Churchill Downs Incorporated (CDI) will exit the B2C online sports betting and iGaming space over the next six months.
Churchill’s CEO Bill Carstanjen broke the news during the company’s Q4 earnings call, commenting: “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.”
Since the US Supreme Court overturned the federal ban on wagering in 2018, operators have rushed to claim their share of the States’ burgeoning sports betting market.
But this has often come at the cost of short-term profitability, or as Carstanjen added, “potentially even long-term profitability,” and Churchill seems unwilling to sacrifice margin for market share.
Citing the space’s “highly competitive” nature and “an ever-increasing number of participants,” Carstanjen announced that CDI would withdraw from online sports betting and iGaming to instead focus on its in-person operations.
He remarked: “We will focus on our retail sports betting operations where we are profitable, and we will seek to monetise, where appropriate, our market access rights to other participants.”
“We do expect to still have a slight drag in the high single-digit range for the year on our Adjusted EBITDA from the combined retail and online sports and casino businesses as we wind down the online business,” added Carstanjen.
“We will work to minimise as much of this drag as we can. 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.”
However, Carstanjen noted that Churchill Downs remains committed to its TwinSpires Horse Racing business, saying: “Where we see the opportunity for our company right now is TwinSpires Horse Racing.
“I’m not a person that likes to stay theoretical for very long. Ultimately, you put your team on the field, and you see what your results are, and you adjust to that.
“And what we have found over time, and it’s been well over a decade, is that our TwinSpires Horse Racing business, our online business for horseracing, is an excellent business.”