Churchill Increases Kentucky Downs Investment

CDI continues to increase its investment in track that offers Instant Racing.

Churchill Downs Inc. has invested at least an additional $1 million in Kentucky Downs, the track in South Central Kentucky that has reaped millions in revenues from Instant Racing machines introduced last fall.

In the latest quarterly report filed by CDI with the Securities and Exchange Commission, the Louisville, Ky.-based racetrack and casino operator noted that among the investments during the previous six-month period ending June 30 was “an increase of $1 million in our investment in Kentucky Downs."

When a partnership headed by racetrack management veteran Corey Johnsen and investment banker Ray Reid purchased 85% Kentucky Downs in 2007, previous owners Churchill Downs, Turfway Park, and Brad Kelley each retained a 5% ownership interest.

The quarterly report did say when the purchase took place, nor did it give a figure for CDI’s total investment in Kentucky Downs. Attempts to reach Bill Mudd, vice president and chief financial officer of CDI, for comment on the company’s investment in Kentucky Downs were unsuccessful.

Located in Franklin, Ky., Kentucky Downs is the first track in the state to offer a form of Instant Racing, electronic games that resemble slot machines in which the outcome is determined by previously run horse races. Technically known as Historical Race Wagering in Kentucky, the alternative form of gaming has been deemed legal by the state Attorney General’s office since the outcome is based on the older races. The legality of Instant Racing is being challenged in the courts.

According to the Kentucky Horse Racing Commission, since Instant Racing began at Kentucky Downs last fall, a total $129.9 million had been wagered on the machines through July 31 of this year. Of that total, Kentucky Downs has made $8.9 million on the machines. Purses at Kentucky tracks have received $1.2 million from Instant Racing and the state and other horse industry programs have also been enriched by the machines at Kentucky Downs.

Churchill Downs has been reluctant to embrace the new form of wagering at its flagship track in Louisville, noting that it wants to wait until the legal issues are settled and has questions about the economical viability of Instant Racing at the Louisville facility.

“Despite the approval of the KHRC, there are questions with regard to the economic viability of the HRM (Historical Racing Machines) in a competitive wagering market such as Louisville, as well as the legality of the new regulations that were enacted to allow HRMs,” CDI said in the quarterly report. “We do not expect to make any decisions on whether to pursue HRMs until both of these questions are answered.”