Churchill Downs wins approval for new Trackside gambling parlor

The Kentucky Horse Racing Commission voted Tuesday to approve plans for Churchill Downs to build a $50 million to $60 million gambling parlor at a former training track in Louisville.

The new 85,000-square-foot venue will house 600 to 650 machines with new wagering games based on previously run horse races. Churchill Downs Inc. plans to develop the games with its own United Tote Co., said Kevin Flanery, Churchill Downs racetrack president.

“We’re excited. This project obviously is one that will be a significant investment in Kentucky Thoroughbred racing that will ultimately help not only Churchill Downs but the city of Louisville, the state of Kentucky, and that’s very important to us,” Flanery told the commission.

Construction on the new gambling parlor is expected to begin this summer, pending approvals from local officials, and create 250 construction jobs. When the facility opens next summer, Flanery said it could create 100 to 200 jobs.

The racing commission approved Churchill’s plans conditionally, with many elements including the games themselves and the footprint of the parlor still up in the air. Training will continue from March through December at the Trackside facility, which has more than 450 stalls.

Churchill did not reveal any revenue projections from the venue, which is expected to draw customers from the Louisville population as well as from tourists and will have to compete with the Horseshoe Southern Indiana Casino across the Ohio River.

The track has agreements in principle with Kentucky horsemen’s groups to contribute to purses as well as the Kentucky Thoroughbred Breeders’ Incentive Fund, Flanery said.

And he said that the parlor is expected to have “significant” impact on purses as early as the fall 2018 racing meet, with increases “well over 10 percent” to help Kentucky better compete to retain horses for races other than Kentucky Derby week.

According to documents submitted to the racing commission, the games are still in their early development stages, but Churchill plans to use exotic wagers “similar in form to existing HHR (historical horse racing) games in operation in Kentucky.”

In addition to Churchill’s racetracks, the company also owns standalone casinos and an online games company, Big Fish Games, that could help develop the new games.

The new games would have to meet existing standards set by the racing commission for pari-mutuel play; historical horse racing has been challenged in court by opponents who contend that it isn’t pari-mutuel and is an illegal form of gambling.

Flanery did not rule out the possibility that if the games are successful Churchill might add them to the flagship track, which is nearby but has little land available to build on.

The new gambling parlor also will have simulcasting to take bets on live horse racing, Flanery said.

According to a news release from Churchill Downs Inc., the planned gambling parlor will have “two quick-service, walk-up food venues, as well as a bar with seating for 50 and large format televisions for guests to take in all the best sporting action year-round.” It also will have a player’s club reward center offering special perks and benefits, including an exclusive parking area for loyal guests.

Until recently, Churchill Downs Inc. had indicated little interest in historical horse racing, often referred to as Instant Racing, the name of the original games. Churchill preferred instead to push for true slots. But in the past few months, corporate officials have acknowledged publicly that Kentucky lawmakers are unlikely to approve an expansion of gambling, so Churchill turned to historical racing.

The proposed expansion will increase the number of historical racing machines in Kentucky by more than a third. Churchill plans to launch its own product rather than use either of the two historical racing gambling products already in use at other tracks.

Before Churchill’s gambling parlor was announced, Kentucky already had 1,724 historical horse racing terminals in operation, according to the racing commission. In May 2017, more than $88 million was bet on the machines at Kentucky Downs, The Red Mile/Keeneland, and Ellis Park, and most of that money was returned to customers in the form of winnings.

For fiscal 2017 through May, almost $839 million had been wagered, generating almost $53 million for the tracks, plus $5.4 million for Thoroughbred purses and $1.3 million for Standardbred purses. About $4.7 million was generated for the Kentucky General Fund so far this fiscal year.

The machines are in place at Kentucky Downs in Franklin, at The Red Mile parlor also run with Keeneland in Lexington, and at Ellis Park in Henderson. Turfway Park in Florence also has received approval, but the machines aren’t in operation.

This story was originally published June 20, 2017 at 2:27 PM with the headline "Churchill Downs wins approval for new Trackside gambling parlor."