Churchill Downs’ $85M Preakness Bid Thwarted by Maryland

• The state of Maryland is exercising its right to buy the intellectual property rights of the Preakness Stakes
• Churchill Downs previously bid $85 million for those assets
• The state merely matched the gaming company’s offer

The state of Maryland has exercised its right of first refusal to purchase the intellectual property of the Preakness Stakes, matching and effectively killing an $85 million acquisition bid by Churchill Downs Inc. (NASDAQ: CHDN).

Per code in Maryland business regulations, the state has rights of first refusal to acquire the IP of the second leg of the Triple Crown and the Black-Eyed Susan Stakes — a race for fillies — from 1/ST Maryland LLC. Under that statute, the state merely needs to match, not exceed, competing offers and that’s what it did.

The Preakness Stakes is more than just a race: It is a cornerstone of Maryland’s history, culture, and economy,” said Gov. Wes Moore (D) in a press release. “This decision secures a vital asset for our state, allows Maryland to shape its horse racing destiny, and by leveraging the Preakness’s iconic status and partnering with industry experts to enhance the fan experience, preserve Maryland’s position as a key power player in the Triple Crown for generations to come.”

The second leg of horse racing’s Triple Crown is held at Pimlico Race Course in Baltimore and historically takes place in May, two weeks after the Kentucky Derby.

Churchill Downs Offers Vague Response

Churchill Downs, which already counts the Derby among its crown jewels, appeared to be in prime position to own Preakness IP after announcing its April offer, noting at that time it expected the deal to close soon after the running of the race.

“We remain committed to working with the Governor and other elected leaders and horse racing constituents in Maryland to fully realize the potential of a redeveloped Pimlico and Preakness Stakes within the Triple Crown and the broader sports and entertainment landscape,” said Carstanjen in a statement.

The state already owns Pimlico and is in the process of buying Laurel Park Race Course, giving it considerable sway of the racing industry there.

Maryland Taxpayers Not on the Hook

Maryland taxpayers aren’t footing the bill for the state’s Preakness deal as Moore’s office points no capital from the general fund will be used for the acquisition. Rather, the purchase will be funded by issuance of a tax-exempt revenue bond.

That debt will be serviced “by future revenues generated by the Preakness Stakes and Black-Eyed Susan, including wagering, ticketing, and sponsorship streams,” according to the governor’s office. The state is already investing in enhancements at Pimlico.

“In 2024, the Maryland General Assembly authorized the Maryland Stadium Authority to issue $400 million in bonds to redevelop the Pimlico Race Course in Baltimore,” according to the governor’s office.

“The new facility will support over 500 jobs and go from hosting approximately 15 racing days per year to becoming the permanent home of Maryland Thoroughbred racing with more than 100 racing days annually.”