PA Online Gambling Forecast: Churchill Downs and Presque Isle

Martin Derbyshire August 21, 2018
Churchill Downs entrance

Churchill Downs Incorporated has grown from owning and operating a single racetrack in Louisville, Kentucky to a giant in the horse racing and casino industry, owning numerous racetracks and casinos in multiple states and one of the top online horse race wagering operations in the country.

The company recently completed a deal to acquire one Pennsylvania casino. Additionally, they are taking over operations of another property. This is all part of the company’s plan to expand into Pennsylvania’s emerging online gambling sector.

In August 2018, Churchill Downs announced that it will take over the management of Lady Luck Casino Nemacolin in Farmington in addition to closing its purchase of Presque Isle Downs & Casino in Erie from Eldorado Resorts.

The deal originally involved the purchase of Presque Isle Downs & Casino and the Lady Luck Vicksburg hotel and casino in Mississippi. However, the $51 million sale of the Mississippi casino was canceled in July 2018 after antitrust concerns were raised.

Churchill will now go ahead with its $179 million purchase of Presque Isle Downs & Casino, take over operations of Lady Luck Casino Nemacolin at a cost of $100,000, and pay Eldorado Resorts a $5 million termination fee.

Presque Isle Downs purchase approved

The Pennsylvania Gaming Control Board (PGCB) approved the operator change for Presque Isle Downs & Casino in mid-August, charging Churchill Downs a control fee of $3.75 million.

In announcing its original agreement to acquire Presque Isle Downs & Casino, Churchill Downs CEO Bill Carstanjen said the property gives Churchill a foothold in a state where legislation authorizing online gaming has passed.

However, while nine of 13 PA casino license holders applied for a $10 million online gambling license just ahead of the state’s the July 16, 2018 deadline, neither Presque Isle Downs & Casino nor Lady Luck Casino Nemacolin were one of them.

The licenses are for operating online slots, online table games, and online poker. Each is now available to the remaining four PA casino license holders at a cost of $4 million each.

At its PA operator change meeting, Churchill Downs applied for online slots and online table games licenses, making its online gambling intentions for Presque Isle Downs & Casino perfectly clear. It will not be pursuing online poker, but a Presque Isle Downs & Casino online casino is in the works

PA casino license holders are currently able to apply for a $10 million license to operate retail and mobile sportsbooks. Again, neither Presque Isle Downs & Casino or Lady Luck Casino Nemacolin have applied for this license. Only Penn National has applied for this license so far.

However, both Parx Casino and Mount Airy Resort Casino have announced an intention to launch sports betting. They will do this through partners GAN and PokerStars/BetStars respectively.

Online gambling first

At its PA operator change meeting, Churchill Downs representatives expressed an interest in sports betting. However, they also said they have some concerns.

Clearly, Churchill Downs will build out its PA online gambling offering first.

In May, the company inked a deal with sports betting software supplier SBTech. The pair will roll out SBTech’s online gambling and sports betting software platform across the US. Churchill Downs is planning to launch SBTech’s sports betting and Chameleon360 iGaming platform where it can.

Since 2007, Churchill Downs has also owned and operated the online horse race wagering service TwinSpires. It takes online bets on virtually every thoroughbred, harness, and quarter horse race in the world. TwinSpires is available in more than 30 states, including PA.

Churchill Downs has also released plans in 2018 to offer online gambling in New Jersey. It will do so under the Golden Nugget Atlantic City internet gaming license.

It’s easy to see it’s online focus is likely to be in New Jersey first. However, its intention in the PA online gambling sphere is becoming clearer with each passing day.

Presque Isle Downs & Casino and Lady Luck Casino Nemacolin

Presque Isle Downs & Casino is one of the state’s smallest casinos with 1,500 slot games and a little more than 30 table games. However, Lady Luck Casino Nemacolin is even smaller, with just 600 slot machines and upwards of 25 table games.

In fact, Presque Isle Downs & Casino and Lady Luck Casino Nemacolin are the two lowest-grossing casino properties in PA.

Presque Isle Downs & Casino was 11th of 12 casinos in 2017, posting $14,470,503 in table games revenue. Lady Luck Casino Nemacolin posted just $4,542,215 in table games revenue in 2017, making it 12th of 12.

Presque Isle Downs & Casino posted $111,164,968 in slot machine revenue in 2017, leaving it 10th of 12 PA casinos in that category. Lady Luck Casino Nemacolin posted just $30,145,146 in slots revenue, once again putting it in last place.

Photo by Ken Wolter / Shutterstock.com