During its most recent quarterly earnings call, Churchill Downs expressed great admiration for its Virginia facilities.
The company had an exceptional first quarter, which was even better than any previous ones. Virginia’s six historical horse racing properties at Churchill Downs were instrumental in achieving this success.
To kick off the year, Churchill Downs had its most successful quarter to date. The company achieved a net revenue of $560 million and a remarkable adjusted EBITDA of $223 million, breaking previous records.
CEO Bill Carstanjen expressed his satisfaction with the performance of all our segments and maintained a positive outlook for the remainder of the year.
Take a peek at the gambling-related notes from the call, focusing on Virginia.
Churchill Downs’ six Virginia HHR properties performing ‘as expected’
Churchill Downs did not raise any concerns about its six historical horse racing operations in Virginia.
Carstanjen mentioned that the properties are meeting or surpassing our expectations.
The six HHR venues in Virginia operated by Churchill Downs are situated at:
- New Kent
- Vinton
- Richmond
- Hampton
- Dumfries
- Collinsville
In the first quarter, Virginia HHR venues generated a net revenue of $98 million according to Churchill Downs officials. Additionally, these facilities produced an adjusted EBITDA of $47 million during the same period.
Carstanjen expressed confidence in the Virginia locations, stating, “I am highly optimistic about our margins and our capacity to maintain and enhance them.”
In addition to the call, Carstanjen emphasized that Churchill Downs’ dedication to HHRs will continue without any deceleration.
“Our company’s key strategic focus for the next five to 10 years is HRMs as we aim to expand our current presence,” stated Carstanjen. “We have successfully invested in this segment, achieving high growth and high margins with excellent returns on capital. Moving forward, we will continue to build on this track record in Kentucky, Virginia, New Hampshire, Louisiana, and potentially beyond.”
Churchill Downs has plans for a $500-$600 million ‘fantastic project’ in Richmond
Carstanjen conveyed his enthusiasm for the project and mentioned that he would provide further updates during Churchill Downs’ upcoming earnings call.
He stated that in the next call, we will delve deeper into our plans regarding our 50/50 partnership with Urban One to establish a complete Class 3 casino in Richmond, Virginia. It’s important to note that this opportunity is distinct from our HRM operations in the state.
Carstanjen mentioned that Churchill Downs plans to collaborate with the City of Richmond in obtaining the required authorization to initiate construction. The proposed development encompasses a casino, hotel, and event center.
He mentioned that obtaining authorization to proceed with the project requires a city referendum. We are currently working towards that goal and remain hopeful to achieve it. However, we have not reached that point yet. These steps are part of our ongoing process, but there is no need to be worried thus far.
Carstanjen expressed his desire to obtain the necessary approvals “during the second and third quarter.”
We believe that this project has the potential to be truly amazing.
Progress on Rosie’s Emporia and Dumfries HHR projects
Carstanjen anticipates the completion of the Emporia HHR venue by the end of the third quarter of this year.
Furthermore, Carstanjen also addressed the significance of the Dumfries HHR facility, describing it as an “exceptionally crucial project.”
Construction for the Dumfries project will remain on schedule until its conclusion after Emporia, according to Carstajen.
He stated that the initial stage of the project, which will consist of 1,150 HHRs and a hotel of around 100 rooms, is anticipated to be operational by the second quarter of 2025.
Virginia limits Churchill Downs to 5,000 HHR machines
Carstanjen expressed confidence when discussing competition from Virginia’s casinos, including the online business aspect.
However, he specifically highlighted one challenge: the limited number of HHR machines in the state.
He stated that our true obstacle in Virginia is the quantity of machines we possess.
Churchill Downs is restricted to having a maximum of 5,000 machines throughout Virginia.
According to Carstanjen, if a specific property is experiencing competition-induced pressure compared to another property, it presents an opportunity to distribute products across the state.
Carstanjen stated that in Virginia, there are approximately 2,700 active machines belonging to Churchill Downs. The company has around 2,300 machines remaining until it reaches the maximum limit of 5,000.
Carstanjen expressed his belief in Churchill Downs reaching that milestone in a relatively short period of time.
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