Churchill Downs Hotel And Casino Among Company Projects Put On Hold During Coronavirus Pandemic

Churchill Downs Inc., in reaction to the economic fallout from the coronavirus (COVID-19) pandemic, is putting expansion projects at several of its gaming facilities on hold, including a new hotel and historical horse racing machine (HRM) casino at its flagship racetrack in Louisville, Ky.

Bill Carstanjen, CDI’s chief executive officer, outlined plans for the company’s immediate future during an April 29 call with investment analysts to review financial results of the first quarter of 2020. CDI, like other gaming companies, is suffering from the closure of its casinos because of the public health crisis.

“As a result of the closure of our gaming properties, we have significantly reduced our maintenance and growth project capital expenditures for 2020,” Carstanjen said during the call. “We have eliminated nearly all maintenance expenditures except for mandatory items until our properties are reopened. Regarding growth project capital, we have elected to continue investing, where it makes sense and stop where the timelines to completion are far out, the bulk of the expense has largely not yet been incurred or in the case of hotel developments, we need to revisit assumptions regarding the occupancy rates and travel patterns going forward.”

The hotel and HRM casino at Churchill Downs is on hold “until we have better visibility into the full impact of the COVID-19 pandemic on the regional economy,” Carstanjen said, adding that the delay would at minimum continue through the 2021 Kentucky Derby.

“We remain extremely committed to investing in the build-out of Churchill Downs Racetrack,” he said. “However, we feel it is prudent at this time to pause this investment until we have greater clarity on timing for a return to economic stability.”

Carstanjen said a quarantine barn and equine medical building at Churchill Downs have been completed, along with renovation of a sixth-floor section of the grandstand adjacent to The Mansion, to be called the Matt Winn Steakhouse, that will seat 350 people.

A second Kentucky project, the Oak Grove harness track, HRM casino and hotel in the Nashville, Tenn., market is on target to be finished with a planned opening of Sept. 1, pending approval from local and state officials. However, Carstanjen said, a planned equine events center and outdoor concert venue at Oak Grove is being delayed.

Carstanjen said historical horse racing games developed by Ainsworth, Scientific Games and IGT will be used at Oak Grove. Historical racing machines from Scientific Games casino and IGT were were introduced and tested at the company’s Derby City Gaming casino in Louisville to complement the games from Ainsworth in place there, and Carstanjen said, “We’re very pleased with their performance.”

The new Tapeta synthetic racetrack surface installation at Turfway Park in Northern Kentucky will go forward, but Carstanjen said that while the old Turfway grandstand is being torn down, “We have placed a temporary hold on the continued architectural design phase of the new grandstand and historical racing machine facility.

“We can pause on the design work without losing much time, so we have,” he added. “As the state opens up and we complete the tear down of the existing grandstand and the installation of the new racing surface, we expect, we are likely to pursue the next phase with all deliberate speed.”

Meanwhile, he said, development of an HRM and simulcast facility in a shopping center near Turfway in Newport, Ky., has a targeted opening date in the fourth quarter of 2020.  “The revenue generated from this facility will support the purses for future live race meets at Turfway Park,” Carstanjen said. “It will open with the simulcast area, a gaming floor with approximately 500 historical racing machines and a bar area.” The so-called Newport Extension will operate with a racing license associated with Turfway, similar to the Derby City Gaming casino in Louisville located a few miles from Churchill Downs.

“Ultimately, the addition of the historical racing machines at Derby City Gaming, Churchill Downs Racetrack, Turfway Park, its Newport Extension and Oak Grove will significantly increase jobs and tax revenues in the Commonwealth, increase the purse money for the horses that race at our racetracks, attract more money to be wagered on our races, because of the increase in the quality of our racing product and increase the value of thoroughbreds for breeding purposes, which is all good for the Kentucky horse industry as well as for the Commonwealth of Kentucky,” Carstanjen said.

In Illinois, Carstanjen said planning and execution for an expansion at the company’s suburban Chicago Rivers Des Plaines casino, including completion of a parking garage that is 90 percent done, is “now paused.”

He did not discuss Arlington Park during the call.

In Ohio, a gaming floor expansion, parking garage and hotel are also on hold.

Churchill Downs share price (CHDN), like all gaming stocks, has fallen in recent months. Tuesday’s closing price was 43.95 per share compared to a 52-week high of 83.11

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