Handle Declines at Churchill-Owned Tracks

Although wagering fell at the four tracks, revenues from racing increased.

Despite an increase in racing days during the first six months of this year, total pari-mutuel handle at Churchill Downs, Inc.-owned tracks fell 9.7%, from $1.06 billion in 2013, to $958.3 million, according to figures included in the quarterly report issued July 30.

As reported July 30 when the financial reports were released, despite the downturn in handle, CDI registered a 4% increase in net revenues from its racing operations for the first six months, from $192.4 million in 2013 to $199.4 million this year. That includes a 2% improvement in revenues from pari-mutuel handle, thanks to increased revenues from handle at Churchill Downs racetrack and a handle increase at CDI's advance-deposit wagering outlet TwinSpires.com. 

Also, second quarter racing revenues rose 1% to $159.4 million, from $157.4 million.

The company reported that during the first half of 2014, there were 206 live Thoroughbred racing days at CDI tracks, compared with 180 during the first half of last year. During the second quarter of 2014Jan. 1-June 30there were 10 fewer live racing days at CDI-owned tracks, from 124 to 114, with handle down 17% during that period.

Churchill Downs operates its flagship track in Louisville, Ky., Fair Grounds Race Course and Slots in New Orleans, La., Arlington International near Chicago, Ill., and Calder Casino and Race Course in South Florida.

CDI has a corporate policy in which its tracks do not report wagering or attendance on a regular basis, except for major race days such days when the Kentucky Derby Presented by Yum! Brands (gr. I), Kentucky Oaks (gr. I), and night racing takes place. Some of the tracks' handle numbers have been reported after being obtained from records the tracks are required to file with regulators, but the quarterly report provides the first overview of the wagering trend at the racetrack- and casino-operating company.

By track, Churchill Downs' handle fell by $52.25 million during the first half of the year, from $461.4 million to $409.2 million; Arlington handle was down 13%, from $246.9 million to $215.6 million; Fair Grounds handle declined 9% from $195.0 million to $177.7 million; and Calder fell only 1% from $157.6 million to $155.8 million. 

But Churchill Downs racetrack registered a 7 percent increase ($2.848 million) in revenues from pari-mutuel wagering, thanks to improved handle on Kentucky Derby Presented by Yum! Brands (gr. I) weekend and the increased takeout rate generating more revenue for the track. Commissions for the Churchill meet were up from 8.8% last year to 10.6% this year.

No other track reported increased revenue, although CDI's advance-deposit wagering saw a 6% increase in handle and 7% increase in net pari-mutuel revenues, up $5.72 million this year to $86.413 million. Pari-mutuel handle for Churchill's online business reached $449,286,000 in the first six months of the year, up $28.99 million compared with last year. Churchill said those online numbers do not include its Isle of Man, high-end player, Velocity Wagering Services.

During the second quarter of fiscal 2014, CDI entered into an agreement with Gulfstream Park to lease and manage the live racing operations of Calder. Previous to that pact, the two South Florida tracks had engaged in head-to-head live racing competition.

The CDI earnings report said 214 full-time positions at Calder were eliminated as a result of the Gulfstream-Calder agreement, which provides that Churchill continue to operate the Calder casino.

In its written analysis of the six-month and second quarter handle trends, CDI said the wagering downturn was "primarily due to the loss of Calder hosting revenues and declines in Florida wagering, and from field-size challenges impacting business levels at our Churchill Downs and Arlington locations."

According to The Jockey Club Information Systems, there were an average 7.29 runners per race during the 38-day Churchill Downs spring meet, compared with 7.78 per race during the same 38-day meet a year ago. At Arlington, fields have average 7.68 per race during the first 52 days of the 2014 meet, compared with 8.01 for the same number of days in 2013.

The Horseplayers Association of North America had called upon its members and other bettors to boycott Churchill Downs, and other CDI tracks, after the flagship track hiked takeout ratesthe amount taken out of each $1 wagered before the rest is returned to the bettors—for the spring meet.

In a release, the company said the strong overall corporate results for the second quarter were due to the acquisition of a casino in Oxford, Miss., and an $8.8 million increase over 2013 in revenues from Kentucky Derby Presented by Yum! Brands (gr. I) and Kentucky Oaks (gr. I) week.