Churchill Downs to Surrender Fair Grounds Licenses Amid Financial Struggles

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The Fair Grounds Race Course, a significant venue in Louisiana's horse racing industry.

News Summary

Churchill Downs Inc. plans to give up its racing and gaming licenses for Fair Grounds Race Course & Slots due to a significant revenue loss, primarily from a Louisiana Supreme Court ruling impacting Historic Horse Racing machines. CEO William Carstanjen has informed state officials of the intention to relinquish the licenses, causing uncertainty for the upcoming racing season. The Fair Grounds is crucial to Louisiana’s horse racing industry, and concerns grow over the economic fallout if solutions are not found swiftly.

New Orleans – Churchill Downs Inc. has announced plans to relinquish its racing and gaming licenses for the Fair Grounds Race Course & Slots in New Orleans due to ongoing financial challenges. In a letter dated June 9, CEO William Carstanjen informed the Louisiana State Racing Commission and state legislators of the company’s intentions, highlighting the upcoming horse racing season’s jeopardy, which typically runs from Thanksgiving through March.

The Fair Grounds racing season holds significant importance for Louisiana’s $2.5 billion horse racing and breeding industry, encompassing notable events such as the Louisiana Derby and Risen Star Stakes. However, revenue losses resulting from a recent Louisiana Supreme Court ruling have put substantial pressure on the operations. This ruling prohibits the operation of Historic Horse Racing (HHR) machines without local voter approval, reversing a 2021 law that had previously permitted HHR slots and leading to an estimated loss of nearly half of Churchill Downs’ revenue in the state.

Churchill Downs has indicated that the revenue loss is unsustainable for maintaining both the Fair Grounds and its 13 off-track betting locations. Despite the company reporting record revenue of over $2.7 billion and net income of $427 million last year, the issues at Fair Grounds are reflective of specific regional financial challenges rather than overall profitability. Efforts to obtain state subsidies to compensate for lost revenue from HHR machines have failed, as lawmakers express reluctance to provide subsidies to a profitable business during times of tight state budgets.

In addition, recent legislative measures have allowed truck stop operators to increase video poker machines from 50 to 60, and licensed bars from three to four. These changes could potentially exacerbate the revenue crisis facing the racing operations. In his letter, Carstanjen expressed concerns about the lack of meaningful discussions with elected officials on achieving a path toward economic viability for Fair Grounds.

If Churchill Downs decides to proceed with surrendering its licenses, the future of this racing season remains uncertain. There are concerns that races may need to be relocated to other tracks, echoing historical precedent from Hurricane Katrina when the Fair Grounds season was moved to Louisiana Downs.

Moreover, speculation has emerged regarding potential buyers for Fair Grounds should Churchill Downs opt to sell, with notable local figures reportedly expressing interest in the property. However, moving operations to other tracks presents its own set of challenges, including zoning issues that may arise.

Industry insiders are increasingly concerned about the future of horse racing in Louisiana if state officials do not address the ongoing revenue crisis promptly. With the threat of losing Fair Grounds looming, the impact of such a decision extends beyond the immediate operations, potentially affecting the broader horse racing community and its economic ecosystem throughout the state.

The Fair Grounds race course is not only a historic venue but a significant contributor to the local economy and culture in New Orleans. As the situation unfolds, stakeholders and enthusiasts within the horse racing and breeding industry are paying close attention to how state officials respond to the mounting challenges faced by Churchill Downs and the future of racing in Louisiana.