Why Churchill Downs is Betting $90 Million on Downtown Louisville

Why Churchill Downs is Betting $90 Million on Downtown Louisville
Fact Checked by Michael Peters

The newest gaming hall in Kentucky opened earlier this month to great fanfare in Downtown Louisville, bringing together several local and state officials and key civic leaders for a preview night hosted by Churchill Downs Incorporated.

The special guests at Derby City Gaming Downtown got to play on the slot-like historical horse racing machines, visit the retail Kentucy sports betting sportsbook and check out the bars and other features, like the naked-eye 3D video board that visitors see on the street as they come up to the building.

Churchill Downs already had one gaming venue in its hometown when it announced it would build another two years ago. In fact, as the company worked on its newest facility, it also invested $76 million in its other Derby City Gaming HHR hall. That project included expanding the gaming floor, opening an upscale steakhouse and building a 123-room hotel on the former Louisville Downs harness track grounds.

So, why would Churchill Downs spend another $90 million to build a second gaming hall in the same city? CEO Bill Carstanjen explained the reason to guests during the Dec. 4 preview event.

“This is a significant investment, not just for horse racing but for the city of Louisville, and perhaps just as importantly, downtown, which is the heart and soul of our city,” he said. “We believe firmly that Derby City Gaming Downtown will be a consequential part of reinventing downtown Louisville at a time when our city needs businesses to double down on their commitment to creating a vibrant hub of economic activity and community interaction.”

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Why Supporters Say It’s Needed

The emergence of historical horse racing has helped revive one of Kentucky’s signature industries. Now, the hope is it can boost one of the state’s major economic engines.

Like many cities, downtown has been Louisville’s main business and entertainment hub for decades. However, the district has found it challenging to rebound from the COVID-19 pandemic, which forced many employers to keep employees at home. A recent University of Toronto study found that out of 66 major urban centers in the U.S. and Canada, only St. Louis had a lower rate of return traffic than Louisville’s 54%.

Further hindering traffic downtown is the historically bad play by the University of Louisville men’s basketball team, the primary tenant of the KFC Yum Center. In past years, any Cardinals game would attract crowds of 20,000 or more. Over the past few seasons, though, the crowds have dwindled like the wins for the once-vaunted program, which has the second worst ACC Championship odds at ESPN BET Kentucky.

It’s not all bad news for downtown. Main Street serves as the heart of the city’s bourbon district, with Old Forester and Angel’s Envy among the distillers offering tours and other experiences to visitors worldwide. More than 6,000 hotel rooms are located downtown to serve business travelers, tourists and people coming for conferences and conventions.

Derby City Downtown is catty-cornered from the Kentucky International Convention Center and is a short walk from the area’s major hotels. It’s also near the Yum Center, the Kentucky Center for the Arts and 4th Street Live.

Churchill executives as well as local and state officials hope the gaming hall and its nearly 500 slot-like racing machines will keep Louisville visitors in town and away from Caesars Southern Indiana, which is located 15 miles from downtown. It’s the only full-fledged casino within an hour’s drive from Louisville. Although the state doesn’t have full casinos, Kentucky sports betting apps went online in September.

“Churchill Downs is known for making smart bets, and this is an example of another one of their great bets,” Louisville Mayor Craig Greenberg said at the event. “A bet on the people of Louisville. A bet on the city of Louisville. A bet on the state of Kentucky.”

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HHR’s Impact on Kentucky

HHR has mushroomed across Kentucky in just over a decade, with gaming halls at most racetracks and affiliated satellite venues, like the two Derby City Gaming properties.

According to the Kentucky Horse Racing Commission, 7,129 machines were operational in October. That month, bettors wagered $732.2 million in the machines, with the tracks reporting net revenues of $55 million. Churchill Downs, which operates four tracks in Kentucky, controlled more than 2,900 of those before Derby City Downtown opened officially on Dec. 6, the day that marked the 150th day until Kentucky Derby 150.

The machines have provided a revenue source for the state’s tracks to boost their purses. In turn, that’s helped them attract more horses for their races, and deeper fields typically lead to increased wagering. While tracks like Churchill Downs and Keeneland have been able to attract some of the top horses, trainers and owners for their meets, the increased purses have also helped others like Turfway Park increase the quality of their fields at the Churchill-owned track, which races in the winter and spring to make the state a viable year-round racing market.

House Speaker David Osborne, R-Prospect, reminded the crowd about a bipartisan bill state lawmakers passed two years ago that ensured the legality of the machines, a measure needed after the Kentucky Supreme Court found the KHRC did not have the authority to approve the games on its own. Osborne said it was a “difficult vote” because some legislators staunchly opposed gaming, but supporters made a stand.

As a result, it’s allowed Churchill Downs, Kentucky Downs, Sandy’s Racing and Gaming, and Keeneland and Red Mile to invest millions of dollars across the state and create thousands of jobs.

“It’s an industry that creates hundreds of millions of dollars of economic impact on the state, and it’s an industry that defines who we are as Kentuckians,” he said. “We took that vote. We’re proud of that vote. I’m so excited to see this come to fruition.”

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Steve is an accomplished, award-winning reporter with more than 20 years of experience covering gaming, sports, politics and business. He has written for the Associated Press, Reuters, The Louisville Courier Journal, The Center Square and numerous other publications. Based in Louisville, Ky., Steve has covered the expansion of sports betting in the U.S. and other gaming matters.

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