Churchill Downs’ Derby City Gaming in Downtown Louisville Slow Out of the Gate

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Churchill Downs opened its $90 million Derby City Gaming location in downtown Louisville in December. The historical horse racing (HHR) facility has failed to meet preopening revenue projections during its initial months in operation.

Churchill Downs’ Derby City Gaming Downtown historical horse racing venue in Louisville is off to a slow start roughly four months into its operation. Churchill Downs officials aren’t yet concerned. (Image: The Courier-Journal)

Derby City Gaming Downtown is a casino-like venue offering HHR gaming machines. The slot-like terminals are based on previously run horse races and are classified as parimutuel wagering.

Churchill’s downtown venue hasn’t seen the robust crowds the company anticipated in spending $90 million to renovate a former US Bank location on the corner of 140 S. 4th St. in Louisville. Revenue reports from the Kentucky Horse Racing Commission reveal that the downtown HHR destination’s terminals are generating only about a quarter of the monthly gross gaming revenue (GGR) being won at Derby City Gaming’s original and only other location along Poplar Level Rd. near the Louisville Airport.

Slow Start, Company Explanation 

The Kentucky Horse Racing Commission reports that the 500 HHR positions at Derby City Downtown each averaged a monthly win of approximately $2,520 during January, February, and March, the most recently reported filings. By comparison, Derby City near the airport averaged about $11,600 per HHR terminal during the same period.

Derby City Downtown has nearly 500 HHR machines while the original Derby City has over 1,300 gaming seats.

When Churchill opened the downtown venue, company leaders touted Derby City as an economic revitalizer for the city center, with the goal being to “contribute to our community.” Several months in, the executives are saying the slow start wasn’t entirely unexpected and additional time is needed for a clearer picture of how the property will benefit Louisville.

We thought it would start relatively modestly because a big component of its business is going to be driven by tourism and downtown traffic,” Churchill Downs CEO Bill Carstanjen said on the company’s earnings call in April. “Opening in December at the height of winter in Louisville is not the ideal time to open. So, what we’re seeing is pretty consistent ramping.”

Carstanjen said the firm will have a better sense of what to expect long-term from the Derby City Downtown operation after realizing revenues from the spring and summer months.

HHR Innovation

To the casual player, HHR machines function just like a casino slot. But the games work vastly differently behind the colorful animations displayed to the player.

HHR devices choose a random previously run horse race and translate the race’s odds into a visual animation. Gamblers typically opt for the quick bet that comes with the best odds, which behind the scenes is a parimutuel wager on the race’s favorite when it took place. If the horse won, the HHR machine bet will win, too.

Also commonly called instant racing machines, HHR machines operated in Kentucky for several years on the state’s permission of parimutuel wagering. After the games’ legality was challenged and the Kentucky Supreme Court ruled against them in 2020, state lawmakers passed an HHR statute that was signed into law by Gov. Andy Beshear (D) in February 2021.

Kentucky receives 1.5% of the overall money bet, or handle, on HHR machines.

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