CDI net income up 42 percent in third quarter

Churchill Downs Inc., the racetrack and casino operator based in Louisville, Ky., had net income of $61.4 million in the third quarter of 2021, up 42 percent compared to net income of $43.1 million last year, according to financial documents released late on Wednesday.

Comparisons between the third quarters of 2020 and 2021 are complicated due to disruptions caused last year by the pandemic. Some of Churchill’s casino and racetrack properties were still operating under coronavirus restrictions in the third quarter of last year, and the company held its most lucrative race, the Kentucky Derby, in September of last year, rather than its traditional date, the first Saturday in May.

Revenue for the quarter was $393.0 million, up 16.3 percent compared to revenue in the third quarter of last year of $337.8 million. In a release announcing the results, Churchill said that its net income figure of $61.4 million was a record for the third quarter.

Churchill benefited in the quarter from its Oak Grove casino in southern Kentucky, which opened in September of last year. The Oak Grove operation had $27.1 million in revenue in the third quarter of this year, compared to $2.4 million last year. Churchill also said that its casino south of its Louisville racetrack, Derby City Gaming, had a $14.3 million net revenue increase this year due to the pandemic restrictions that were still in place last year.

Revenue for Twinspires, the company’s account-wagering operation, was $102.2 million in the third quarter this year, down from $127.6 million last year. Churchill markets Twinspires heavily during the Derby, and the company said that the delay in holding the Derby last year until September accounted for the higher net revenue figure in the third quarter of last year.

Handle through Twinspires, the company said, was up $113.2 million, or 30.7 percent, when compared to the same quarter two years ago. The handle figures do not include bets made through the company’s rebate shop, Velocity.

In late September, Churchill announced that it had reached an agreement to sell its 326-acre Arlington Park property outside Chicago to the Chicago Bears for $197.2 million. On a conference call on Thursday morning, Churchill’s chief executive officer, Bill Carstanjen, reiterated that the company expected the sale to close either late in 2022 or early in 2023.

In answering a question from an analyst about the future of Churchill’s presence in Chicago, Carstanjen said that the sale of Arlington was the result of “archaic” racing and gaming laws in Illinois. Churchill declined to pursue a casino at Arlington after legislation was passed in 2019 allowing racetracks to open casinos on-track, contending that the tax rate was too high.

“Our decision to sell Arlington Park really wasn’t any kind of comment on Chicago, or the Chicagoland region or even the state of Illinois, it was really a comment on the archaic racing laws that really haven’t been changed in any material way in that state for 30-plus years, and no longer worked,” Carstanjen said. “While gaming was passed, it really wasn’t passed in a form that could make up for the racing paradigm in the state.”

Carstanjen also said that Churchill is in the process of taking bids for 116 acres of “excess land” around its former Calder Race Course property in Miami, Florida. The track is now a casino.

“We are happy with the process so far,” Carstanjen said.