Meeker: Wagering Products Must Match Customer Demand

Churchill Downs Inc. will look to develop products that suit its patrons under a new customer relationship management program expected to have "dramatic" results, CDI president Tom Meeker said June 19 during the company's annual shareholders' meeting in Louisville, Ky.

The program, now on the drawing board, figures to grow from CDI's Twin Spires rewards program, which accounts for 22% of the company's on-site business at racetracks and off-track betting facilities with the exception of California. The program will involve employees and customers at every level, Meeker said.

"It will be one of the best opportunities for growth as we move into the future," Meeker said. "We have not matched the product with the demand of the customer."

Because simulcasting accounts for 85% of industry handle, Meeker said the focus would be on developing more products attractive to simulcast customers, such as wagers on packages of stakes or races at company tracks, which CDI currently offers. Meeker indicated there also would be more use of the latest technology in catering to bettors.

"We need to develop customer interfaces," Meeker said. "I don't care what the tote companies say -- they don't provide us with a product that interfaces with the customer. It really is a sorry testament. We're looking to do more in the future, and you will see a multiple array of customer interfaces. Clearly, we must do a better job."

The Churchill Downs Simulcast Network increased its share of the pari-mutuel market in the United States from 18.3% to 19.2% last year. In total, CDI racetracks and wagering outlets accounted for $4.1 billion in bets in 2002. Tracks under the CDI umbrella are Churchill Downs and Ellis Park in Kentucky, Arlington Park in Illinois, Calder Race Course in Florida, Hollywood Park in California, and Hoosier Park in Indiana, as well as all affiliated OTB facilities.

"Simulcasting clearly will continue to be the growth component of the business," Meeker said.

In response to questions from reporters after the shareholder meeting, held at the Trackside OTB facility, Meeker said the company continues to look for a buyer for Ellis Park -- proceeds from the sale of which would be used to pay down debt -- but he indicated it would be business as usual for now. The track, located in western Kentucky, opens in early July and just announced purse hikes for some stakes.

"We are going to continue to operate it, and will put in for a dates application for next year," Meeker said. "We're not proposing to sell it at a fire sale."

With 12,108,000 of the 13,168,489 shares of CDI common stock accounted for at the meeting, an election for four open seats on the board of directors was held. Leonard Coleman Jr., a senior adviser to Major League Baseball; Craig Duchossois, chief executive officer of Duchossois Industries; G. Watts Humphrey Jr., president of GWH Holdings; and Dennis Swanson, executive vice president of Viacom Television Stations Group, were re-elected to three-year terms as Class I directors.

In other notes from the shareholders meeting:

--Meeker said journalists and "naysayers embedded in the industry" are off base in their assessment of the racing industry's health. He cited the more than 450,000 people who attended the Kentucky Oaks, Kentucky Derby, Preakness Stakes, and Belmont Stakes programs, as well as outstanding television ratings, as proof it will not fail.

"There is a vitality in our industry," he said. "You have to ask yourself the question, 'How bad is it?' It isn't that bad. Racing still can and will capture the interest of the community at large."

--With a $121-million renovation of Churchill Downs now under way, Meeker said a common question from shareholders and others has centered on their box seats. In response, he said: "(The box) is going to be in some dump somewhere, because it's going to be removed. We're working on seating plans ... to make sure your needs are satisfied. I ask for your patience."

Boxholders will be notified of new arrangements for the 2003 fall meet and next year's Kentucky Derby, probably by July 30.

--One shareholder complained about having been kept out of giveaways, which go to customers who pay admission. (Only 45% of the gate at Churchill Downs is paid.) Meeker said the idea is to increase revenue for the company.

"If you need a bobblehead, give me a call, and I'll get you one," Meeker told the shareholder. "Some have suggested we have a Tom Meeker bobblehead. I think it should be a pin doll."

--The push for alternative gaming at CDI racetracks would continue, Meeker said, and he made a point to say state legislatures must realize how important horse racing is to the economy and the fabric of life. In a brief meeting with reporters after the shareholders' meeting, he said there is nothing hypocritical about asking for alternative gaming even though the company had positive financial results in 2002.

"Look at Turfway Park -- it's about ready to fall off the map," Meeker said. "Look at Ellis Park. Our company has been able to react to competitive pressures, but it's coming. Long-term, we need to get the trend lines up a little bit farther north."

--CDI plans to keep its Trackside OTB in Louisville open for business even after a new year-round simulcasting facility opens at Churchill Downs when renovations are completed. Meeker said a "small" Trackside operation would cater to horsemen and some patrons, but it makes sense to focus on the new Churchill facility.

When asked if Churchill has a strategy for the Louisville market when and if Indiana Downs, a new competitor, opens an OTB parlor just across the Ohio River from Louisville, Meeker told reporters: "We have a strategy, but you won't be the first to get that story."