Churchill Downs CEO sheds more light on $60M gaming facility, Derby's huge TV showing

Jul 27, 2017, 2:15pm EDT

Churchill Downs Inc. CEO Bill Carstanjen said Thursday that the company is finalizing the design for a $60 million historical-race wagering facility at its former Trackside training and simulcast wagering facility on Poplar Level Road in Louisville.

And he vowed it will be both “innovative” and “competitive,” teasing that it could be the start of something bigger for the company.

Last month, CDI (Nasdaq:CHDN) announced plans for the 85,000-square-foot facility, which will offer historical-racie machines — also known as instant racing — that model games on previously run horse races.

The company received conditional approval from the Kentucky Horse Racing Commission to establish historical race wagering during a meeting in Frankfort last month.

During CDI’s quarterly earnings call with investors and analysts Thursday morning, Carstanjen said the facility will initially be outfitted with 600 historical racing machines, which are similar to slot machines. If the facility proves successful, he said, the complex will be large enough to bring in more machines as needed.

One analyst asked Carstanjen whether this could be the start of multiple facilities of this type in the company’s portfolio. Although nothing else is planned now, Carstanjen said the company hopes more facilities like this one will follow.

In addition to the machines, the complex will have walk-up food venues with quick-service menus and a bar that will seat as many as 50 people alongside large televisions.

The project is expected to create 450 jobs, including 250 temporary construction jobs. The other 200 full- and part-time employees will operate and manage the facility.

Carstanjen said the goal is to have the facility open by late summer or early fall of 2018.

Bad weather but great ratings for Kentucky Derby

Miserable weather on Kentucky Oaks and Derby days in May prevented CDIfrom breaking live attendance records, but it didn’t dissuade the television viewing audience.

Carstanjen said the Derby earned its highest television audience since 1989, with a peak viewership of more than 19 million people. That was the highest Saturday afternoon television program since the NFL’s NFC divisional playoffs in early January, Carstanjen added.

And despite the bad weather, Kentucky Derby Week attendance this year was about 350,000. Last year’s Derby Week attendance was a record 376,980.

CDI sees revenues soar as Big Fish Games dips

CDI posted second-quarter record net revenue of $451.9 million, a 3 percent increase from a year earlier, and record net income of $78.3 million, a 12 percent increase from the prior year.

The company also reported record net income per share of $4.81, diluted, which was 17 percent higher than the previous year.

That came with increases in most of the company’s business segments. Racing net revenue was up about 6.6 percent, to $175.7 million, because of the boost from the Kentucky Derby. Casino revenue was up about 4.6 percent, to $88.3 million, because of a strong quarter in a few of the company’s properties.

But BIg Fish Games, the Seattle-based mobile and online video game company owned by CDI, saw a 10 percent decline in its overall net revenue, to $112.6 million.

The company said it anticipated the fall and attributed it to revenue declines for both its premium and casual free-to-play games. Social casino gaming purchases were actually up for the quarter.

Carstanjen said the company remains confident in its purchase of Big Fish Gamesand its offerings and believes it will generate a strong return on investment over time.

Marty Finley covers economic development, commercial and residential real estate, government and sports business.


Here's how much parking Churchill Downs is adding at the racetrack

Updated

Churchill Downs Racetrack is moving ahead with a plan to add new parking on land it recently acquired to the west of the track.

The property was bought as part of a recent round of land acquisition that cost $13 million or more for vacant lots, houses and commercial lots surrounding the facility, some of which have been razed.

Churchill Downs Racetrack general manager Ryan Jordan told me Tuesday morning that the plan calls for 100 more parking spaces at the racetrack, which has more than 4,000 existing spaces in and around the project area. Churchill Downs filed applications for the addition with Louisville Metro Planning and Design Services on Monday.

The new parking area will have numerous landscape islands outfitted with rainwater boxes to curb stormwater runoff and about 900 new trees to beautify the space. A perimeter fence will serve as a buffer zone between the roadway and the parking lot. Interior walking paths will be added to direct pedestrian flow from the parking lot to the racetrack’s entrances, Jordan said.

The fence will be designed to secure the parking area, particularly during off-hours and when racing is not active, according to the plans.

Churchill Downs asked the city earlier this month to close a grid of alleys and small streets between Churchill Downs properties on the west side of the track to accommodate the new parking. Those streets and alleys are bordered by Central Avenue to the north and Bohannon Avenue to the west, and the request is still pending, Jordan said.

Receiving authorization from the city to close those streets and alleys and gaining approval for the development plan will shape the construction timeline, though Churchill Downs wants to get started by October or November of this year and have some of the work done in time for the 2018 Kentucky Derby. The rest of the work should be completed in time for the track’s 2018 Fall Meet and the Breeders’ Cup in November 2018, Jordan said.

Costs are being worked out as the racetrack finalizes some of the design elements.

For instance, a vehicle maneuvering area and a promenade have been proposed to move visitors between the parking area to track entrances. The full scope of the promenade is under development, but Jordan said it will be equipped with a sidewalk wrapping between Gate 1 and Gate 10 to the parking area, providing a safe walking path to the track’s main entrances.

This is the latest in a series of new capital projects for the racetrack. The track is in the midst of a $37 million, three-story addition that will add 1,800 seats in luxury suites, dining areas and a third-floor grandstand. That development will be finished in time for the 2018 Kentucky Derby.

And Churchill Downs announced a plan last week to allocate $60 million for construction of a historical race wagering facility in Louisville at its former Trackside training and simulcast wagering facility on Poplar Level Road. That facility could open next year.

The 85,000-square-foot facility will offer about 600 historical racing machines, also known as instant racing, that model games off previously run horse races. It also will have dining and bar venues.

Churchill Downs Racetrack is owned by Louisville-based Churchill Downs Inc. (Nasdaq:CHDN), which owns numerous racetracks and casinos across the U.S.

Marty Finley covers economic development, commercial and residential real estate, government and sports business.


Churchill Downs to invest $60 million in electronic gambling facility

By BORIS LADWIG |

A rendering of Churchill Downs’ planned $60 million electronic gambling facility. Courtesy of Churchill Downs

Churchill Downs Inc. plans to spend $60 million to create an 85,000-square-foot electronic gambling facility east of the airport.

CDI said the Kentucky Horse Racing Commission on Tuesday afternoon had given conditional approval to the company’s request to offer “exotic wagering on historical racing.”

CDI said the state-of-the-art structure, at 4520 Poplar Level Road, the location of the company’s former Trackside training center, will be staffed by 200 new full- and part-time employees in areas ranging from food service to information technology and administration. Wage information was not immediately available. Job fairs will be held at Trackside.

CDI said the structure would include two quick-service restaurants, a bar, large TVs and 600 so-called historic racing machines. Historic racing refers to electronic betting on replays of horse races. Some of the betting machines resemble slot machines.

The Louisville-based company said in a press release that the project also would create 250 construction jobs.

Kevin Flanery

“This is a great opportunity for us to revitalize another area of our city while strengthening the commonwealth’s equine industry through larger purses and greater incentives for Kentucky breeders and owners,” Churchill Downs Racetrack President Kevin Flanery said in the release. “Stronger horse racing means a stronger Kentucky.”

The company said in a press release that it hoped to begin construction this year and open the venue by summer of next year.

Churchill Downs had said in March that its mobile betting subsidiary, TwinSpires, had relocated its headquarters to Louisville from Southern California, bringing more than 70 technology-focused jobs to Kentucky.


Churchill Downs to spend $60M on new gaming facility in Louisville

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Churchill Downs Inc. is investing about $60 million to build a historical race wagering facility in Louisville at its former Trackside training and simulcast wagering facility on Poplar Level Road.

The 85,000-square-foot facility will offer historical racing machines, also known as instant racing, that model games off previously run horse races. The announcement came after Churchill Downs (NASDAQ: CHDN) received conditional approval from the Kentucky Horse Racing Commission to establish historical race wagering during a meeting in Frankfort today.

“A state-of-the-art historic racing facility will allow us to deliver an exciting and compelling pari-mutuel product for our customers in Louisville,” Churchill Downs Racetrack president Kevin Flanery said in a news release. “This is a great opportunity for us to revitalize another area of our city while strengthening the commonwealth’s equine industry through larger purses and greater incentives for Kentucky breeders and owners. Stronger horse racing means a stronger Kentucky.”

In a phone interview following the announcement, Flanery told me Churchill Downs has been considering this option since the commission authorized historical race wagering several years ago, but it wanted to ensure it is competitive and can produce the type of facility the community will take pride in.

The facility will feature 600 historical racing machines, which are similar to slot machines, and a player’s club reward center. The reward center will offer perks for members, such as exclusive parking. And the complex will sport walk-up food venues with quick-service menus and a bar that will seat as many as 50 people alongside large televisions.

Construction of the facility will start later this year, and it is expected to open by the summer of 2018.

The project will create 450 jobs, including 250 temporary construction jobs. The other 200 full- and part-time employees will operate and manage the facility.

Churchill Downs said it will hire hourly and salaried employees in a number of designated areas, such as operations, marketing, finance, food and beverage, maintenance, information technology, human resources, security and administration. To find employees, job fairs will be held at the Trackside site and at Churchill Downs Racetrack.

Historical race wagering’s legality has been questioned at the state level for years, and a long-running court case challenging it remains pending in Franklin Circuit Court. Flanery said Churchill Downs’ general counsel has thoroughly reviewed the case and feels comfortable in moving forward on the facility.

Opponents have argued historical race wagering does not follow state regulations on gaming, but the option already has been adopted at Keenelandand The Red Mile in Lexington, Kentucky Downs in Franklin and Ellis Park Racecourse in Henderson, according to this report by the Lexington Herald-Leader. Turfway Park in Florence also has been approved for the option, the report said.

Flanery said final approval for individual machines will be required from the Kentucky Horse Racing Commission, and the racetrack will work hand-in-hand with the commission on floor layout and facility design.

This announcement comes in the midst of a very busy time for Churchill Downs. The company recently relocated its advance deposit wagering service, TwinSpires, from Mountain View, Calif., to the company’s corporate headquarters at 600 N. Hurstbourne Parkway in Louisville.

The move cost about $2.2 million for the office expansion, and it is expected to create about 100 high-paying jobs.

Likewise, a hum of activity is circulating at and around Churchill Downs Racetrack itself. The racetrack has started a $37 million three-story addition that will add 1,800 seats in luxury suites, dining areas and a third-floor grandstand. That development will be finished in time for the 2018 Kentucky Derby.

Churchill Downs also has spent more than $13 million scooping up properties around the track, some of which will be used to expand parking.


Churchill Downs has a plan to add more parking

Jun 7, 2017, 7:03am EDT

Churchill Downs Racetrack wants Louisville Metro Government to close several streets and alleys west of the track so it can expand its parking capacity.

WDRB.com reports that in an application filed with Louisville Metro Planning and Design Services, Churchill said the closures would allow for “substantial parking and landscaping enhancements” on the west side of the track.

WDRB reported last month that an affiliate of Churchill Downs Inc. (Nasdaq: CHDN) had bought nearly three dozen vacant lots, houses and commercial properties on three sides of the Central Avenue track, spending more than $13 million.

Churchill Downs spokesman John Asher told WDRB that track officials are trying to decide the best use for the property.

Churchill CEO Bill Carstanjen told WDRB last month that company officials hope the newly acquired property would “have a purpose beyond just parking,” but he declined to elaborate.


Churchill Downs creating nearly 100 Louisville HQ jobs by end of year

Updated

Ten years later, Twinspires has come back home to Kentucky.

Louisville-based Churchill Downs Inc. (Nasdaq: CHDN) has completed the relocation of the advance deposit wagering service from Mountain View, Calif., to the company’s corporate headquarters at 600 N. Hurstbourne Parkway in Louisville.

With the move, about 70 high-paying jobs already have been filled, and CDI has spent $2.2 million to outfit an additional 15,000 square feet in the building, which is in the University of Louisville’s ShelbyHurst Office and Research Park. The company now has 50,000 square feet in the building as its anchor tenant and is expected to create another 25 Twinspires jobs in Louisville by year’s end. The jobs pay $75,000 to $110,000.

With the relocation, Twinspires now has 208 employees in Kentucky, including 140 or so in leased office space in Lexington. Churchill Downs CEO Bill Carstanjen said those jobs will remain in Lexington to keep a strong presence in the state’s two largest cities.

Not surprisingly, the bulk of the jobs are new hires, as only six to eight of Twinspires’ California employees made the move to Kentucky, according to Twinspires officials.

The Twinspires relocation was first announced during an earnings call by Carstanjen last August, and he said Tuesday that the move has been a year in the making.

But the idea got its start in 2014, when company officials started discussing the long-term future of the wagering platform. Carstanjen and other CDI officials conceptualized and founded Twinspires with five employees in Louisville in 2007. At the time, Carstanjen was the company’s executive vice president, general counsel and chief development officer.

Carstanjen said the company was moved to California shortly after its was founded to take advantage of the talent pool and IT experience in Silicon Valley, saying he did not have confidence that Kentucky had the tech talent a decade ago to meet the company’s needs. Last year, $1.1 billion in total handle, or 10 percent of total U.S. wagering on horse racing, came through Twinspires.

But a lot can change in 10 years. Carstanjen said Louisville’s economic development activity has helped created a larger and more robust tech environment in Louisville. And he believes the local tech scene is flexible enough now to help Twinspires stay competitive.

Kentucky Gov. Matt Bevin praised the move, saying it is a trademark example of the type of jobs he wants to come to Kentucky as he works to establish the state as an advanced manufacturing and engineering hub.

Bevin also said it is fitting that an old and storied company such as Churchill Downs is investing in high-tech jobs and a sleek, modern office in Louisville’s East End.

The governor said he will look back and measure success for his administration when governors of other states are scratching their heads and wondering why their residents are moving to Kentucky for job opportunities.

Mary Ellen Wiederwohl, chief of Louisville Forward, Louisville Metro Government’s economic development arm, also praised Churchill Downs for its expansion. She said the city’s business services division is the fastest growing sector for Metro Government and has long-term potential to create jobs that will attract this type of talent from across the country.

Carstanjen said the decision was nothing but “positive energy” and that California’s cost of living and more expensive tax structure were not major factors in the relocation.

But Bevin said the money that will be earned through these jobs will have more purchasing power for its employees to buy larger houses and invest in the city’s vibrant arts and entertainment scene.

“That’s good for Louisville, and it’s good for Kentucky,” he said.

During the news conference, Bevin was asked about the possibility of expanded gaming in Kentucky, particularly casino gambling. Bevin said there is “no political will” for casino gambling by the Kentucky General Assembly, noting that it would take legislative action to legalize such a concept.

Bevin, a Republican, noted that his predecessor, Democrat Steve Beshear, made casino gambling a significant goal for his administration but was unsuccessful in a friendlier legislative environment. Today, the GOP controls both houses of the state legislature.

Carstanjen and CDI long have supported expanded gaming in Kentucky, but he told me after the news conference that the company doesn’t waste its time dwelling on what’s not available. He said a lack of casino gaming in Kentucky has not slowed the company’s ability to harvest all the possibilities available to it here.

“If you worry about what you can’t change, it will drive you crazy,” he told me.

Today, CDI has grown to include several horse-racing tracks and casinos as part of its portfolio. The company also owns totalizator company United Tote Inc. and Seattle-based video game company Big Fish Games.

Nationwide, CDI has about 4,000 employees, 676 of whom are based in Kentucky, either at the corporate office, Churchill Downs Racetrack, Twinspires or United Tote. The company’s East End headquarters has 200 or more of those employees.

When asked, Carstanjen said it us unlikely any of Big Fish Games’ roughly 600 employees will join Twinspires in Louisville. The company was founded and cultivated in Seattle, its executive team has long called Seattle home, and it is a decidedly West Coast company.

The company also has a larger mass of employees in a city where game development talent is widespread.

“If it ain’t broke, don’t fix it,” Carstanjen said.

Marty Finley covers economic development, commercial and residential real estate, government and sports business.


Renovations, William Walker highlight Spring Meet opening at Churchill Downs

After a busy winter at Churchill Downs, track President Kevin Flanery took a few minutes Friday morning to watch some of the horses expected to start in next Saturday’s 143rd Kentucky Derby put in their workouts.

When the 38-day Spring Meet gets underway at 6 p.m. on Saturday, April 29, the track throws open the doors on its latest renovation work, a $16 million project to modernize the second floor of the Clubhouse. The area, which includes a completely upgraded facility with many creature comforts, typically can hold about 13,000 patrons.

But racing fans are likely to spot many other improvements throughout the plant, such as more ATMs and additional trashcans to toss those losing mutuel tickets. In the Clubhouse renovation alone, where foot traffic patterns were streamlined, the restroom capacity was more than doubled, along with the installation of more than 220 flat-screen TVs and upgraded food and beverage service.

“We are focusing on the guest experience,” Flanery said. “It is really amazing what our team does each year.”

With the usual large crowd expected on opening night, Saturday gives Churchill Downs a chance for a shakedown run to work out the kinks ahead of Derby Week, which begins Tuesday, leading up to next Friday’s 143rd Kentucky Oaks for 3-year-old fillies, followed by the Derby on Saturday, when the nation’s attention focuses on the historic Central Avenue plant.

Part of the opening night festivities will include the second annual teaming with Louisville’s Fund for the Arts to showcase some 150 local artists with 20 live arts performances around the track. A portion of the proceeds Saturday will benefit the Fund for the Arts.

But Churchill Downs is built for horse racing, and fans will have an 11-race program to watch.

The feature event is the $100,000 third running of the William Walker Purse for 3-year-olds, which attracted a field of seven, headed by the Todd Pletcher-trained Syndergaard. The New York-bred colt – racing in the colors of Eric Fein, Christopher McKenna, Harris Fein, Guri Singh and Jerry Walia – drew the rail and will be ridden by his regular jockey, John Velazquez.

Syndergaard, the horse and not the Mets’ pitcher (Noah Syndergaard), is making his first start this year after finishing fifth in the Grade I Breeders’ Cup Juvenile last November at Santa Anita. As a 2-year-old, he was nosed out in the Champagne Stakes at Belmont by Practical Joke, after winning his first two starts at Saratoga. He is the 4-5 morning line favorite.

Drawing toward the outside in post position 6 is Conquest Wildcat, a 5-1 shot trained by Randy Morse with Corey Lanerie appointed to ride. The Florida-bred, who won his maiden at Churchill Downs last May, finished second the last time out two weeks ago in the Bachelor at Oaklawn Park.

Not to be overlooked is locally based En Hanse, also at 5-1, who’ll have Julien Leparoux aboard. The colt, owned by Kendall Hansen and Bode Miller and trained by Mike Maker, won here last fall and scored some strong results at Turfway Park before finishing ninth in the Grade III Spiral Stakes on March 25.

After opening night, Churchill takes two days off, before three days of day racing with a 12:45 p.m. post time.


KENTUCKY DERBY | Gov. Bevin A Fan of Churchill Downs Renovations

05/06/2017 02:59 PM

Churchill Downs recently completed its renovation of some parts of its legendary Clubhouse.

And Kentucky Governor Matt Bevin is a fan.

“It’s stunning. It’s beautiful,” said Gov. Matt Bevin. “It’s a first-class institution. It’s a first-class company. And the way in which they have continued every year to make this event even better and better for the guests that come is spectacular.”

There are so many new aspects to the Clubhouse, including new bars and lounges, but one thing stands out to Gov. Bevin.

“Just the way they’ve widened some of the hallways where people can move through,” said Gov. Bevin. “It’s just made it a lot more open and airy and accessible.”

 


Renovated Churchill Downs clubhouse draws bustling crowd, high praise on Oaks Day

May 5, 2017, 1:52pm EDT

Louisville-based Churchill Downs Inc. dropped $16 million this year to upgrade the second-floor clubhouse at its namesake Louisville racetrack.

The project wrapped up just a few weeks before Derby week, and it served as a warm shelter for hundreds of people escaping the rain, wind and sudden cold snap of weather that hit the Kentucky Oaks this morning.

As I previously reported, Churchill Downs has modernized about 95,000 square feet in the clubhouse to improve circulation and service. During larger events, the clubhouse typically hosts thousands of guests.

The project includes updated televisions, several bars named after past Derby winners and more points of sale and larger walkways to reduce wait times and long lines.

I took a walk around the clubhouse before noon today and found the wagering booths, bars and concession stands had heavy traffic, but the wider hallways and the numerous pay options kept the lines lean and manageable.

I also spoke to several people — grizzled Oaks and Derby veterans and first-timers alike — who were pleased with the service and quality of the products they received and were enamored with the new artwork on the walls, including a splashy mural that shows Derby jockeys, trainers and owners and immediately catches your eye.

Kenny and Lenae Kavanaugh of Jeffersonville are frequent visitors to the Kentucky Oaks and said they felt much more comfortable in the clubhouse with the wider layout and ease of service that has cut the lines.

Kenny Kavanaugh said people were almost on top of one another in the old clubhouse layout, which cheapened the experience, forced them to wait longer to buy food or drinks or place bets and made it harder to get from the clubhouse to their seats for the next race.

“Kudos to Churchill Downs for this investment,” and listening to their customers, Kenny Kavanaugh said.

Dawn Paden and George Heilman have been coming to the Derby for decades. The couple met seven years ago at the 2010 Kentucky Derby and are involved in Thoroughbred training back home in Mountain Home, Ark.

They stop into the clubhouse when they come to town, and Heilman said the renovation is a definite improvement on the old layout and should make life easier for those who use its services.

With rain and wind hitting the track hard today, Heilman expected many would look to the clubhouse for warmth and accommodations.

“It’s going to be a real test,” he said. As the day chugged along, the clubhouse filled with more people and lines did get longer.

From a broader standpoint, Heilman did express some reservations with the direction CDI has taken with its capital improvements, saying he feels the company is focusing more on luxury areas inside the track and, in the process, making the experience harder to afford for those with modest incomes.

Charles and Jennifer Ansaroff, a Boca Raton, Fla., couple, were taking in the experience inside the clubhouse’s new Aristides Lounge, named after the winner of the first Kentucky Derby.

The lounge is in a corner of the clubhouse that previously was used for storage and temporary event space during the Derby and other special events. Now, it has table seating for about 300 guests, 27 flat-screen televisions and a full-service bar. During my visit earlier today, a large crowd had filed into the lounge, where a large food spread was arranged and a band was playing.

The lounge also includes graphics honoring Aristides and his jockey, Oliver Lewis, as well as mosaic wallpaper created from vintage wagering tickets.

Charles Ansaroff in particular paid attention to what he called an old-school feel in a “prestigious” event setting.

“This place is amazing,” Ansaroff said.

Kevin Flanery, president of Churchill Downs Racetrack, has said the clubhouse redesign is a re-imagining of Churchill Downs’ vaunted history, paying respects to the past while modernizing for the future.

Scott and Lisa Cochran, a couple from Atlanta who recently moved to Fort Knox, Ky., on an Army assignment, were snapping pictures of one another in front of one of the clubhouse murals after upgrading their tickets from the infield.

“We want the entire (Derby) experience,” Scott Cochran said.

Marty Finley covers economic development, commercial and residential real estate, government and sports business.


Here's who was hanging out at the Turf Club at Churchill Downs on Derby Day

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The Turf Club is one of the most exclusive spots at Churchill Downs Racetrack outside of the Mansion, and it is never short on celebrities and other high-profile guests on Derby day.

Photographer Ron Bath and I took a tour of the Turf Club in the early afternoon Saturday and were immediately inundated with famous faces, such as country music stars Kix Brooks and Eddie Montgomery of Montgomery Gentry.

We also ran into multiple sports stars, including recently retired Major League Baseball slugger David Ortiz, who has become a Boston icon for his storied tenure with the Boston Red Sox, and NFL great Jerry Rice, who dazzled audiences with his quick feet and smooth hands while playing for the San Francisco 49ers.

Ortiz is featured in our gallery. Unfortunately, Rice was moving quickly (no surprise for a hall-of-fame wide receiver) and made it to the off-limits Turf terrace before we could grab him for a photo.

Other faces we ran into included Stephen Amell of the television show “Arrow” and movie star Jesse Eisenberg, known for movies such as “The Social Network” and “Zombieland.”

Dolvett Quince, a personal trainer on “The Biggest Loser” and grand marshal of the Pegasus Parade, was gracious enough to chat with us and even recorded a video greeting for my wife, who is a big fan.

To see our full line-up of Turf Club names we ran into, check out our gallery above.

Marty Finley covers economic development, commercial and residential real estate, government and sports business.