LOUISVILLE, Ky. (WDRB) -- When Derby City Gaming opened in downtown Louisville in December, the CEO of Churchill Downs Inc. said the casino-like venue represented a "much needed entertainment facility in this region" and "an investment in the spirit and the culture and the future of our city."
But the $90 million downtown gaming venue is off to a slow start, according to figures from the Kentucky Horse Racing Commission, which regulates the slots-style "historical horse racing" machines featured there.
From the facility's opening Dec. 6 through March 31, the new downtown location generated only about one-quarter of the revenue per machine of the original Derby City Gaming off Poplar Level Road, according to figures published by the KHRC.
Despite Louisville being the state's biggest market, Derby City Gaming Downtown was the least-generating of Kentucky's 12 historical racing venues in each of its first four months, except in December when it narrowly edged out Sandy's Racing & Gaming in Ashland.
Churchill Downs officials have said the downtown Louisville venue's initial performance is not surprising given that the facility was designed to serve a seasonal clientele of bourbon tourists, concert-goers and convention attendees.
"We thought it would start relatively modestly because a big component of its business is going to be driven by tourism and downtown traffic," Churchill Downs CEO Bill Carstanjen told analysts on the company's April 25 earnings call. "And opening in December and the height of winter in Louisville is not the ideal time to open. So, what we're seeing is pretty consistent ramping ... Let's get some of the spring and summer months under our belts and then we can really have a much better sense of what to expect in the long term."
Churchill Downs reiterated those assertions in a statement for this story.
"Following its winter opening, we expect to see acceleration this spring as downtown activity traditionally increases," Churchill Downs spokesman Logan Spradlin said in the statement.
Churchill Downs, a horse racing and casino operator, has a recent history of executing shrewd investments. Its stock has outperformed the broader market by a 2-to-1 margin the last five years.
An inside look at Derby City Gaming Downtown ahead of its Dec. 6, 2023 opening. Dec. 4, 2023. (WDRB Photo)
The original Derby City Gaming in suburban Louisville, which opened in 2018, has consistently been the state's highest-grossing historical racing venue. Carstanjen has called it "a juggernaut."
The company has since added five historical racing venues throughout the state and expanded in other states that have the slots-style gaming, such as Virginia, New Hampshire and Wyoming. It also bought Exacta Systems, a company that makes the "central determinate system" software that runs the machines.
In states like Kentucky where casinos are not legal, historical racing offers a workaround to mimic the experience of slots. Those who play the machines are said to be engaging in pari-mutuel horse racing, just as if they were betting on a horse at the track.
"They look and feel and play like every other slot machine you would find anywhere in the country," Garth Williams, general manager of Derby City Gaming Downtown, said on Louisville Business First's Access Louisville podcast in March. "... The only difference is ... the game is programmed to go out to a database and randomly select an old horse race and translate that to what you see visually on the screen. So, most customers don't even care about that. There's ways for you to go in there and kind of, handicap, the race, if you will. It's not as fun, and when you teach guests how to do it, they quickly lose interest."
