10/29/2014 4:20PM

Churchill Downs Inc. quarterly revenue, income fall


Churchill Downs Inc. had net income of $3.5 million in the third quarter of 2014, a sharp decline from net income of $9.2 million in the third quarter of last year, as revenue from its racetracks and many of its casinos continued to weaken, according to financial documents released by the company on Wednesday.

Revenue for the quarter was $173.7 million, down 6 percent compared to revenue of $185.5 million in the third quarter last year. The quarterly revenue figure was impacted by a 19 percent drop in revenue from its racing division, largely because the track leased its Miami-area property, Calder Race Course, to a competing racetrack operator as of the beginning of the third quarter.

Overall, it was a very weak quarter for Churchill Downs Inc., whose stock traded above $100 per share for the first time this month. Revenue for most of the company’s properties was down when compared to results in the third quarter last year.

Online revenue for the company was down 5 percent in the quarter, according to the financial documents, from $48.5 million in the third quarter last year to $46.3 million this year. Churchill’s online betting operations, led by its market-leading account-wagering company, twinspires.com, has generally grown on a quarter-by-quarter basis for the last several years. Churchill said that the decline was largely due to the loss of customers in Texas, where Churchill stopped taking bets on Sept. 25 of last year due to a dispute over the legality of internet betting in the state.

Revenue at many of the company’s casino properties was also down for the quarter, with revenue dropping 5 percent at a casino at Calder the company continues to operate; down 3 percent for its Louisiana operations, including a casino at Fair Grounds; and down 5 percent at the Riverwalk Casino property in Mississippi. Revenue for a second casino in Mississippi was flat, while revenue at a Maine casino was up 23 percent, though that was largely because Churchill did not close a deal to buy the property until midway through the third quarter last year.

At its racing properties, revenue at Churchill Downs in Louisville was up 1 percent, despite a significant drop in handle at the track’s meet in September. Earlier this year, Churchill raised the takeout on its bets, and it has also begun charging simulcast sites and account-wagering outlets higher rates, allowing the company to retain more of the revenue from bets at the track.

Racing revenue at Arlington Park was down 5 percent, while racing revenue at Fair Grounds was down 7 percent, according to the financial documents.

Overall, Churchill had $41.1 million in racing revenue during the quarter, down 19 percent. Its revenue from casino operations in the quarter was nearly double that figure, at $81.8 million, up 2 percent.