Churchill Downs Inc. net revenue falls 5 percent in 2013

Churchill Downs Inc. had net income of $55 million in 2013, down 5 percent compared with net income of $58.3 million in 2012, while posting record revenues for the third year in a row, according to financial documents released by the company late on Wednesday.

Revenue for the year rose 7 percent to a record $779.3 million, with the gain due entirely to higher revenues from Churchill’s casinos. Live racing revenue fell 9 percent during the year, despite strong gains for the Kentucky Derby and Oaks, largely because of losses at Churchill’s Calder Race Course in Miami. Meanwhile, revenue from Churchill’s online operations, a significant source of growth in the last several years, jumped only 1 percent.

In total for the year, live racing revenue dropped $27.4 million, from $302 million in 2012 to $274.3 million, according to the documents. Revenue from Calder’s operations dropped $28.3 million during the year, , as a result of head-to-head competition with Gulfstream Park during the latter half of the year and, as a result, a sharp drop in Calder’s simulcasting revenues associated with its loss of an exclusive right to sell simulcast signals in the state.

Revenue at the company’s Arlington Park near Chicago was also down in 2013, from $69.1 million to $64.5 million, or 7 percent. Racing revenue at Fair Grounds dropped 8 percent, from $44.2 million in 2012 to $40.1 million in 2013.

Revenue at Churchill Downs, the company’s flagship track in Louisville, Ky., jumped 7 percent, from $124.3 million in 2012 to $132.8 million in 2013. The company said the gains were due to sharply higher revenue for its two busiest racedays, the first Friday and Saturday in May, when the Oaks and the Derby are held. In addition, the company said a brief meet Churchill held in September for the first time resulted in a slight gain in revenue.

Casino revenue soared from $223 million in 2012 to $297.5 million, with the casino total surpassing Churchill’s total annual racing revenue for the first time in the company’s history. While revenues at the three casinos owned by Churchill prior to 2012 were all flat when compared with revenue at the casinos in 2013, the casino figures were boosted by the inclusion of full-year revenues for a Mississippi casino Churchill bought late in 2012 and a Maine casino Churchill bought midway through 2013.

Growth in the company’s online operations, including twinspires.com, the largest account-wagering company in the country, slowed nearly to a halt, with revenue for the year at $184.5 million, up less than 1 percent. Total handle through the online operations was up only 1 percent as well, Churchill said.

Churchill blamed some of the slowdown on a partial shutdown in account-wagering in Illinois during the year and the company’s decision to stop taking wagers from bettors in Texas in September 2013, after regulators in the state sent account-wagering companies notifications that state law prohibits online and telephone betting. In a statement accompanying the financial documents, Churchill said that handle was up 6 percent for the year when handle totals from Texas and Illinois were not included in the total for either year.