A June 9 letter sent by Bill Carstanjen, CEO of Churchill Downs Inc., to the Louisiana Racing Commission and political leaders in the state, noting CDI's intention to surrender its racing license at Fair Grounds Race Course & Slots, appears unlikely to result in immediate regulatory or legislative relief. The letter, sent following comments made last month at an emergency meeting of the LRC by a CDI representative, echoes perceived financially detrimental changes in the state's gaming laws.
According to two former owners of Fair Grounds, Louie Roussel III and Bryan Krantz, CDI has a strained relationship with Louisiana stakeholders. The Louisville, Ky.-based track operator has recently been unsuccessful in its efforts to secure legislative assistance, Carstanjen acknowledged in his Monday letter, following a Louisiana Supreme Court ruling in March that declared the statute authorizing historical horse racing gaming unconstitutional without first requiring local voter approval.
HHR gaming terminals, which resemble slot machines but are based on previously run horse races, have been highly profitable for Churchill Downs and a boon for purses. Their profits exceed those from video poker machines, which are similar in style and legal for CDI to use at Fair Grounds and its off-track betting network, but operate differently and without the jackpot payoffs offered with HHR devices. According to CDI, the cessation of HHR means the elimination of 46% of its OTB revenue.
"To date, our efforts to engage elected officials have not led to meaningful discussions, and confoundingly, CDI's efforts have been met with a combination of reluctance, indifference, apathy, and even opposition," Carstanjen wrote.
CDI claims Fair Grounds is not financially viable without HHR. It says its racing operations are losing millions, with its gaming operators offsetting those losses.
But Roussel, who owned controlling interest in Fair Grounds from 1977-90 before selling the historic New Orleans track to the Krantz family, disputes those claims, pointing to CDI's publicly reported finances. He said the track has been successful despite CDI's claims, noting that the company has offset multimillion-dollar gains with expenses for "non-allocated costs," depreciation, and interest on the property, which he does not believe should be attributed.
With HHR gaming a central part of its business strategy, CDI reported a net income of $426.8 million in 2024 across its various gaming and racing properties. CDI also owns Exacta Systems, a HHR gaming provider.
"They're making money. You don't give handouts or subsidies to people who are making money," Roussel.
Carstanjen's letter may have also been delivered as a last-minute bid to have Louisiana Gov. Jeff Landry veto bills that CDI views as detrimental to its operations and bottom line. The state's legislative session ends June 12.
The bills in question are House Bill 540 and House Bill 547. The former would expand the permitted number of video poker machines at truck stops from 50 to 60 and at bars from three to four, while establishing a fund to allocate revenue from the additional video poker machines to support the horse racing industry. The second bill would permit fixed-odds wagering on horse racing while generating a purse supplement fund.
The bills are considered favorable to purses and participating horsemen, but not racetrack operators. In expressing his opposition, Carstanjen wrote that they would cause cannibalization and a shift in wagering.
Roussel, who calls himself an adviser to Landry, said there was little or no chance of those bills being vetoed.
He questioned why Churchill would not be willing to try racing without HHR, with hopes that video poker could be profitable and supplement its racing operations. Before operating HHR, they utilized video poker machines. He also criticized them for not aggressively lobbying the legislature to place referendums on ballots that could make HHR legal with passage.
Fair Grounds successfully secured a favorable referendum vote during Krantz's tenure as owner of Fair Grounds.
It is a path for CDI, Krantz said, "but it would not be an easy path, because it's a lot tougher sledding now than it was back then to pass these things because of the nature of the opposition. You've got those truck stops and those barrooms with video poker that are gonna oppose you."
Krantz, whose family owned Fair Grounds from 1990 until CDI's purchase of the track in 2004, noted that the Louisiana Horsemen's Benevolent and Protective Association supports the video poker bill due to its purse-aiding possibilities.
Benard Chatters, president of the Louisiana HBPA, said he could not yet speak regarding the group's official position on CDI. An emergency meeting of the LRC is scheduled to convene in the coming weeks to discuss Churchill's operations of Fair Grounds.
Roussel, a longtime owner and trainer best known for training 1988 Preakness Stakes (G1) and Belmont Stakes (G1) winner Risen Star, wants the LRC to fine them if CDI chooses not to pursue racing, and for inaction on paddock improvements that he said were promised this spring.
What the future holds for Fair Grounds, one of the nation's oldest racetracks, is in doubt. Opinions differ on the value of the property, either for racing and gaming purposes, or for real estate development. CDI has demonstrated its willingness to cease racing at its racetracks that fail to meet its profit expectations.
In 2021, CDI shuttered and sold Arlington Park to the NFL's Chicago Bears, reportedly forgoing interest from parties interested in its use as a racetrack. After a long wait to secure gaming in Illinois and then receiving a tax rate it viewed as unfavorable, CDI soured on adding casino gaming at Arlington in part because of its proximity to Rivers Casino, a nearby casino it co-owns.
The Bears have torn down Arlington and used the land as a bargaining measure for an NFL stadium there or for improvements at Soldier Field, where the team currently plays.
A CDI spokesperson said they are "not engaged in any conversations related to the sale of the (Fair Grounds). Our attention is currently directed toward operational challenges and the pressing business decisions that accompany them."
The spokesperson said a new bill would need to be passed to bring referendums before voters to implement HHR, and "we have no confidence that would be successful given the current lack of support. Add to that uncertainty the additional unpredictability of a vote and the necessary expense to overcome industries that would oppose such action. No one wants to bet the entire future of Louisiana racing on those terrible odds."
