Churchill Downs to build gambling venue in downtown Louisville

Churchill Downs in 2002. (Photo by Todd DeFeo/The DeFeo Groupe)

(The Center Square) – Louisville-based Churchill Downs Inc. announced Thursday it plans to build a casino-style gambling venue in its hometown’s downtown district.

The news was not necessarily a surprise as company officials told investment analysts earlier this year they planned to add a historical horse racing (HHR) parlor elsewhere in the city rather than place them at its flagship track.

On Thursday, company officials gathered with city, state and civic leaders at the Kentucky International Convention Center. In the backdrop was the U.S. Bank building the gaming company plans to overhaul into Derby City Gaming Downtown, a 43,000-square-foot facility that will include 500 HHR machines, three bars and a retail store.

“Derby City Downtown is designed to be a state-of-the-art entertainment destination for tourists and downtown visitors,” Churchill Downs Inc. CEO Bill Carstanjen said at Thursday’s announcement.

While company officials did not disclose the size of the investment, they said the project would create 350 construction jobs and 100 permanent jobs. Work is expected to start on the venue later this year, with a grand opening targeted for early 2023.

Unlike pari-mutuel wagering on horse races, casino gambling is illegal in Kentucky. However, the state has approved HHR machines, which look like slot machines at a casino. However, the machines determine winners by bets placed on the outcomes of previously run races.

The machines have been at state racetracks and satellite facilities for a decade. But after a state Supreme Court ruling last year challenged their legality, the General Assembly passed legislation earlier this year that gave the Kentucky Horse Racing Authority the ability to authorize HRMs as pari-mutuel wagering.

The state’s racetracks use a portion of the revenues generated from the machines to boost purses for their live racing cards.

According to KHRC data through July, there are more than 4,900 HHR machines operating statewide. In the past decade, nearly $13.2 billion has been wagered in HHR parlors. That has generated $197.9 million in racing- and equine-related and higher education funds. Another $81.4 million has been generated for the state’s general fund.

In addition to announcing the new facility, Churchill Downs also announced a $1 million pledge to the West End Opportunity Partnership. The partnership, which was established as a result of a law passed by state legislators earlier this year, creates a tax-increment financing district for one of the city’s most economically disadvantaged areas.

Over the next 20 years, 80% of the tax revenue created within the district’s nine neighborhoods will be funneled back into those communities to spur economic development and promote homeowner stabilization.

Churchill Downs officials will also work with community organizations to provide job opportunities for individuals in the West End neighborhoods.

State Sen. Gerald Neal, a Louisville Democrat whose district includes downtown and the West End neighborhoods and who worked with majority Republican lawmakers to pass the partnership bill, lauded Churchill Downs for its moves and investment in the community.

“It comes down to leadership,” he said at the announcement. “It comes down to intentionality, and that intentionality is not just reflected in understanding that a strong Louisville is a strong Kentucky, but guess what, a strong West Louisville is a strong Louisville. So Churchill Downs, under its incredible leadership, gets it.”

The downtown venue will be the second for Churchill Downs in Louisville. Its first Derby City Gaming venue opened three years ago. That gaming center features nearly 1,000 machines, and two months ago, the company announced a $76 million expansion that would include a 123-room hotel and gaming space that could accommodate up to 400 more machines.

Company executives expect that expansion to be completed by late next year or early 2023. That expansion and the downtown venue should help Churchill Downs generate up to $12 million more in live-racing purse money.

Earlier this year, the Kentucky Tourism Development Finance Authority gave preliminary approval for up to $23.5 million in tax incentives for a harness track and HHR facility in southeastern Kentucky. However, a spokesperson for Churchill Downs Incorporated said the company does not currently have plans to seek such incentives for the downtown project.

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