Sports betting has become all the rage in the USA now that states have been granted the autonomy to decide for themselves if they will allow it. Moreover, there is no shortage of operators desperately seeking licenses in as many markets as they can possibly handle. But one company has bowed out of the fiercely competitive industry and here’s why.
TwinSpires Shuttering Bookmaking Biz
TwinSpires, initially known for booking horse racing online, decided to branch out into the digital sportsbook business but it has not worked out as well as initially hoped. In fact, Churchill Downs, the owner of TwinSpires, has decided to exit quietly over the next six months due to questionable profit margins now and in the future.
Churchill Downs Inc. CEO Bill Carstanjen recently stated that although his firm was initially optimistic about their place in the sportsbook industry their hopes have vanished based on what has transpired over the short time they have been taking online action.
Carstanjen said the following in a fourth-quarter earnings call, “However, the online sports betting and online casino space is highly competitive with an ever-increasing number of participants that the states have licensed. Many are pursuing maximum market share in every state with limited regard for short-term or potentially even long-term profitability.
“This isn’t the result we wanted when we started this business back in late 2018,” Carstanjen said. “But it is the prudent next step forward for our company.”
And with that, TwinSpires will be trying to sell their licenses to interested parties for their online sports betting and virtual casino platforms. They will, however, keep their profitable brick-and-mortar locations as well as their online horse racing business.
Stick With What You Know
Churchill Downs is known for horse racing and it is one of the most revered names in the industry. But taking bets on horse races and booking sports is a similar but different animal. Horse racing uses a parimutuel betting formula where the profit to the house is already built into the equation.
However, sports betting is as much art as science, and lines are often adjusted manually by oddsmakers rather than a built-in mechanism in horse racing. But getting a handle on the sports betting business wasn’t as much a problem as was attracting customers to bet with their low-profile sportsbook, TwinSpires, which had a virtual presence in Arizona, Colorado, Indiana,
Michigan, New Jersey, Pennsylvania, and Tennessee. Consider that of the $465 million wagered online in Arizona in November of 2021, TwinSpires accounted for only $1.5 million of that action.
“We have profitable retail sportsbooks in four of our casinos, however, the online sports betting and online casino space are highly competitive with an ever-increasing number of participants that the states have licensed.
Many are pursuing maximum market share in every state with limited concern for short-term or even long-term profitability,” said Carstanjen. “Because we do not see—for us—a path in which this business model delivers predictable and acceptable margins for at least several years—if ever—we have decided to exit the B2C online sports betting and iGaming space over the next six months.”
But if you have a TwinSpires online horse racing account you need not worry as they will continue their retail and digital presence according to Carstanjen. “We remain absolutely committed and excited about TwinSpires horse racing.
Its top line, bottom line, and margins continue to demonstrate that this is a special online business with a sustainable, scalable, and unique business model that delivers profitable growth today just as it has when we started this business well over a decade ago.”
Bookmakers Review will keep its readers updated with this story and any new information as it unfolds.