In a fourth-quarter earnings call, Churchill Downs Chief Executive Officer Bill Carstanjen announced its online business, including casino gaming and sports betting, would wind down its Twin Spires operations over the next six months.
He said Churchill Downs plans to sell its market access to other operators and will focus on its retail sportsbooks.
He said the four CDI-owned casinos with retail sportsbooks—Harlow’s Casino in Greenville, Mississippi; Presque Isle Downs Casino in Erie, Pennsylvania; Ocean Downs Casino in Berlin, Maryland; and Rivers Casino in Des Plaines, Illinois—are profitable.
“When the Supreme Court overturned the ban on sports betting in 2018, we had high hopes for building a profitable business in this space. We have profitable retail books in four of our casinos. However, the online betting and casino space is highly competitive with an ever-increasing number of participants. Many are pursuing maximum market share in every state with little regard for short-term or potentially even long-term profitability,” Carstanjen said.
Many are pursuing market share in every state, with limited regard for short-term, or potentially even long-term, profitability, he said. “Because we do not see a path in which this business model delivers predictable and acceptable margins for at least several years, if ever, we have decided to exit the online sports betting and iGaming space over the next six months.”
TwinSpires has online sportsbooks live in Arizona, Colorado, Indiana, Michigan, New Jersey, Pennsylvania, and Tennessee. It has online casino operations in Michigan, New Jersey, and Pennsylvania.
Carstanjen added, “We are always committed to building long-term value for shareholders. Consistent with this commitment, when we see an investment is not progressing as planned, we will redeploy the capital to other growth projects or return it to shareholders. This isn’t the result we wanted when we started the business in late 2018 but it is the prudent next step forward for our company. We remain absolutely committed and excited about TwinSpire’s online horseracing business.”
Churchill Downs launched the BetAmerica brand in late 2018. It relaunched last year as TwinSpires and changed technology providers in an unsuccessful attempt to stop losses.
Other companies are experiencing similar losses. Last November, Wynn announced it was cutting marketing spending and in January announced it would sell off its digital business altogether. Caesars recently announced it was cutting external marketing to try to cap sports betting losses at $1 billion. And DraftKings and similar companies’ stocks have experienced massive sell-offs as investors object to underwriting additional losses.
