Churchill Downs Inc. posts $700,000 loss for first quarter

Revenue from Churchill Downs Inc.’s three main business segments – racing operations, casinos, and online betting – were all up in the first quarter of 2014 compared with the first quarter last year, but the company still posted a small loss for the period, according to financial documents released Wednesday.

Total revenue from its operations was up 13 percent to a record $167.3 million for the quarter. Revenue from its casinos was up 20 percent to $86.6 million, largely due to the inclusion of numbers from a casino in Maine that Churchill acquired in the middle of last year. Revenue from its online gambling operations was $46.1 million, up 7 percent, and revenue from its racing operations was $30.6 million, up 10 percent.

Still, operating expenses were up 14 percent, while interest expense jumped $3.5 million, sending the overall results into the red with a loss of $700,000. In the first quarter of 2013, Churchill had net income of $1.1 million.

Churchill said in a statement accompanying the financial documents that handle through its account-wagering site, twinspires.com, was up 8.8 percent in the quarter, at a time when the racing industry is struggling overall. In contrast to the results at twinspires.com, handle on all U.S. races in the first quarter was down 1.2 percent, according to Equibase.

Twinspires.com had handle of approximately $1 billion in 2013, according to figures kept by the Oregon Racing Commission, which regulates the company’s wagering hub. That’s almost 10 percent of all handle in the United States, making the account-wagering company the online market leader.

Though revenue from racing operations was up overall in the quarter, expenses from racing operations significantly exceeded the revenue figure, at $43.2 million and $30.6 million, respectively.

Revenue from racing operations was up due to Churchill’s decision to run 39 race dates during the quarter at its Calder Race Course in Miami, a first for the track. The decision to run the dates in head-to-head competition with nearby Gulfstream Park also allowed Churchill to act as a broker for simulcast signals in the state, a critical source of revenue for Calder in prior years, when it had a monopoly on the business for most of the year.

Revenue at Calder was up from $2.3 million in the first quarter of last year to $8.0 million this year, according to the statements. Revenue was down 15 percent at Arlington Park near Chicago and down 11 percent at Fair Grounds in New Orleans, where local horsemen have been highly critical of Churchill’s management of the track and have pressed lawmakers to pass a bill mandating that Churchill spend 10 percent of its slot-machine revenue on capital improvements.

Interest expense in the quarter rose from $1.5 million in the first quarter of 2013 to $5.0 million in the first quarter this year.