The approval of electronic pull-tabs in Indiana and the introduction of video lottery legislation in Kentucky kept the stock market rallying around Churchill Downs on Tuesday.
Churchill's stock rose as much as $3.25 during most of the day, spiking above $43 per share just after 10 a.m. and not sliding substantially until after 2:30 p.m. The stock price closed 4.5% higher by day's end at $41.80 and volume was heavy with 194,500 shares changing hands. In anticipation of Tuesday's events, the stock rose $3.22 Monday on a volume of 75,500 shares.
The Indiana House approved a gambling bill that allow electronic pull-tab machines at the state's two racetracks. Chruchill Downs Inc. is the majority owner of Hoosier Park in Anderson, Ind. The pull-tab machines are to compensate for the elimination of a $26 million subsidy the Indiana Horse Racing Commission receives from riverboat gambling. The subsidy is to be phased out over three years.
Legislation also was introduced in Kentucky where video lottery wagering could double Churchill Downs' purses to $58 million a year and generate even greater increases at other state racetracks. After three years, the gaming machines are expected to generate about $440 million annually.
In other racing stock news, MTR Gaming stock fell 8.8% Tuesday to $12.40. The company has had trouble converting its slot machines to accept $5 wagers do to supplier problems. MTR Gaming, owner of Mountaineer Park in West Virginia, also reported higher than anticipated expenses associated with a new hotel.
CIBC World Markets didn't help the stock when it downgraded its recommendations from "buy" to "hold" on Tuesday. Trading was heavy with 2,535,500 shares changing hands compared with the average daily volume of 528,681.