Churchill Downs Inc. appears to be doing just fine after deciding to exit the online sports betting business, helped in no small part by big numbers from the running of this year’s Kentucky Derby.
Louisville-based CDI on Wednesday reported record net revenue and net income for the second quarter of 2022, a period which included 80-1 longshot Rich Strike winning the Derby in early May.
Wagering on the horse race hit an all-time high, totaling $179 million, as it was run this year without COVID-19-related capacity restrictions.
The big Derby numbers helped drive net revenue in Churchill Downs' (CDI) live and historical racing segment to $260.9 million, well up over the $175.9 million reported for the three months ended June 30, 2021. Total net revenue for CDI rose to $582.5 million in this year's second quarter, up $67.4 million from a year earlier.
However, the surge in revenue was dampened just a bit by a $4-million dip in receipts reported by CDI's TwinSpires segment, the company's online horse racing, sports betting, and casino gaming platform.
The year-over-year decrease to $136.8 million in quarterly revenue for TwinSpires was due in part to “the decision to exit the direct online sports and casino business in the first quarter of 2022,” the company said in its quarterly filings.
No sports betting? No problem?
CDI announced in February that it would exit the consumer-facing online sports betting and casino gaming segment over the next six months, as it was worried about whether it could make money in the uber-competitive climate. The company said it would still operate brick-and-mortar sportsbooks that are profitable but try to sell market-access rights for online wagering where it could.
TwinSpires stopped accepting sports wagers in Colorado and Indiana in May, but the online sportsbook remains available in Arizona, Michigan, and Pennsylvania. CDI CEO Bill Carstanjen also noted in April that they were pleased with the progress of their exit thus far and that there was interest from numerous other groups in the company's market-access rights.
The decision showed up again Wednesday in CDI’s adjusted earnings, which rose by $57.9 million for the second quarter compared to a year earlier, to $291.2 million. The bump was due in small part to decreased marketing and promotional costs tied to the online sports and casino business, the company noted.
And even with the sports-betting exit, CDI reported record net income for the second quarter of 2022 as well, with profit hitting $339.3 million for the three months, a threefold increase from a year earlier. That said, the quarterly net income was given a big boost thanks to a $193.6-million after-tax gain booked on a sale of land near Calder Casino in Florida.
