acceptable return for our shareholders,” Carstanjen said.
“This is not the result we wanted when we started this business at the end of 2018, but it is the next prudent step for our business.”
Elsewhere, CDI has announced a number of executive promotions in its games business. Both Tim Bryant and Michael Meagher have been named co-vice presidents of gaming operations, where they will oversee CDI’s gaming properties.
Bryant has been with CDI for 10 years, where he served as President and General Manager of Derby City Gaming in Louisville and President of Fair Ground Racecourse in New Orleans, Louisiana.
“Tim successfully led the Derby City Gaming team from inception through a period 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 asset to the properties he leads with this promotion.”
Most recently, Meagher served as CDI’s finance president for games. He has been involved in analyzing CDI’s financial decisions and driving business results for its gaming properties.
“Michael has been a key leader for this business and brings a deep operational understanding to the role of VP of Game Operations,” Mudd explained. “With his involvement and oversight at the property level, I am confident we will see increased efficiency and continued success.”
Bryant and Meagher both replace Maureen Adams, who was promoted to senior vice president of gaming operations earlier this month.
Russ Stokes has also been promoted to vice president of casino technology. In this role, he will oversee the operation of CDI’s property management systems. 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 the technology expertise brought by John and Russ, takes on even greater importance,” Mudd said. “It’s rewarding and exciting to see this incredible team take the lead during this time of unprecedented growth for our business.”