Archives for March 2017


On February 28, 2017, Churchill Downs, Inc. (CHDN) reported its operating results for the 2016 fiscal year, which commenced on January 1, 2016 and ended on December 31, 2016.

CHDN operates in six business segments:

  • Horse Racing, consisting of live racing at Churchill Downs, Arlington Park, and Fair Grounds Race Course.  Calder Race Course in Miami is owned by CHDN, but is managed by the Stronach Group.
  • Casinos, including five casinos, two hotels, a 50% stake in Miami Valley Gaming, and a 25% stake in Saratoga Holdings.  CHDN has gaming positions (slot machines, video poker, and table games) in seven states.
  • TwinSpires, the largest, legal mobile platform for online betting on horse racing in the United States and includes related businesses such as BRIS (handicapping information).
  • Big Fish Games, a global producer and distributor of social casino, casual, and mid-core free-to-play premium paid games for PC, MAC, and mobile devices.
  • Other Investments in such companies as United Tote.
  • Corporate.

In 2016, CHDN had aggregate net revenue of $1.3 billion compared to $1.21 billion in 2015.  Diluted earnings per share were $6.42 in 2016 versus $3.71 in 2015.

Net revenue for each of the six business segments were (in millions of dollars): Horse Racing, $268.1; Casinos, $332.8; TwinSpires, $221.9; Big Fish Gaming, $486.2; Other Investments, $20.8; and Corporate, $1.0.

Total EBITDA for CHDN in 2016 was $334.5 million.  The percentage shares of EBIDTA for the segments were:  Horse Racing, 23.8% ; Casinos, 37.6%; TwinSpires, 16.5%; Big Fish Gaming, 23.6% ; Other Investments, less than 1%; and Corporate, -2.4%.

When the horse racing and online betting segments are combined, they account for 38% of aggregate net revenue and 40% of total EBIDTA.

The five-year performance of CHDN common stock was far above average.  A $100 investment in CHDN stock on December 31, 2011 would have grown to $302.92 by the end of 2016.  By contrast, a $100 investment in the S & P 500 index would have been worth $191.18 and a $100 investment in the Russell 2000 index of small-capitalization stocks would have increased to $196.45.

Copyright © 2017 Horse Racing Business


Silky Sullivan was a California-bred superstar as the 1958 Kentucky Derby approached, gracing the cover of Sports Illustrated on April 28th and capturing the attention of people who were not fans of horse racing.  He was a muscular 16 hands-plus picture-perfect specimen known as the “California Comet” whose chestnut coat gleamed in the Golden State sun.

Silky Sullivan’s appeal was his running style, which was lagging far, far behind the field in the early part of races and then closing with a tremendous rush.  His trainer, Reggie Cornell, and his regular jockey, Bill Shoemaker, said that the colt would not respond to efforts to keep him closer to the pace.

In a 6 ½ furlong prep race for the Kentucky Derby, Silky Sullivan was 41 lengths behind after a quarter of a mile, and rallied to win.  Has a horse ever overcome such a gap in a sprint and won?  Doubtful.

In the Kentucky Derby, CBS televised the race using a split screen, with one screen focused on the field and the other screen showing the dawdling Silky Sullivan.

Prior to the Kentucky Derby, Silky Sullivan had won half his 14 starts.  In the Santa Anita Derby on March 8, 1958, his last race before the Kentucky Derby, the colt made up a 26-length deficit to win by three lengths at 1 1/8 miles.

Silky Sullivan went off in the Kentucky Derby as the co-favorite with Calumet Farm’s Tim Tam…and dashed his followers hopes by losing to Tim Tam by 20 lengths and finishing twelfth.  Tim Tam repeated the drubbing in the Preakness, beating Silky Sullivan by 15 lengths.

While Silky Sullivan had lost much of his mystique after the Derby and Preakness, he delighted his loyal fans by returning to California and winning two sprints with his come-from-behind style.

Silky Sullivan lived out his life as a breeding stallion of some note and was paraded for several years in front of adoring fans at California racetracks on St. Patrick’s Day.  He continued to receive fan mail for years after his 1958 campaign.  Silky Sullivan died in 1977 and was buried near the tote board at Golden Gates Field racetrack in San Francisco.

It is difficult today to imagine what it was like in 1958 when a charismatic racehorse was a household name.

Copyright © 2017 Horse Racing Business

The series on Kentucky Derby history began on February 20 and ends on May 1.


Analyzing and betting sensibly on horse races is an intellectual challenge requiring consideration of a multitude of variables that may affect the outcome.  A handicapper must sort out the variables and weight them in terms of their importance given the conditions of a race.  Computer software enables a handicapper to develop a quantitative model and back-test its predictive power.

Might artificial intelligence produce a superior result?  In 1997, IBM’s Deep Blue defeated chess champion Garry Kasparov.  Great advancements in AI have been made since then, in a variety of dissimilar endeavors, from medicine to gaming.  For example:

  • Northwestern University researchers developed AI that beat the average American in solving the intelligence test of visual and analogical reasoning called the Raven Progressive Matrices Test.
  • Researchers at Imperial College London developed AI that was more accurate in diagnosing pulmonary hypertension than the typical cardiologist.
  • AI is being applied by major employers to sort out the best candidates to fill job openings.
  • At the Rivers Casino in Pittsburgh, Pennsylvania, researchers from Carnegie Mellon University used the AI program Libratus to play four world champion poker players (one-on-one, not as a group) in 120,000 hands of heads-up no-limit hold’em.  In the end, Libratus had an advantage of 1.8 million chips.

There are important fundamental differences, of course, in playing chess and poker, and handicapping horse racing or sports events.  In chess, both players can see the other’s moves and thus there is no private information.  By contrast, in poker, each player has incomplete information because some of the cards are hidden…and thus probability becomes a key determinant of winning and losing.  In horse racing and human sports competition like soccer and basketball, there is plenty of public information available to bettors, but also there is private information that the average bettor is not privy to…and luck plays a role as well.

AI may be more difficult to develop for handicapping horse races than playing chess or poker, but it does offer potential because AI can handle the interactions among numerous variables that determine the results of a race and it can do simulations.  Plus, AI takes human emotion out of the decision.

Our sponsor, SBAT, has been exploring possibilities of using AI to better understand, interpret and explore statistics in an effort to make betting easier and offer valuable information and guidance needed to wager intelligently on sports like horse racing and soccer.

Copyright © 2017 Horse Racing Business