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Churchill Downs Inc. Reports Operating Results (10-Q)

August 04, 2010 | About:
10qk

10qk

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Churchill Downs Inc. (CHDN) filed Quarterly Report for the period ended 2010-06-30.

Churchill Downs Inc. has a market cap of $600.7 million; its shares were traded at around $36.45 with a P/E ratio of 31.7 and P/S ratio of 1.4. The dividend yield of Churchill Downs Inc. stocks is 1.3%. Churchill Downs Inc. had an annual average earning growth of 6.1% over the past 5 years.CHDN is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

During the six months ended June 30, 2010, the continuing overall weakness in the U.S. economy has resulted in considerable negative pressure on consumer spending. As a result, pari-mutuel wagering and gaming businesses, which are driven, in part, by discretionary spending and industry competition, continued to weaken and, we believe, contributed to a decline in our pari-mutuel handle of 8% during the six months ended June 30, 2010 compared to the same period of 2009 and a decline in our pari-mutuel handle of 5% during the three months ended June 30, 2010 compared to the same period of 2009. During the three and six months ended June 30, 2010, Youbet contributed $35.9 million of handle during its one month of operation. During the three months ended June 30, 2010, Youbet reported a decline in handle of 3% and during the six months ended June 30, 2010, Youbet would have reported a decline in handle of 5%. On a combined, pro forma basis, TwinSpires and Youbet handle would have increased 3% and increased 1%, respectively, for the same periods. Total handle on U.S. thoroughbred racing, according to figures published by Equibase, declined 8% during the six months ended June 30, 2010 compared to the same period of 2009 and declined 6% during the three months ended June 30, 2010 compared to the same period of 2009.

Pursuant to Article X, Section 23 of the Florida Constitution, on January 28, 2008, Miami-Dade County voters approved a local referendum approving existing, licensed, permitted pari-mutuel facilities, including Calder, to operate up to 2,000 slot machines at each location. Under the then-current state law, slot machines were subject to a 50% tax rate. In 2009, the Florida legislature subsequently enacted House Bill 788 (HB 788), which provided for a reduction in the tax rate for racetracks operating slot facilities in Miami-Dade and Broward Counties from 50% to 35%, as well as a reduction in the annual license fee from $3 million to $2 million over a two-year period. HB 788 removed wagering limits for poker, and its effective date was contingent upon legislative approval of the Seminole Tribe Compact in Florida. The 2009 Tribal Compact was not approved by the legislature, therefore leaving the tax rate and licensing fees at their original levels.

SB 3146 would authorize Arlington Park to operate up to 1,200 gaming positions (slots or video poker) for a license fee of $25,000 per position. SB 3146 would also authorize Quad City Downs, owned by Arlington Park, to operate up to 900 gaming positions (slots or video poker) at an initial licensing fee of $12,500 per position. Gaming taxes would be established at the same rate as riverboat casinos, which currently is a graduated rate that varies from 15% of gross gaming revenues to 50% of gross gaming revenues depending on the level of gross gaming revenues. The next opportunity for passage of SB 3146 will be during the Fall Veto Session of the Illinois legislature, which will be held from November 16 through December 1, 2010.

During 2006, the Illinois General Assembly enacted Public Act 94-804, which created the HRE Trust Fund which is funded by a 3% surcharge on revenues of Illinois riverboat casinos that meet a certain revenue threshold. Approximately 60% of the funds are to be used for horsemens purses (57% for thoroughbred meets and 43% for standardbred meets). The remaining 40% of monies paid to the HRE Trust Fund are to be distributed to Illinois organizational licensees, pursuant to percentage allocations set forth in Public Act 94-804, for the purpose of improving, maintaining, marketing and operating their racetracks.

Read the The complete Report

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