Exclusive: Churchill Downs prepares major poker push
Racetrack operator making plans for poker network - has applied for service provider licence in Nevada.
Churchill Downs (CD) is in talks with potential software partners to become both a major B2B and B2C player in the US online poker market, eGaming Review can reveal.
eGR has learned that the Kentucky-based racing operator is in talks with a number of providers including Playtech and Ongame to launch its own poker network. It has also applied for a service provider licence in Nevada.
A source close to the matter said the company plans to join forces with a series of partners in order to pool liquidity on its own network, on which it will also launch its own poker product. It would then approach a third party provider to power the network on its behalf.
Churchill Downs has yet to confirm it will use its recently acquired Bluff brand for its own poker product, although it is thought a free-play version could be launched to build brand awareness in the coming months ahead of forthcoming regulation.
The operator purchased multimedia poker content, brand and publishing company Bluff Media in February this year. The Atlanta-based business’s assets include poker publication Bluff Magazine and website, an online performance tracking and ranking database, blogs and online poker forums.
Churchill Downs, named after the thoroughbred racetrack famous for hosting the Kentucky Derby, launched its online division, twinspires.com, in 2007 and has since become the largest online horseracing business in the US ahead of the likes of Betfair TVG. Its current platform only offers horseracing, but Ted Gay, chief strategy officer, told eGR that the company was “spending lots of time focusing on poker and egaming” and that the recent application in Nevada was part of a larger plan to become a major player in the poker market.
It is likely that CD’s aspirations are fixed on federal or interstate gaming in the future. However Nevada’s online gambling regulator is seen as the benchmark for licensing in the US, and is therefore a vital hurdle for those wanting to establish themselves ahead of further regulation. Nevada became the first state to pass online gambling regulation last year and handed out the first two service provider licences “ to IGT and Bally Technologies “ last month.
“Nevada is an important regulatory body and we felt that it was important to be part of the process early on,” Gay said. “We don’t take the challenge [of competing in the online poker market] lightly. The competition will be great and it will be a huge challenge. But we have been an online operator for several years, so in many ways we have an advantage over the land-based [casino] companies. We are evolving the business to remain competitive.”
In other states, it is likely that CD will pursue an operator role where possible. Recent years have seen the company extend operations at its racetracks in Florida and Illinois to include casino and poker rooms, while it also acquired Mississippi-based Harlow’s Casino Resort and Hotel in 2010.
The company has been actively lobbying in California where, as a racetrack operator, it would be able to apply for an online poker operator licence if the current proposed legislation sees the light of day. Egaming regulation has stalled in the Golden State as tribal groups continue to challenge the provision allowing racetracks such as Churchill Downs, along with card clubs, to offer online poker.
CD’s racetrack and casino operation in Illinois would mean it could also qualify for an online poker licence in the Prairie State, if and when regulation is passed.
Senator John Cullerton’s HB 4148, which fell short in this legislative session but is likely to be reintroduced, proposed for egaming to be offered through the state lottery. Any of the state’s 16 licensed casinos and racetracks would have been free to apply for licences to host games.
In its full-year results for 2011 CD posted record revenues of $696.9m, an increase of some 19% on 2010. The growth was attributed to the performance of its online business and gaming operations. Revenues of twinspires.com increased 18% while EBITDA more than tripled to $9.1m from $2.8 million in the prior year’s fourth quarter.