Churchill Downs Incorporated (CDI) will exit the B2C and iGaming online sports betting space over the next six months.
Churchill CEO Bill Carstanjen broke the news during the company’s fourth-quarter earnings call, commenting, “We don’t see a path for us in which this business model will deliver predictable and acceptable margins for at least several years.”
Since the US Supreme Court overturned the federal betting ban in 2018, operators have rushed to claim their share of the burgeoning US sports betting market.
But this has often come at the expense of short-term profitability, or as Carstanjen added, “potentially even long-term profitability,” and Churchill appears unwilling to sacrifice margin for market share.
A competitive market with more and more players
Citing the “highly competitive” nature of the space and “an increasing number of participants”, Carstanjen announced that CDI would withdraw from online sports betting and iGaming to focus instead on its in-person operations.
He noted, “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 expect to have a slight drag in the high single digits for the year in our Adjusted EBITDA from the combined retail and online sports and casino businesses as we close the online business,” added Carstanjen.
“We will work to minimize this drag as much as we can. This is not the result we wanted when we started this business in late 2018, but it is the next prudent step for our company.”
However, Carstanjen noted that Churchill Downs remains committed to its TwinSpires Horse Racing business, saying, “Where we now see the opportunity for our company is TwinSpires Horse Racing.”
“I’m not a person who likes to stay theoretical for a long time. Ultimately, you put your team on the field, see what your results are and adjust to that.”
“And what we’ve found over time, and it’s been well over a decade, is that our TwinSpires Horse Racing business, our online horse racing business, is essential to us,” concluded Carstanjen.
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