Churchill Downs Inc. has a market cap of $602 million; its shares were traded at around $36.73 with a P/E ratio of 45.9 and P/S ratio of 1.3. The dividend yield of Churchill Downs Inc. stocks is 1.4%. Churchill Downs Inc. had an annual average earning growth of 6.1% over the past 5 years.CHDN is in the portfolios of Mario Gabelli of GAMCO Investors, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:During the nine months ended September 30, 2010, the continuing overall weakness in the U.S. economy has resulted in considerable negative pressure on discretionary 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 5% during the nine months ended September 30, 2010 compared to the same period of 2009 despite the generation of $139.5 million of handle by Youbet, which was acquired during June 2010. During the three months ended September 30, 2010, our pari-mutuel handle remained consistent compared to the same period of 2009 but reflected the impact of $103.7 million of handle generated by Youbet. During the three months ended September 30, 2010, Youbet reported a decline in handle of 14.5%, and during the nine months ended September 30, 2010, Youbet would have reported a decline in handle of 8.0%. On a combined basis, TwinSpires and Youbet handle would have decreased 4.1% and 0.6%, respectively, for the same periods. Total handle on U.S. thoroughbred racing, according to figures published by Equibase, declined 6% during the three months ended September 30, 2010 compared to the same period of 2009 and declined 7% during the nine months ended September 30, 2010 compared to the same period of 2009.
Generally, borrowings made pursuant to the Amendment will bear interest at a LIBOR-based rate per annum plus an applicable percentage ranging from 1.625% to 3.125% depending on certain of the Companys financial ratios. In addition, under the Amendment, the Company agreed to pay a commitment fee at rates that range from 0.25% to 0.45% of the available aggregate commitment, depending on the Companys leverage ratio.
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.
On July 12, 2010, the IRB issued Rule 325.60, which limits the amount of host fees paid by ADW businesses to racetracks outside of Illinois to 5% of handle. On August 31, 2010, the IRB amended Rule 325.60 to set the maximum host fees paid by ADW businesses to racetracks outside of Illinois to 9% of handle. From July 12, to September 1, 2010 TwinSpires and Youbet did not offer certain racetracks content to Illinois residents through their wagering platforms. TwinSpires and Youbet are currently offering all their racetracks content to Illinois residents.
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