Churchill Downs Inc. net revenue climbs 40 percent

Churchill Downs Inc., the multi-faceted entertainment and gambling company that owns Churchill Downs in Louisville, Ky., had net income of $65.2 million in 2015, up 40.5 percent compared with net revenue of $46.4 million in 2014, according to financial statements released late on Wednesday.

Total revenue during the year was $1.212 billion, a record for the company and up 49 percent compared with revenue of $812.3 million last year. During the year, Big Fish, a social-gaming company that Churchill purchased late in 2014, had revenue of $413.7 million, accounting for nearly all of the revenue growth year-over-year.

Churchill’s racing operations, which includes its four racetracks, had net revenue of $248.6 million during the year, down 4.9 percent compared with racing revenue of $261.5 million in 2014. Operating expenses for the racing division dropped 12 percent, from $216.3 million in 2014 to $190.2 million last year, in part because Churchill is no longer incurring expenses for the racing operation at Miami’s Calder Race Course, which is being leased to a third party.

Though Churchill did not break out its revenue numbers for Derby week, the company said that revenue was a record for the period and that adjusted earnings before interest, taxes, depreciation, and amortization from the week was up $6 million. Total revenue from Churchill Downs, the track, was $151.1 million, up 5.5 percent compared with revenue of $143.2 million in 2014.

Total 2015 revenue for twinspires.com, Churchill advanced-deposit wagering company, was $200.2 million, up 5.2 percent compared with 2014. Churchill said handle through twinspires.com was up 7.5 percent during the year, compared with a total U.S. handle increase in 2015 of 1.2 percent. While revenue was up, expenses for twinspires.com were even with 2014, at $133.3 million.

Big Fish, which offers a variety of mobile games, including a “social casino,” had expenses of $340.1 million for 2015, compared with the $413.7 million revenue number. Churchill also recorded $39.4 million in “research and development” costs, according to its income statement. Those costs, which only began appearing as a line item this year, account for the development of Big Fish games, officials have said, leading to total expenses of $379.5 million related to Big Fish.

Churchill’s five casinos had net revenue of $332.3 million during 2015, compared with net revenue of $328.3 million in 2014. Operating expenses for the casino division was $240.9 million, down slightly from operating expenses of $243.4 million in 2014. Revenues were down slightly at three of the five properties.

Interest expense during the year rose 37.2 percent, from $20.8 million in 2014 to $28.6 million. At the end of the year, Churchill had long-term debt of $171 million and notes payable of $593.7 million. It also recorded a $279.5 million liability on its balance sheet for payments due to the former owners of Big Fish, which was purchased in a deal worth as much as $1 billion.