Amid Kentucky Sports Betting Dilemma, Churchill Downs is Sending Mixed Messages

Another wrinkle has just been added to the future of Kentucky sports betting: Churchill Downs Inc. (CDI), which is best known for operating the race track that allows you to bet on the Kentucky Derby, is re-entering the online sportsbook business.

Kind of.

During a recent shareholders meeting, CDI executives announced their intent to start marketing new horse racing products to the best online sportsbooks in the United States. This plan runs counter to the company's February decision to cease their online sports betting operations across the rest of the country.

So what's going on here? Does CDI's re-entry into this online market suggest sports betting in Kentucky is on the horizon? Or is this just a piece of business geared toward capitalizing on the more established legal sports betting markets in the USA?

Churchill Downs is Seen as a Bellwether Kentucky Sports Betting

Perhaps you're wondering why anyone who cares about legal sports betting in Kentucky should be focused on what Churchill Downs Inc. is doing outside the state itself. And that makes sense.

It all comes down to projecting. Everything Churchill Downs Inc. does is seen as bellwether for Kentucky sports betting, even if it isn't happening directly inside the state. After all, they operate one of the most popular race tracks in the world, at which they offer the ability to bet on events as part of a constitutional amendment that allows pari-mutuel wagering.

Assigning so much value to one company's actions might seem odd. But it has proven accurate in the past. Take CDI's decision to close up their online sports betting operations this past February. Many throughout the state took it as a sign that CDI didn't think the latest Kentucky sports betting bill would make it through the Senate this past spring. And while that shouldn't technically change how the company views other markets with legal sports betting in place, the name "Churchill Downs" is synonymous with Kentucky more than anywhere else. Setting up an online sportsbook was always a bet on the Kentucky market allowing them to accept wagers on other sports rather than increasing their footprint across the country.

Lo and behold, less than three months after CDI announced they would be closing their online sportsbook, Kentucky's bill to legalize online sports gambling was voted down—rather decidedly we might add. Knowing that, you can see why CDI's decision to start doing business with other online sportsbooks has piqued the attention of many in Kentucky.

But Does It Actually Matter That Churchill Downs is Marketing to Other Online Sportsbooks?

The longer answer to this question is complicated. The short answer, though? That's a yes.

By selling horse racing packages to online sportsbooks, CDI won't be directly impacting the future of Kentucky sports betting. They're merely trying to increase their hold over the horse racing industry outside of Kentucky.

Partnering with more established online sportsbooks is a simpler way to do that than having CDI run their own sportsbook. Once more: Their name is synonymous with horse racing, and more specifically, horse racing in Kentucky. People who live in Kentucky might use them to bet on sports off the race track, if it is ever legalized. Those who live outside the state, however, are more likely to take their business to more recognizable names such as Bovada, BetOnline and any of the top sites that crack our list of the best online sportsbooks.

Marketing special horse races and subsequent packages allows CDI to dip their toes into the national waters without wading fully in. Their upside isn't as high, because they're likely charging a flat free along with a smaller percentage of profit thresholds. But their overhead costs also aren't as steep, since they aren't operating an entire online sportsbook. This thinking might seem counterintuitive for a company that just posted record profits during the most recent fiscal quarter. However, it's widely assumed Churchill Downs Inc. was losing money—or at least barely making any—with their solo online betting operations.

Equally important: CDI's prospective relationships with online sportsbooks is also a way for them to curry favor with partners who will be vying for licenses if and when Kentucky sports betting comes to fruition. And that's a big deal. It would allow them to leverage their already entrenched presence in the Kentucky market to potentially more lucrative agreements with those who wish to serve as the top online sportsbooks.

Now for the Bad News About Kentucky Sports Betting...

Even though Churchill Downs' vision for online sports betting partnerships does suggest that Kentucky will inevitably legalize gambling beyond horse races, it doesn't actually accelerate the timeline for it to happen. 

Like most other states, Kentucky needs a sports betting amendment to make it through the House and Senate. And after that, any proposal must still be approved by the state's voters. Those decisions typically only make the ballots during major election years.

Since Kentucky's most recent sports betting bill failed to make it out of the Senate, it will not be appearing on the November 2022 ballot. That, in turn, means the soonest Kentucky sports betting could ever be approved by voters is in 2024. And even then, the state would still need to undergo an extensive rollout and licensing process. It could be 2025 before Kentucky sports betting becomes reality. And that may be the absolute earliest possible time.

Still, while this may not be ideal, the latest announcement from Churchill Downs Inc. at least implies Kentucky will get sports betting. Eventually.

Take a look at this list of the top online sportsbooks so you can decide which one works for all of your sports betting needs: