Churchill Downs recently held its quarterly earnings call, and the company had high praise for its Virginia facilities.
It was a great first quarter (the best ever, in fact) for the company. And Virginia’s six Churchill Downs historical horse racing properties played a key role.
Churchill Downs enjoyed its best quarter to date to start the calendar year. The company totaled a net revenue of $560 million and a record $223 million adjusted EBITDA.
“We were pleased with the performance of all of our segments, and our expectations remain high for the rest of the year,” CEO Bill Carstanjen said.
Here’s a look at the Virginia gambling-related notes from the call.
Churchill Downs’ six Virginia HHR properties performing ‘as expected’
Churchill Downs expressed no issues with its six historical horse racing operations in Virginia.
“(The) properties are performing as we expected, and in some cased exceeding our expectations,” Carstanjen said.
Churchill Downs six HHR venues in Virginia are located in:
- New Kent
Churchill Downs officials shared that Virginia HHR venues accounted for $98 million of net revenue in the first quarter. Those facilities churned out $47 million in adjusted EBITDA during that span.
“I feel really good about our margins and our ability to sustain and improve,” Carstanjen said about the Virginia locations.
Also on the call, Carstanjen added that Churchill Downs’ focus on HHRs won’t slow down anytime soon.
“HRMs are a key strategic focus over the next five to 10 years for our company as we seek to expand our existing footprint,” Carstanjen said. “We have developed high growth, high margin investments in this segment and excellent returns on capital, and we will seek to build on that track record in Kentucky, Virginia, New Hampshire, Louisiana and perhaps beyond.”
Churchill Downs has plans for a $500-$600 million ‘fantastic project’ in Richmond
Carstanjen expressed his excitement with the project but said he’d share more at Churchill Downs’ next earnings call.
“We will also discuss in more detail on the next call our plans with respect to our 50/50 partnership with Urban One to pursue a full Class 3 casino in the city of Richmond, Virginia,” he said. “This is a separate opportunity from our HRM operations in the state.”
Carstanjen added that Churchill Downs will continue to work with the City of Richmond to acquire authorization necessary to begin construction. Plans include a casino, hotel and an event center.
“A city referendum is required for authorization to move forward with the project,” he said. “We’re on a pathway to do that. We hope to achieve that. We haven’t achieved that yet. Those are a series of steps that we’re processing through, but so far nothing to be concerned about.”
Carstanjen said he hopes to have the required approvals “over the second and third quarter.”
“We think (this) would be a really fantastic project.”
Progress on Rosie’s Emporia and Dumfries HHR projects
Carstanjen said he expects the Emporia HHR venue to wrap up in the third quarter of this year.
Additionally, Carstanjen touched on the Dumfries HHR facility. Or, as he called it, “an extremely important project.”
The Dumfries project will conclude after Emporia. Carstajen said that, as of now, construction is on schedule.
“We expect the first phase of the project with 1,150 HHRs and an approximately 100-room hotel to be open in the second quarter of 2024,” he said.
Virginia limits Churchill Downs to 5,000 HHR machines
When asked about competition with Virginia’s casinos, Carstanjen said he feels good. That competition includes online business, too.
But he did point out one challenge in particular: the amount of HHR machines within the state.
“Ultimately, our real challenge in the state of Virginia is the number of machines we have,” he said.
Virginia limits Churchill Downs to 5,000 machines across the state.
“If one particular property feels pressure versus another because of competition, essentially that’s an opportunity to move product around the state,” Carstanjen explained.
According to Carstanjen, there are about 2,700 Churchill Downs machines active in Virginia. In turn, the company has roughly 2,300 until it reaches that 5,000 cap.
Carstanjen said he believes Churchill Downs will hit that mark “relatively quickly.”