Kentucky Gov. Beshear clears way for Churchill backstretch to open May 11; racing announcement expected in coming days

LEXINGTON, Ky. – Churchill Downs in Louisville will be able to open its backstretch beginning May 11, according to Kentucky Gov. Andy Beshear, who made the announcement during his daily afternoon briefing on Wednesday about the COVID-19 virus and the state’s efforts to contain it.

Beshear made the announcement about Churchill as part of the state’s “phase 1” reopening plan for several types of businesses, and he said the May 11 date was contingent on Churchill - and the other industries slated for phase 1 deployment – complying with the state’s health protocols. In a release issued after Beshear’s announcement, Churchill said that it would announce a return to live racing in “the coming days after track officials evaluate its incoming horse population and load-in procedures.”

When racing resumes, it will be conducted spectator-free for the foreseeable future, Churchill said.

“The health and safety of our horsemen, staff and community remain paramount,” said Churchill president Kevin Flanery. “Strict compliance with our comprehensive COVID-19 action plan and social distancing guidelines is our responsible duty to effectively contain the virus.”

Beshear singled out Churchill Downs in the announcement by saying that the company had “provided one of the most detailed plans we have seen” about COVID-19 protocols. But he also cautioned that the phase 1 reopening plans hinged on the state continuing to make progress in combating the spread of the virus and companies complying with the health protocols.

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“It’s all contingent on all of us doing this right, on making sure we don’t see a spike in the virus,” Beshear said, later adding: “If we can’t do this safely, it is all subject to pause.”

Churchill’s spring meet was initially scheduled to open on April 25. The last live race to be held in Kentucky occurred on March 25 at Turfway Park in Northern Kentucky, which closed its doors after holding spectator-free racing for a little over a week. Turfway is owned by Churchill, and horses continue to train at the track.

Churchill has twice pushed back the opening of its stable area due to the outbreak, and in mid-March it announced that the opening of its live meet would be delayed indefinitely. At the same time, the company announced that it had postponed the Kentucky Derby until Sept. 5, a date that would have been impossible to meet without the state first endorsing a plan for the track to begin holding live races again.

In its release, Churchill said it would begin accepting horses from Fair Grounds in New Orleans on May 11-13; from Gulfstream Park in Florida from May 14-16; from Oaklawn Park in Arkansas from May 17-19, and from all other locales beginning on May 20. The track also said that racing would be staged “at a minimum of four days a week” on a Thursday-through-Sunday schedule. A condition book will be released soon, the track said.

The announcement of the reopening of the stable area follows two weeks of discussions between Churchill Downs officials and representatives of Gov. Beshear in which Churchill attempted to assure state officials that a return to live racing would not pose a significant risk to the spread of the COVID-19 virus. Churchill has circulated a proposal to the governor’s office detailing the protocols that will be in place to accept horses to its backstretch – which has been closed since the end of last year due to renovations – and to limit ontrack personnel to those who are necessary to conduct live racing.

Churchill’s return to live racing may also trigger a public effort to sort out additional racing dates on the Kentucky circuit in the summer and fall. Keeneland, which canceled its spring meet, has been seeking to run for a long weekend sometime in the summer, according to multiple sources, with a late July weekend circled on the calendar. Ellis Park in western Kentucky typically runs the majority of its dates following the July 4 weekend, and Kentucky Downs has been awarded six racing dates beginning Sept. 7 and running through Sept. 16.

The Kentucky Horse Racing Commission has already awarded the week prior to Sept. 5 to Churchill for its Derby-week races, including the Sept. 4 running of the Kentucky Oaks. The commission and its racing dates committee has also communicated to tracks on the circuit that it remains open to shuffling the calendar later this year.

Churchill’s potential return to racing comes amid a staggering shift on the national wagering landscape in which the handful of tracks that have continued to race spectator-free during the outbreak have experienced enormous gains in handle, according to a recent analysis by Daily Racing Form. In addition to the power of its brand, Churchill Downs operates the largest account-wagering company in the U.S., and the company was eager to begin racing in order to capitalize on the wagering trend.

According to the analysis, racing’s market leaders, Gulfstream Park and Oaklawn Park, are up 50 percent in handle per race since mid-March, when the pandemic began causing closures across the country, while small tracks such as Fonner Park in Nebraska and Will Rogers Downs in Oklahoma are up 1,000 percent and 371 percent in per-race handle, respectively. Both Fonner and Will Rogers have gone to a Monday through Wednesday racing schedule to capitalize on the dearth of tracks operating in the U.S.

Oaklawn Park is scheduled to close after its Saturday card, though the track has said that horses will be allowed to remain on the grounds in order to train. Both Tampa Bay Downs in Florida and Fonner Park have already been authorized to extend their meetings into late May.

Kentucky horsemen and national horsemen’s organizations have fallen in line behind Churchill’s effort to reopen, in the hopes that horses in the state and elsewhere could begin to start earning purse payments at a time when racing options are few and far between and there is no competition from other sporting events. Horses are currently idled at a number of racetracks and training centers around the Midwest, although many have been able to continue to train.

A number of other horsemen’s groups in the Midwest and mid-south are pressing state governments to allow racetracks to reopen without spectators, including in Indiana, Louisiana, and West Virginia, but many of those efforts have centered on returning to live racing in early June, according to officials.

Racing will restart in Kentucky without a current-account boost from subsidies from the state’s casinos, which are exclusively operated by racing licensees and which contribute a portion of their revenues to purses. Through the end of March, which in Kentucky is the first nine months of the fiscal year, the casinos had generated $15.8 million in purse subsidies, or approximately $1.8 million a month. Churchill Downs had used some of its banked subsidy money to boost purses at Turfway Park this winter, the first season the track has been operated by Churchill.

Churchill’s stock on Wednesday rose $6.62, or 6.49 percent, to $108.63 at the close of trading, on moderate share volume, but some of those gains began to be erased in after-hours trading shortly after the close. On Tuesday night, Beshear had said at his daily press conference that he had been in discussions with Churchill and that he expected an announcement about the track to come out on Wednesday.

Like all other gambling companies, Churchill’s stock has been battered by the disruptions caused by the COVID-19 virus. In late February, the stock was trading as high as $165, but the share price began slipping precipitously shortly thereafter before bottoming out on March 18 at $61.

The announcement of a potential reopening came on the same day that Churchill reported a first quarter net loss of $23.4 million on revenues of $252.9 million this year, down from net income of $11.6 million on revenues of $265.4 million in the first quarter of last year. Churchill’s casinos and racetracks began to be shut down at the end of March, impacting the company’s net earnings. Churchill also filed documents with the SEC on Wednesday that showed the company has modified several loan covenants related to its debt in relation to the COVID-19 outbreak.