Major U.s. Horse Race Company Spends Big On Online Gambling Preparations

But plans for access to New Jersey market went awry

The Louisville, Kentucky newspaper the Courier-Journal has revealed interesting developments by the major casino and horse racing group Churchill Downs as it pursues a preparation strategy aimed at entering the online gambling business.

Much of the lengthy article's information has been gleaned from court filings in litigation between Churchill Downs and Nicholas Ribis' NLR Entertainment following the failure of a plan that would have seen Riblis buy the New Jersey land casino Showboat (now on the brink of closure), which would have given Churchill Downs access to the newly legalised online gambling market in the Garden State.

The Courier-Journal reveals that Churchill has taken the long and difficult route of building its online gambling venture – including software – from the ground up, and has been developing the structure and technology for a network at its headquarters in Louisville, initially hiring a team of at least 30 experts dedicated to the CD Interactive project.

The newspaper has established that the company was granted tax incentives for up to 50 jobs in Louisville paying an average of $168,480 a year with benefits.

Approached by the newspaper, the company declined to comment on how far the project, which has been running for over a year, has advanced.

The New Jersey initiative through Ribis ended badly, with acrimony on both sides and Churchill launching a legal action against its former partner, claiming he misled the company about his ability to hold up his part of the deal.

Court filings indicate that Churchill's online gambling platform was ready to go in April, with the company spending $10 million to develop a system that would take online casino bets from New Jersey intrastate online punters.

A further $2.5 million was paid to NLR Entertainment in the belief that Nicholas Ribis would be capable of buying Showboat and open the door for Churchill to access the New Jersey online gambling market through its licensing.

Ribis is disputing the Churchill legal claim, saying that the company knew he would need an additional $7.5 million to fulfil his obligations under the agreement, and that Churchill was not able to provide the online gambling system it had promised.

Without a buyer, Caesars Entertainment announced in June this year that The Showboat is to close at the end of next (August) month.

Despite the New Jersey setback, Churchill officials told the Courier-Journal that the company is taking a long-term approach on internet gambling, and had spent about $1.1 million developing its online platform from January through March this year following similar spend over the preceding three months.

The company said that it planned to continue investing in the project at that rate, at least through to the end of the year, in order to be prepared for legalised online gambling opportunities in individual states.

Churchill already has an online enterprise titled Luckity, which handles advance-deposit account wagering on live racing and lets players gamble through computer graphics that resemble a bingo game.

"Company officials have said Luckity is not directly related to its hopes to participate in an online poker business, but the investment in the wagering platform used by Luckity and its TwinSpires.com online horse betting business would be used to help Churchill compete in legalized internet gambling", the Courier Journal reports.

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