A Bigger Field for Churchill Downs

It's a fast track at Churchill Downs (CHDN ), which operates six race courses, including the home of the legendary Kentucky Derby. Now at 30 a share, its stock usually starts a run some weeks before the Derby, scheduled for May 5 this year. But to some pros, Churchill Downs isn't just a bet on horse racing anymore. It also has become a play on horse-race broadcasting through its budding media operations, the Churchill Downs Simulcast Network. The company has evolved, notes Marc Falcone of Bear Stearns, from being solely a track operator to a vertically integrated content provider, distributor, and cable network services company. Churchill has been acquiring racetracks and uses live racing as the "content" it distributes to off-track wagering outlets.

Churchill has racked up eight straight years of rising earnings. "Churchill spent the last few years developing one of the strongest brand names in horse racing," says Falcone. In a joint bid with the New York Racing Assn., Churchill is looking to buy the highly profitable New York Off-Track Betting (OTB). Mayor Rudolph Giuliani has been under pressure to privatize OTB. It posted sales of $1 billion on wagers in 2000. In what could be a big growth vehicle, it should boost interactive wagers on live simulcasts of horse racing worldwide all year round.

By Gene G. Marcial

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