New parlor for Instant Racing

LEXINGTON, Ky. – Churchill Downs plans to build a new standalone facility at its Trackside training center in Louisville to house 650 historical horse racing machines, with a planned opening in the late summer or fall of next year, company officials said on Tuesday after receiving preliminary approval for the plan from the Kentucky Horse Racing Commission.

Churchill plans to invest $50 million to $60 million in the 85,000-square-foot parlor, Kevin Flanery, the president of the track, said after the commission meeting. Trackside, which is located just outside a ring road surrounding the Louisville urban area, will continue to operate as a training center, Flanery said.

The decision by Churchill to seek approval for historical horse racing machines – slot machine-like devices that use the results of previously run horse races to generate random numbers determining payouts to gamblers – is a reversal of the company’s previous position of declining to seek the devices and instead lobbying for a full casino.

However, with any gambling expansion considered a nonstarter in the state under Gov. Matt Bevin, Churchill is now embracing the machines, which have generated nearly $900 million in betting this year at three other locations in the state through May, according to KHRC records.

“It is something we think the customers will enjoy,” Flanery said.

Flanery declined to provide estimates for how much the facility is expected to generate in wagering. The company plans to develop its own devices through its United Tote subsidiary, a bet-processing company. Two other companies have already developed machines in use at Kentucky’s racetracks and in Arkansas at Oaklawn Park.

Flanery said the company expects the machines to lead to a double-digit-percentage purse increase at the track’s three meets when the machines are up and running. Horsemen get a little under 1 percent of the gross wagering through the machines.

Racing commission members offered broad support for the plan at the meeting on Tuesday, although one member, David Dickerson, the secretary of the Public Protection Cabinet – which oversees the commission – voted against the proposal. Dickerson was installed on the board as a voting member after Bevin restructured the panel shortly after taking office.

Historical racing machines have been in place at Kentucky Downs since 2011, and its parlor, located near the Tennessee border, has enabled the track to boost purses at its short allturf meet to nearly $1 million a day. Ellis Park installed the machines in 2012, and The Red Mile and Keeneland, operating in partnership, opened a parlor at The Red Mile in Lexington in 2015.

Handle through the machines at the three locations is up 44.5 percent this year, according to KHRC figures, with the numbers growing significantly at both Kentucky Downs and The Red Mile. The three tracks have collectively earned $52.7 million this year through May on the wagering, the KHRC figures show.

The Churchill parlor will be located in the state’s largest population center, but the market also has competition from casinos across the river in Indiana. Flanery said company officials are being “conservative” with estimates for their machines, but the $60 million investment by Churchill indicates that the company is looking to generate significant revenue.

Ellis Park and Kentucky Downs initially each invested $3 million to build parlors in their existing grandstands, while Keeneland and The Red Mile spent $30 million to completely renovate the grandstand at The Red Mile to house 1,000 machines.

Flanery noted that Louisville is a highly competitive market for the entertainment dollar, justifying the expense of building a facility that will have to compete with casinos nearby. He said that Churchill did not want to place the machines at its landmark track because of recent renovations of the grandstand focused on improving the customer experience for live racing and simulcasting.

Also at the meeting, the KHRC approved a request by Kentucky Downs to add a new wager to its meet this fall called the Jockey 7. The wager will allow bettors to select jockeys in win, place, show, exacta, and trifecta bets, with payoffs based on the points earned by the riders relative to their finishing positions in the last seven races on the card. A portion of the revenue from the bet will be contributed to the Permanently Disabled Jockeys Fund, said the track’s president and co-owner, Corey Johnsen.