My Old Kentucky Home: Macquarie have initiated coverage of Churchill Downs with an outperform rating, citing the iconic status of the Kentucky Derby (c25% of company EBITDA generated in a single day), the “underappreciated” historical racing machines story (33% mix; Macquarie believes the Kentucky market could be worth $750m at maturity) and the growth opportunity represented by the re-launched TwinSpires online arm (currently 16% mix). Macquaries believes Churchill Down can build on its online horseracing betting position. Note, in Kentucky TwinSpires has over 50% wagering market share. Gaming (51% revenue mix) remains a “core driver of earnings.”
The Kentucky Derby is Decadent and Depraved: The Macquarie team adds some colour around the Derby. The Derby was first run in 1875 and it the longest-running sporting event in the US. The event draws in c160,000 people and is a “one-of-a-kind experience it is near impossible to replicate.” For more on that experience, read the famous article from long-time Louisville resident and Gonzo journalist, the late Hunter S. Thompson, written 51 years ago, but still relevant for the mint julep drinking classes.
Also available today on Earnings + More:
- 888 analyst price push
- Denmark: Playing down the channels
- Portugal: Taxing times
- DraftKings and Hindenburg
