With public interest in horse racing declining, the parent company of the Kentucky Derby has evolved into an entertainment enterprise built on gambling and social gaming platforms.
Saturday marks the 143rd running of the Kentucky Derby. While it’s been called the “most exciting two minutes in sports” since 1875, interest in horse racing has declined over the years. In fact, Churchill Downs no longer gets most of its money from its race track.
Jim Miselis has been coming to the Derby since the mid-1980s. He’s from Connecticut and with his racecard and a chewed up cigar, he’s happy to be at the track today.
“It’s been about my 15th trip down here to the Derby,” Miselis said. “I just like the festivities. People are very friendly, hang out at the backside some mornings.”
The “backside” is where the horse stables are and where trainers and jockeys hang out. Miselis is an old school horse race fan. He’s watched attendance at horse races decline over the years; he’d like tracks to find ways to bring younger spectators to the sport.
“It’s just as much social as it is the sport,” Miselis said.” “And the sport’s interesting when you get a high number of quality horses running. That is what makes the race a lot more interesting.”
But racing just isn’t where the money is.
Fewer people are going to races across the country. And that’s led to fewer races being run. There were 15,000 more races in 2006 than there were last year.
To bring in more revenue, some race tracks have turned away from horses.
In 2014, Churchill Downs bought Big Fish Games which runs web-based platforms like Jackpot City Slots, Sunken Secrets and Bush Whacker 2. Though the company says its anchor is still the Kentucky Derby, it attributes a jump in revenue last year to its acquisition of Big Fish.
Cameron McKnight, a Wells Fargo analyst who tracks the gaming industry, said Churchill Downs has become a “leisure company.”
“Horse racing and the Derby absolutely sits at its core, but around it are several valuable and related businesses that are collectively all about entertainment,” McKnight said.
According to its annual SEC filings, Churchill Downs Inc. now only gets about 25 percent of its profits from the four racetracks it owns across the country, and the company’s stock is trading near an all-time high.
In addition to the addictive phone and computer games, Churchill Downs reaps much of its revenue from five casinos across the country and an online horse betting service called Twin Spires.
Alex Waldrop, president of the National Thoroughbred Racing Association said Churchill Downs’ diversification is still bringing money back into the racing industry.
“The good news is even as people gravitate towards the casino products, we’re able to bring money back into the businesses and grow purses,” Waldrop said.
Purses — the prize money that horse owners are trying to win — are near an all-time high, grossing more than $1 billion last year.
And the Kentucky Derby itself still going strong. Attendance has broken records in recent years — in 2015 topping 170,000.