Is Kentucky Derby Poker in the Cards?

The President and CEO of Kentucky's Churchill Downs racetrack, which also owns the famous Kentucky Derby brand, has hinted he has ambitions to add other forms of online gambling to their horse betting capabilities on the company's new TwinSpires Internet account-wagering network, which gives rise to the question: Kentucky Derby Poker, anyone?

Yesterday, CEO Bob Evans told attendees at Greater Louisville Inc.'s annual small business luncheon that entrepreneurs should look for ways to sell more products through their existing channels. The Courier-Journal reported that Evans then used his own company as an example, saying that the U.S. thoroughbred pari-mutuel market is essentially stagnant and attendance and revenue numbers aren't any better, so they looked for ways to expand.

Under Evans, who was hired for his technology background, Churchill has invested in the HRTV racing channel, previously owned solely by Magna Entertainment Corp., and started its own online account-wagering site, Twinspires.

Twinspires became possible last October when the Unlawful Internet Gambling Enforcement Act (UIGEA) exempted online horse betting from restrictions forbidding financial institutions to handle transactions between online gambling sites and US residents, in an attempt to ban most online gambling. In addition to horse betting, lottery and fantasy sports games were exempted.

Account wagering is now the fastest growing segment of the U.S. pari-mutuel market.

The New York Racing Association Inc., a private, non-profit association that owns and operates the three largest race tracks in New York (Aqueduct, Belmont Park and Saratoga) has already received approval from New York State gambling regulators allowing it to accept online bets from residents of New York and, under controversy, of Connecticut (click here to read related article).

Evans remarked that Churchill is trying to make the most of its racetrack operating skills by being part of a group bidding on the franchise for New York's three premier race courses.

Also last year, the company teamed with Magna in an international racing channel to take bets from England and Ireland on U.S. races.

But Evans' aspirations could be dampened by recent rulings by the World Trade Organization (WTO) dispute panel against the United States for discriminating against online gambling operators located outside the USA.

The panel specifically cited how the Unlawful Internet Gambling Enforcement Act (UIGEA) allows US residents to bet on horse races online from US-based operators, but that it forbade similar betting on offshore sites (click here to read related article). The US is now trying to avoid paying damages to WTO members, which may lead it to rethink exemptions such as allowing online horse betting within the USA.

But Churchill Downs has bigger ideas than just online horse betting.

"Given the fact that the Kentucky Derby, Churchill Downs, Twin Spires are world-renowned brands, why wouldn't we use those brands to enter into businesses that are outside our traditional core of thoroughbred racing?" Evans asked.

He added that Churchill is interested in extending its brands "to play other games" in countries where online gambling is legal. Though Evans didn't elaborate, those games typically include online poker and online casino games.

He also noted that Churchill, in seeing itself differently, needs to create more intangible assets, such as media and data rights, besides such tangible assets as racetracks.

Referring to moving more products through existing channels, Evans said that Churchill has the ability, through its TwinSpires site for example, to sell products to customers who win a bet.

"There's hundreds of companies that would love to put thousands of products in front of those winners at the very moment they've won," he said.

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