Archives for December 2021


Bloomberg reported last week that Churchill Downs, Inc. is exploring the sale of its TwinSpires advance-deposit wagering business for $1.5 billion, although the company has not made a definitive decision on whether it would sell at all.  Further, the sale would be for the TwinSpires horse-betting platform only and would exclude its sports betting and online casino platforms. 

TwinSpires racing handle increased in the third quarter of 2021 by 31% over the same quarter in 2019 (pre-pandemic) and active users were up by 23%.

Currently, Churchill Downs, Inc. has online sportsbooks in Arizona, Colorado, Indiana, Michigan, New Jersey, Pennsylvania, and Tennessee.  Its retail sports books operate in Arizona, Colorado, Indiana, Mississippi, and Pennsylvania.  And TwinSpires online casinos are located in Michigan, New Jersey, and Pennsylvania. 

When a publicly traded company sells or spin-offs a subsidiary to shareholders, it is usually for one of two reasons.  First, the subsidiary does not fit within the mission of the parent company and the money it brings in a sale can be more profitably deployed elsewhere.  Or, second, the subsidiary as a stand-alone operation would command a higher price-to-earnings multiple than its parent company does. Kohl’s, for example, is under pressure from activist investors to sell or spin off its e-commerce business because it has a much better growth rate than Kohl’s retail stores.

American companies are increasingly selling off or spinning off subsidiaries to enhance shareholder value. General Electric, for instance, is splitting into three separate firms.

The view here is that the main reason Churchill Downs, Inc. is looking into the TwinSpires sale is that the parent company’s strategy is to continue to evolve into a brick-and-mortar casino and online casino/sports betting operation and move away from its historical emphasis on horse racing (similar to the strategic route taken by Penn National Gaming).  Churchill Downs’ 2021 sale of Arlington Park racetrack in Chicago is the most recent case in point.  Churchill Downs, Inc. will undoubtedly hold onto the crown jewel of American racing, the lucrative Kentucky Derby, and likely its racetracks that are part of a casino.

Proceeds of $1.5 billion from the sale of the TwinSpires horse racing business could be used for a variety of purposes, such as to pay down debt and strengthen the balance sheet, to invest in casino-related high-growth segments like sports betting, to increase shareholder dividends, and to buy back Churchill Downs stock.

(Disclosure: I am a Churchill Downs, Inc. shareholder. As such, my preference would be for the company to retain TwinSpires racing, as it is an integral part of horse racing and potentially synergistic with sports betting.)

Copyright © 2021 Horse Racing Business


The trial of Tylicki vs. Gibbons is underway in High Court in London, England and the outcome could have wide-ranging consequences for not only horse racing but sports in general.  Former jockey Freddy Tylicki has a £6 million negligence claim against fellow jockey Graham Gibbons for inflicting “life-changing injuries” in a flat race at Kempton in 2016.

Tylicki, who is permanently in a wheelchair, asserts that halfway through a mile race Gibbons recklessly sent his mount Madame Butterfly to the rail, thereby cutting off Tylicki riding Nellie Dean and causing her to fall in a four-horse pileup. Tylicki alleges that Gibbons engaged in riding “dangerous in the extreme” and violated his responsibility as a jockey. 

Further, Tylicki says he yelled a warning to Gibbons not to persist on the path he took with Madame Butterfly.  Court filings state: “As a professional jockey riding in a race under rules the defendant owed the claimant a duty to exercise the reasonable care towards a fellow jockey that is to be expected of an experienced high level professional jockey.”  Gibbons, of course, denies the allegation and cites “split-second” decisions that jockeys must make.

The view here is that if Tylicki prevails, the monetary outlays required of jockeys, at least in Great Britain, would be burdensome because jockeys would need to protect themselves by purchasing liability insurance, which would either be impossible to get or too expensive for most riders.  Moreover, a stewards’ ruling that suspended a jockey for careless riding would be used as evidence in a court case similar to Tylicki vs. Gibbons.

A verdict finding Gibbons liable might set a precedent that spreads to other sports.  Rugby, for instance, is a bloodsport in which participants can and do suffer severe injuries.  Same for boxing.

Imagine in the United States if an NFL player is sued after injuring another player for a hit that a referee flagged for initiating unnecessary contact against a receiver who is in a defenseless posture.  Ice jockey is also replete with such scenarios.

The trial, which began Monday, is expected to last five days.

Copyright © 2021 Horse Racing Business