Keeneland, Churchill Downs get green light for harness track with casino

LEXINGTON, Ky. – The Kentucky Horse Racing Commission on Friday awarded a harness racing license to a partnership between Churchill Downs and Keeneland that will allow the companies to open a casino near the border with Tennessee in the small town of Oak Grove, brushing aside competing bids from the giant casino operator Caesars Entertainment and Kentucky Downs.

The commission awarded the license on a voice vote, just two months after calling for bids from interested parties for the Oak Grove location. The vote came at the end of a two-hour meeting on Friday in which the commission conducted question-and-answer sessions with representatives of each separate bidding group, during which the new owners of Kentucky Downs urged the commission to delay the vote to give them more time to prepare a bid.

Kevin Flanery, the president of Churchill Downs, said after the vote that the partnership plans to begin construction immediately, with plans to conduct 12 days of harness racing at a new track next fall. The bid included plans to build the track, an adjoining equestrian center, a hotel, an amphitheater, and a casino that will operate 1,200 historical horse-racing machines, devices that are similar to slot machines.

“We think together we have tremendous history in the state of Kentucky in supporting horse racing and a proven track record of overdelivering, being innovative, and really having a positive economic impact in the areas where we operate,” Flanery said.

The location targeted by all three bidders is a small town off Interstate 24 approximately 45 miles from Nashville, Tenn., and near the sprawling Fort Campbell military base. All three bidders had told the commission that they expected the brunt of their customers to travel from the Nashville area, which is also the primary market for the casino at Kentucky Downs, which this year has generated $800 million in handle on its own machines.

The Churchill-Keeneland partnership said it expected to spend $150 million to build the entire project, while Caesars, which, in addition to its dozens of casino properties, operates a small track in Paducah, stated that its project would cost $140 million (although a proposed “phase two” to the project could entail the construction of a hotel, adding tens of millions of dollars to the cost, Caesars officials said). Kentucky Downs officials said they expected to spend $100 million on both improvements to their existing track and casino and the new project in Oak Grove.

The motion to approve the bid by the partnership of Keeneland and Churchill was made by Kenneth Jackson, a Standardbred owner and breeder who is also a partner in a Standardbred sales company. Churchill had promised the commission that it would provide at least $1 million in purses next year for 12 days of Standardbred racing at the new track.

The losing bidders reacted with a mix of anger and disappointment. Representatives of both Caesars and Kentucky Downs sat together in the meeting room as the motion to approve the Churchill-Keeneland partnership was read, shaking their heads.

Dan Real, the regional president for the South for Caesars Entertainment, called the approval “ludicrous” after the vote, citing what he said were deficiencies in the bid by Churchill and Keeneland.

“They don’t have a signed horsemen’s agreement, they don’t have the ability to do simulcasting, they don’t have any history, relations, or marketing efforts in the region, which obviously the other two operators do,” Real said. He added that the introduction of the motion and overwhelming vote “leads me to believe that this was always set up to be what it was from Day 1.”

Asked if Caesars would file a legal objection to the vote, Real said: “That’s something I can’t speak to. That’s beyond me.”

Kentucky Downs was recently sold to a partnership of Ron Winchell, a horse owner and breeder, and Marc Falcone, a former executive with Red Rock Casinos and Station Casinos. During the question-and-answer session, Winchell asked the commission to put off a vote on approving any of the bidders, stating that the new partners did not have time to produce detailed plans for a proposal.

“It’s disappointing,” Falcone said after the meeting. “We were hoping that extra time would have given us the opportunity to make a stronger case to the commission. We were disappointed we didn’t get that time, disappointed that the commission didn’t even take an interest in giving us more time.”

Winchell said he expected that Kentucky Downs’s existing casino would be cannibalized to some degree by the new location, although he said he did not have time to project a detailed estimate. But he also said that, “We are competitors, we believe in competition,” and that Kentucky Downs would spend the next year preparing plans to counter the new casino.

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