Due primarily to increased business Kentucky Derby week and continued growth at TwinSpires.com, Churchill Downs Inc. reported an 8% increase in net revenues from continuing operations for the second quarter of fiscal year 2012.
The Louisville, Ky.-based operator of racetracks and casinos reported net revenues rose $21.1 million to $270.8 million for the period, compared with $249.7 million during the 2011 second quarter ending June 30. Net earnings from continuing operations for the period were $48.6 million, or $2.77 per diluted common share, an increase of 21% from net earnings from continuing operations of $40.1 million, or $2.36 per diluted common share, during the second quarter of 2011.
Earnings from CDI racing operations increased $6.6 million, with $5.4 million of that increased profit coming from increased admissions, sponsorships, and pari-mutuel revenues during the week of the Kentucky Derby Presented by Yum! Brands (gr. I) and Kentucky Oaks (gr. I). CDI-owned tracks also had 17 additional live race days during the quarter, including 11 more live racing dates at Calder Casino & Race Course as a result of a schedule change.
CDI reported net revenues from racing of $160.4 million for the quarter, up 8% from the $148.4 million figure for the same period a year ago.
CDI’s online wagering company, Twinspires.com, experienced a second quarter handle increase of 13%, or $29.7 million, as compared to the prior-year period, driven primarily by new customer growth and an increase in average daily wagering.
The company reported a $6.6 million increase in pre-tax earnings from its casino business sector, but $5 million of that was from a flood insurance payment related to the Harlow’s Casino Resort & Hotel in Mississippi being closed for 25 days due to flood damage.
The company also said Calder Casino decreased profits by $1.1 million before taxes because of competition in that market. CDI executives said the Calder casino had been impacted by the startup of casino-style gaming at a jai-alai facility located about 16 miles south of the Florida track and by aggressive marketing by an established Native American-owned casino about nine miles north of Calder.
Despite that competition, BIll Carstanjen, CDI's president and chief operating officer, said the company was not going to quickly overreact. “As things settle down, we will make adjustments,” Carstanjen said.
CDI chairman and CEO Robert L. Evans said CDI plans to continue to capitalize on the popularity of Derby and Oaks week when it completes a $9 million construction project that will include The Mansion, the recently announced plush seating area that replaces the media center on the sixth floor of the namesake track.
We continue to build our portfolio of growth opportunities,” Evans said in a statement that accompanied the earnings report. “Construction of the super-premium seating venue, The Mansion at Churchill Downs, has begun along with sales for this area for the 2013 Kentucky Oaks and Kentucky Derby.”
Evans said CDI remains optimistic that expanded gaming legislation in Illinois, which is now in front of Gov. Pat Quinn, will include gaming at CDI-owned Arlington Park.
"If not this year, then next year," Evans said of the Illinois situation. "We are not going to walk away from that opportunity."
In other areas, Evans said CDI and its partner, Delaware North Gaming and Entertainment, known as Miami Valley Gaming & Racing LLC, submitted its gaming and racing license applications to the state of Ohio and that later this year the company plans to launch the real-money gaming site Luckity.com.
“And we continue to aggressively evaluate various ventures and potential acquisitions,” Evans said in reference to CDI’s future growth.
