Kentucky

Churchill to pursue alternatives

Churchill Downs plans to continue pursuing other types of gambling in Kentucky and in Illinois, according to the company's president and CEO.

Bob Evans said Thursday morning that the racetrack company "will continue to look for new ways to expand our alternative gambling operations. ... We will again engage in the legislative process in Illinois and Kentucky."

Evans said that, with Maryland voters on Tuesday approving slots and with New York selecting an operator for its racetrack slots operations, Kentucky will be the only one of the three states with Triple Crown races not supported by expanded gambling.

The comments came as Evans discussed Churchill's third-quarter earnings with Wall Street analysts.

Besides Churchill Downs in Kentucky, the company owns Arlington Park in Illinois, Calder Race Course in Florida and Fair Grounds in New Orleans.

A slots facility is in the planning stages at Calder. "That plan is making its way through the permitting and regulatory process," Evans said. "Once it does, we'll be the first guys to make it public."

Evans declined to say when the facility might begin contributing to the bottom line, but architects and contractors have been hired, he said.

In New Orleans, a temporary slots facility has been in operation since September 2007 and a permanent one will open Nov. 14.

Higher-than-expected revenues from Churchill's Louisiana gambling operations helped shore up sagging earnings from racetrack operations. Gambling revenue was up 83 percent in the third quarter, from $6.3 million in 2007 to $11.6 million in 2008.

Third-quarter revenue from the four tracks was down 15 percent, from $87.1 million in 2007 to $73.9 million in 2008.

The drop was double the overall industry trend, which Evans attributed to disputes with horse trainers and owners over how to split revenue from the increasingly lucrative advance-deposit wagering business. Because the track and horsemen have not been able to reach agreement, ADW betting at Calder and Churchill has been largely blocked. Even so, Evans said, new accounts doubled and average daily wagering increased 53 percent, from the same quarter last year.

Revenue from Churchill's online segment, which includes TwinSpires.com as well as other operations, topped gambling revenue. Online revenue grew 46 percent for the third quarter, from $8.9 million in 2007 to $13.1 million in 2008.

Besides pursuing expanded gambling, Churchill could be looking at expansion in other ways. Evans was cagey when asked about the possibility Thursday morning by analysts.

"We've been pretty conservative with our balance sheets," he said. "So we've got the resources to pursue growth opportunities."

Those opportunities might come from a key competitor, Magna Entertainment, which owns Pimlico, where the Preakness — the second jewel of the Triple Crown — is run. Magna reported third-quarter earnings Wednesday that show quarterly losses of more than $48 million, bringing year-to-date losses to $116 million.

The company announced that it has hired a consultant, investment banker Miller Buckfire & Co., to "review and evaluate various strategic alternatives including additional asset sales, financing and balance sheet restructuring opportunities," as well as possible joint ventures.

Frank Stronach, Magna Entertainment chairman and CEO, said that as a result of the weak real estate and credit markets "we are evaluating (Magna's) core operations with a view to possibly selling or joint venturing one or more of (Magna's) core racetracks."

Besides Pimlico and Laurel Park in Maryland, Magna owns Santa Anita in California and Gulfstream Park in Florida, among other tracks.

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