Online sportsbooks should and will offer horse racing across the United States, and Churchill Downs Inc. wants to provide those events to bettors within the confines of their everyday wagering app, the company’s chief executive says.
Churchill Downs CEO Bill Carstanjen broke down the business-to-business (B2B) strategy for the company's TwinSpires platform Thursday morning, telling analysts and investors the approach will allow the Louisville-based firm to offer sports-betting sponsorships for its flagship event, the Kentucky Derby.
The plan would also allow Churchill Downs to keep a foot in the still-growing market for online sports betting even as the company — which runs brick-and-mortar racetracks, sportsbooks, and casinos, as well as the TwinSpires app — is pulling back from iGaming.
“We believe fundamentally that horse-racing content should and will become available over time on sports-wagering platforms to reach every wagering customer across the U.S.,” Carstanjen said during a conference call. “We intend to be a leading distributor of horse-racing content, either directly to customers of TwinSpires or under a B2B model that enables the online distribution of horse racing content to millions of new customers who have opened online sports wagering accounts.”
The Derby delivers
Punters can wager on horse racing over the internet in the U.S., but it is typically through a separate horse-racing site or app, such as TwinSpires or TVG, not the numerous online sportsbooks that have acquired millions of customers around the country.
Churchill Downs (CDI) uses the TwinSpires brand for online wagering on horse racing, sports betting, and casino gaming. However, Carstanjen and CDI are now looking to “seamlessly integrate” pari-mutuel wagering on horse races into third-party sportsbooks, such as DraftKings, which could allow the company to generate “content fees” for its racetracks.
“Our TwinSpires strategy going forward will be to maintain and grow our existing TwinSpires platform while growing the distribution of online horse racing content to the millions of U.S. sports betting customers who have been acquired by sports-betting platforms over the past couple of years,” Carstanjen said. “We anticipate that we will announce some key partnerships before the end of the year and will provide an update on our progress on our next earnings call.”
CDI is looking for customers for its horse races as enthusiasm for the sport among gamblers has been gaining momentum, as demonstrated by record levels of wagering on this year’s Kentucky Derby. The 148th edition of the race garnered $179 million in wagering from all sources, an 8% increase over the previous record of $165.5 million set in pre-pandemic 2019.
“The Derby truly was back in full force,” Carstanjen said Thursday.
An exit strategy
Yet, the B2B plan also comes as Churchill Downs is exiting the consumer-facing online sports betting and casino gaming business provided via the TwinSpires platform (while remaining very much involved in horse racing), citing concerns about making money in such a competitive climate.
TwinSpires stopped accepting sports wagers in Colorado and Indiana in May, although the online sportsbook remains available in Arizona, Michigan, and Pennsylvania.
Churchill Downs still owns and operates retail sportsbooks and brick-and-mortar casinos. But, rather than try to outduel the DraftKings of the world in online sports betting, CDI appears to want to partner with them, which could drive interest in horse racing in general.
“Our TwinSpires online sports and casino business was almost break-even in the second quarter, reflecting the actions we have taken to quickly exit this business while maintaining the retail sports operations in our gaming facilities,” Carstanjen said Thursday. “We are still working to monetize our market-access rights to other participants and will provide an update when our plans reach fruition in the coming months.”
The comments followed CDI’s second-quarter financial results, with the horse racing and gaming company reporting record net revenue and net income. The company's big quarter was partly driven by the boom in Kentucky Derby-related wagering.
“Virtually all metrics point to the Derby’s relative and growing appeal,” Carstanjen said. “Just as an example, the 16 million average viewership for the Derby was the same as the total for the Daytona 500, Indy 500, and Miami Formula One race combined.”
