Twin Spires collapse; The Great Buffet Battle

Online sports betting has claimed its second victim. First it was Wynn Interactive. Now it’s Churchill Downs subsidiary Twin Spires. Too much competition and too little profitability were the reasons cited by CEO Bill Carstanjen. CHDN will also cease its Internet-casino operations. It will, however, retain its four retail sports books, including Rivers Casino Des Plaines, as they are all performing in the black. “We had high hopes for the potential to build a profitable business in this space … We have profitable retail sports books in four of our casinos. However, the online sports betting and online casino space is highly competitive, with an ever-increasing number of participants that the states have licensed,” Carstanjen said, adding that he did not see a path to profitability in OSB “for at least several years.” Which was too much red ink for Churchill Downs to stomach.

The news was so big it overshadowed CHDN’s $43 million profit, to say nothing of its $2.5 billion engorgement of Peninsula Pacific and legislative approval of its Queen of Terre Haute casino project. Still, the cumulative results were enough to send Churchill Downs stock on a 12% runup. Revenue was $365 million, slightly above Wall Street’s expectation. In addition to an upstate New York casino, Churchill Downs gets a Virginia horse track, six Virginia slot parlors and the rights to build a casino atop a landfill near Washington, D.C., from Peninsula Pacific. It also inherits the off-again/on-again, $565 million Urban One casino project (below) in Richmond. Out goes the real estate of Hard Rock Sioux City, in a sale/leaseback arrangement (details to be announced).

Jeffries analyst David Katz enthused, “Notwithstanding time to closing [late 2022], property ramp-up, and future development, the deal adds to the heft of the already robust, unique, growth pipeline for CHDN. We consider any potential near-term weakness as an opportunity to accumulate shares.” They don’t come cheap: $242/share.

Despite striking its online tent, CHDN won’t be taking a bath. It holds market-access rights that it can sell, and which will no doubt find hot and eager takers. So if you want to get into OSB in any of seven states or i-gaming in Michigan, New Jersey and Pennsylvania, give Carstanjen a call. Hopefully, takers will have better luck than Twin Spires, which so far has lost $1.5 million in Arizona, Michigan and Pennsylvania, having given away the (modest) store with promotions. Worst was Michigan, where $22 million in handle boiled down to a $1 million deficit. For whatever reason (brand equity, perhaps), Twin Spires could never get significant traction in any market where it operated.

Roundhill Investments CEO Will Hershey told SportsHandle that the OSB implosion “just all happened way quicker than anybody expected—from euphoria last year to realization,” but that Churchill Downs as a whole was in no peril as Twin Spires was peripheral to its business. Nor is the Twin Spires brand going away entirely, as it will continue to be a platform for betting on horseracing, CHDN’s core concern.

It might be a good thing that we’ve pretty much seen the last of the casino buffet. A few weeks back a brawl broke out in a Golden Corral in Bensalem, Pennsylvania (proud home of Parx Casino) when the buffet ran out of steak. Them’s fightin’ words! Over threescore people were involved in the fist-punching, chair-throwing melée. “There were no serious injuries or deaths, other than the death of participants’ dignity,” reported Matt LaBash. “My friend, she’s in the video trying to break it up, and she told me she got hit by a table and her ankle got bruised up pretty bad. And yeah, it’s scary stuff,” said ex-employee Dylan Becker. “I’ve never seen nothing like that in Golden Corral before.”

If you’ve seen the excellent film Licorice Pizza—or have a long memory—you’ll have a flashback to the Arab Oil Embargo of 1973, which caused interminable lines at the gas pumps and stern austerity measures by then-President Richard Nixon … but no violence that we can recall. Nowadays a shortage of beef at Golden Corral is a causus belli. Put another way, if the Japanese attacked Pearl Harbor now they would win the war. Meanwhile, if you’re at a casino, be extra nice to your service person. They’re doing the best they can.

Jessica Chastain‘s long-shot Best Actress win at last night’s SAG Awards was so out of left field that oddsmakers haven’t recomputed their Oscar rankings yet. Troy Kotsur (CODA) also bested oddsmaker favorite Kodi Smit-McPhee (The Power of the Dog), presaging a possible Oscar upset. In the meantime, The Power of the Dog is the 61% favorite (-155) for Best Picture, losing some momentum to feel-good Belfast (+175), while West Side Story (+600) appears to be fading.

Jottings: Sparks Nugget is the newest jewel in Century Casinos‘ crown. The latter picked up the casino and half its real estate (with an option to buy the rest) for a tidy $195 million … The Seminole Tribe has less than a month to decide on what grounds it will appeal a federal judge’s rejection of its latest compact with Florida. By defining cyberspace as “tribal lands,” the compact has run up hard against IGRA … Another Las Vegas idol has been dethroned and rightly so. Vanity Fair has exposed the late Jerry Lewis as a gross, serial sexual predator. It’s too late to make amends but we never thought the bastard was funny anyway, just annoying.