Churchill Downs’ TwinSpires virtual horse racing platform propelled the Louisville-based company to a strong third quarter, it reported Thursday evening.
Net revenues grew year-over-year by $11.4 million for the quarter, to $314.8 million. $10.8 million of that increase was attributable to another strong showing by TwinSpires, the platform that allows users in nearly all U.S. states to wager on live and replayed horse racing.
TwinSpires saw a 23.9 percent increase in active players from the prior year quarter, and handle growth of 20.6 percent, against 3.7 percent growth across the broader U.S. thoroughbred industry, according to Equibase, an industry data provider.
“This segment of our company has performed very well,” said Bill Carstanjen, chief executive officer of Churchill Downs. “Our team continues to prove it can acquire new users and grow revenues per existing user.”
“While we benefit from the trend of horse players moving their play online from brick and mortar outlets, we extensively market for new players around the Kentucky Derby, the Triple Crown season and the Breeder’s Cup, since that is when new and more casual players enter or re-enter the game,” Carstanjen continued.
Net income for the quarter nearly doubled from the prior year, to $16.7 million, while adjusted EBITDA jumped 7 percent to $76 million and diluted earnings per share more than doubled to $1.08 million.
Big Fish Games, the social gaming unit acquired by Churchill in late 2014, continued its slump by reporting a $4.4 million decrease in revenues and a $10.2 million drop in adjusted EBITDA.
These declines come against a $9.1 million increase in social casino revenue, but were offset by declines in the premium, casual and mid-core free-to-play segments.
Carstanjen attributed the drop to ramped up social casino marketing spend and noted that adjusted EBITDA and bookings grew sequentially from the second quarter.
The company’s casino segment generated $4.5 million in revenue growth, while the racing segment was flat but grew EBITDA slightly.
“This quarter, we were successful in growing adjusted EBITDA, but at this point we do not expect significant improvement in longer term trends in thoroughbred racing,” Carstanjen said.
Carstanjen emphasized that Churchill is firmly opposed to a ballot referendum in Maine on November 7 that would allow for a casino in Portland – the state’s largest city – that would pose a threat to the company’s property in Oxford.
“A casino in Portland would be harmful to our property and to employment in our community, so we are opposed to the initiative and believe the current polling suggests the majority of voters strongly agree,” he said.
Churchill also announced in late October that it had discontinued its Kentucky Derby sponsor relationship with Yum! Brands and that it had finalized a new deal with Brown-Forman.
Moving ahead, the event will be officially titled the Kentucky Derby, presented by Woodford Reserve – the bourbon manufacturer and Brown-Forman subsidiary.
