Churchill to buy Exacta Systems, its supplier of historical horse racing machines

Churchill Downs Inc. has reached an agreement to purchase a major manufacturer and supplier of the slot-machine-like devices that are in operation at all of its Kentucky facilities and its new properties in Virginia, the company announced on Monday night.

The agreement will allow Churchill to purchase “all of the outstanding equity interests” of Exacta Systems for $250 million, Churchill said in a release. Exacta Systems, founded in 2013, currently provides historical horse racing machines and operational support for Ellis Park, which is owned by Churchill, and for Colonial Downs in Virginia and its off-track betting parlors and casinos.

Exacta Systems also has supplier and support relationships with casinos in Wyoming and New Hampshire.

Historical horse racing machines have generated hundreds of millions of dollars in revenue for track owners in Kentucky, where they are the only legal electronic gambling device and restricted to companies with racing licenses. A portion of the revenue from the machines goes to purse subsidies, and the embrace of the machines by Kentucky track operators have led to massive purse increases at Kentucky tracks over the past five years.

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Churchill initially balked at installing the devices at its tracks, lobbying instead for legislation that would allow the company’s Kentucky properties to operate full-scale casinos and slot machines. But as the HHR devices began to increasingly resemble slot machines and generate outsized returns for other Kentucky tracks, the company embraced the devices. It now operates the machines at five locations in Kentucky, with one other casino in the works.

Churchill said it will finance the deal with “cash on hand” and by using a portion of its existing credit line. The company said it expected the deal to close “in 2023.”

“For nearly a decade, Exacta has been a creative force supporting the growth of historical horse racing in the U.S.,” said Bill Carstanjen, the chief executive of Churchill, in a release. “We look forward to expanding Exacta’s national footprint and further diversifying the game offerings available to players at [historical horse racing] facilities around the country.”

Churchill purchased Colonial Downs and its OTB parlors in a transaction that closed earlier this year. The company has said that it intends to double the number of machines it operates in the state over the next several years.

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