Churchill Downs Incorporated (CDI) has decided to leave behind its online sports betting and online gaming business. CDI will phase out both businesses within the next six months.
Bill Carstanjen, CDI CEO, said the company came to this decision after considering the size of both the online sports betting and online casinos markets; and the growing number of participants that states have been licensed.
“Many are pursuing maximum market share in every state with limited regard for short-term or potentially even long-term profitability. Because 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, we have decided to exit the B2C online sports betting and iGaming space over the next six months,” he said.
“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.”
Though the company expects exiting these markets could cause a decrease in adjusted EBITDA, Carstanjen said CDI will work to minimize this as much as possible.
CDI had previously approached both markets with enthusiasm and optimism after nationwide bans on sports betting had been overturned in federal court.
“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 legalized online sports wagering and iGaming. We have profitable retail sports books in four of our casinos.”
Carstanjen said the company will continue to devote its efforts to its retail business and pursue opportunities for expansion nationwide.
“We will focus on our retail sports betting operations where we are profitable, and we will seek to monetize where appropriate our market access rights to other participants. We consistently receive interest from other industry parties with respect to market access in states where we conduct operations or have the rights to do so,” he said.
“We remain absolutely committed and excited about TwinSpires Horse Racing as its top line, bottom line and margins continue to demonstrate that this is a special online business with a sustainable, scalable and unique business model that delivers profitable growth today just as it has since we started the business well over a decade ago.”
