Churchill Downs Inc. has reached the finish line with its TwinSpires sports betting app and online casino operations.
The announcement was made during Churchill Downs Inc. Q4 earnings call on Feb. 24. CEO Bill Carstanjen cited a highly competitive online casino and sports betting space where the participants’ pursuit for market share has “limited regard for short-term or potentially even long-term profitability.”
“We do not see, for us, a path for which this business model delivers predictable and acceptable margins for at least several years, if ever. We have decided to exit the space over the next six months.”
Churchill Downs out of sports betting and online casino business
Life and the sports betting business moves at you fast. In the summer of 2020, Churchill Downs Inc. announced plans to change from SBTech and go to a GAN platform for its iGaming product and Kambi for its sportsbook.
In April 2021, Churchill Downs Inc. ($CDI) rebranded BetAmerica to TwinSpires. The sportsbook and online casino operate in Pennsylvania through their partnership through Presque Isle Down Casino. Bringing sports and casino under the TwinSpires umbrella allowed the two verticals to exist alongside horse betting within the same app.
Twinspires plans to stay in the horse racing business.
“This isn’t the result we wanted but it is the prudent next step for our company,” commented Carstanjen. “We remain absolutely committed and excited about TwinSpires horse racing as its margins continue to demonstrate that this is a special online business with a sustainable business model.”
Carstanjen said that retail sportsbooks in four casinos including Presque Isle Downs in PA are profitable.
“We are always committed to building long-term value for our shareholders and when we see an investment isn’t going as planned, we will redeploy the resources and the capital to other growth projects or return the capital to our shareholders. We have proven with past decisions that we are willing to walk away from businesses where we do not see a secure enough path to profitable growth with an acceptable return for our shareholders.”
Does exit mean new sports betting and casino operator coming to PA?
Twinspires will seek to monetize market access rights through other participants.
“We consistently receive interest from other industry parties with respect to market access in states we conduct operations or have the rights to do so,” said Carstanjen.
Presque Isle Downs Casino, which is owned by Churchill Downs, holds the iGaming certificate in Pennsylvania for internet slots and table games and paid a $4 million fee for each of the (slots and table games) certificates. In addition, Presque Isle paid a $10 million to fee to the state for a Sports Wagering Certificate.
Sports betting apps that could partner with Presque Isle Downs
With the recent launch of PointsBet, Pennsylvania now has 14 sports betting apps. Who could Presque Isle choose to partner with in Pennsylvania? Purely speculating, there is ESPN which is exploring the possibility of its own branded sportsbook. Hard Rock is looking for revenue after online sports betting was stopped in Florida.
Fanatics was shut out of New York online sports betting and CEO Michael Rubin has high hopes for Fanatics’ future foray into sports betting.
At Rubin’s Super Bowl LVI party in Los Angeles told the Sports Business Journal:
“We can be the No. 1 player in the world in that business in 10 years, That does seem ambitious for someone who’s not in the business today, but our strategic advantages are that we are one of the best-known digital sports brands and we touch so many fans. There’s been so much money lost in this business, but we will be deliberate and I’m bullish on it being one of our key long-term businesses.”
Churchill Downs nearly non-existent sports betting market share
No matter the name, this horse often finished at the back of the pack in Pennsylvania.
Sports betting apps launched in Pennsylvania at the start of the summer of 2019. BetAmerica arrived in mid-December 2019. FanDuel commands about 36% percent of Pennsylvania’s online sports betting market share. DraftKings is the No. 2 sportsbook for handle and revenue. BetAmerica/TwinSpires share of the sports betting market in PA has been minuscule. Since 2019, they have not accounted for more than one percent of the state’s handle or revenue.
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Fiscal Year 2019/2020:
- PA online sports betting handle: $1.9 billion
- Revenue: $131.7 million.
- During its first seven months, BetAmerica took .19% of all bets and its revenue accounted for .14% of the state’s total.
Fiscal year 2020/2021
- PA online sportsbooks handle: $5.1 billion
- Revenue: $392.4 million
- BetAmerica/TwinSpires took .32% of bets placed online and revenue was .22% of overall.
Fiscal year 2021/2022
- PA online sportsbooks handle: $3.9 billion
- Revenue: $284 million
- TwinSpires accounted for .64 of handle and .70% of revenue.