Churchill Downs Announces the Shuttering of Its Online Sports Betting and Casino Gaming Business
Sports Betting Expert
Horse racing giant Churchill Downs has surprised many with a recent announcement. The company has decided to shutter their online sports betting and casino business. This announcement was made a few days ago while the company revealed its fourth quarter earnings.
The CEO of Churchill Downs, Bill Carstanjen, announced that the company was unable to find an avenue where it would be profitable to keep these businesses running. He cited the extremely competitive market as a reason for the closing. Over the next six months, the company will be working to wind down the online side of the business.
Carstanjen stated that the company had high hopes for online sports betting and casino gaming back in 2018. This was when the United States Supreme Court overturned PASPA, which allowed for legal sports betting nationwide. However, making a profit in this space has been harder than originally thought.
The company still has profitable retail sportsbook at four of their casinos. But, with new online sports betting companies joining the market all the time, the competition has made it hard for the company to garner an online fanbase. He discussed the fact that many of these online sports betting operators are pursuing a maximum share of the market in every state, whether that is a good tactic for the short term or long term profitability.
Carstanjen also mentioned that the company needs to think about building value for the long term for their shareholders. So, if an investment the company has made is not working out as they had envisioned, it only makes sense to put those resources elsewhere.
Moving forward, Churchill Downs plans to put its efforts into its retail sportsbooks at its facilities nationwide. Plus, it will look into selling its market access to its competitors.
Carstanjen expressed his disappointment at this turn of events, but stated that he thought this was the best course of action for Churchill Downs. He also stated that the company remains committed and enthusiastic about TwinSpire’s online horse racing business.
This announcement has not been surprising for those in and around the industry. Since Churchill Downs announced its BetAmerica brand in late 2018, the company has faced many obstacles in the online gambling world.
Last year, with the company’s relaunch under the TwinSpires banner, Churchill Downs hoped to find a new fanbase. Plus, it also changed its technology providers, however both moves proved to be in vain.
When it comes to online sports betting handle, in January 2022 in Pennsylvania, TwinSpires was only able to take in around 0.6% of the market.
Churchill Downs did not specifically reference their online betting results. But the company did note that TwinSpires was down $13.9 million year-on-year to $11.7 million on Q4 EBITDA.
The company said this was due to an increase of $9.5 million from Sports and Casino because of increased promotional and marketing activities.
After the announcement was made Churchill Downs Industries stock took a dip of around 3% to $208, but it did rebound a few hours later to $214.
The withdrawal of Churchill Downs from the online sports betting arena does add to a troubling narrative that surrounds sports betting in the United States. Investors have discussed their concerns about a lack of profits.
Wynn announced in November 2021 that it would reduce its marketing spending with the hope to quell their money loss. In January, a report said the company was looking to sell off the digital side of the business altogether.
A few days ago, Caesars also followed suit by announcing that it would cut external marketing spending with the hope to cap their sports betting losses at $1 billion. At the same time, stocks like DraftKings have had to due with large sell-offs, demonstrating that investors are refusing to underwrite more losses.
Written by Allie Nelson, our US Sports Betting Industry Expert.