Churchill Downs to ditch online betting and igaming business in 2022
Churchill Downs Incorporated (CDI) has announced that it will discontinue its online sports betting and internet gaming operations within the next six months.
US.- Bill Carstanjen, CEO of Churchill Downs Incorporated (CDI), has announced that the company will wind down its sports betting and online gaming business in the next six months. He said the decision had been taken because the business had performed as expected in such a competitive market.
Carstanjen broke the news in the company’s Q4 earnings call. He said: “We do not see for us a path in which this business model delivers predictable and acceptable margins for at least several years, if ever.”
CDI’s online product TwinSpires brought in $431.7m in total revenue for the year but also generated $325.4m in costs.
“When the US Supreme Court overturned the federal ban on sports betting in May of 2018, we had high hopes for the potential to build a profitable business in this space,” said Carstanjen. “Our initial strategy was to leverage a variable cost technology model and be disciplined in our marketing spend with a focus on bottom line profitability as states legalised online sports wagering and online gaming.”
Carstanjen said the company will focus on retail sports betting operations where they are profitable, and “will seek to monetise, where appropriate, our market access rights to other participants.”
“We do expect to still have a slight drag in the high single-digit range for the year on our Adjusted EBITDA from the combined retail and online sports and casino businesses as we wind down the online business,” Carstanjen added.
“We will work to minimise as much of this drag as we can. This isn’t the result we wanted when we started this business back in late 2018, but it is the prudent next step forward for our company.”
Carstanjen said Churchill Downs remains committed to its TwinSpires Horse Racing business.
CDI financial results for Q4 and full-year 2021
Churchill Downs Incorporated’s financial results for full-year 2021 reported net annual revenue of $1.59bn, up 51.1 per cent compared to 2020. The company also celebrated a return to profit, with income of $249.1m compared to a net loss of $81.9m.
Adjusted EBITDA for 2021 was up 119 per cent to $627m in comparison to $286.5m in 2020. Fourth-quarter 2021 net income was $43.3m compared to $17.1m in the prior year’s quarter. CDI’s online wagering platform, TwinSpires, saw adjusted EBITDA of $119m, down 6 per cent year-on-year but up 52 per cent from 2019.
See also: Churchill Downs to acquire Peninsula Pacific Entertainment assets for $2.49bn
