Churchill Downs to Buy Historical Horse Racing’s Exacta Systems for $250M

Posted on: December 20, 2022, 10:56h. 

Last updated on: December 20, 2022, 02:07h.

Churchill Downs announced late Monday that it plans to acquire Exacta Systems, a Florida-based provider of historical horse racing (HHR) systems and gaming machines.

Churchill Downs
Change of Control works out on the Churchill Downs turf course in April. On Monday, Churchill Downs Incorporated announced the acquisition of Exacta Systems. The $250 million purchase is set to close in 2023. (Image: Coady Photography)

In the deal, announced after markets closed on Monday afternoon, the Louisville-based gaming and racing company said it will buy all of Exacta’s remaining equity interests for $250 million.

Exacta works with a number of leading gaming technology companies, such as AGS, IGT, Light & Wonder, Everi, Konami, and Incredible Technologies, and integrates their games into Exacta’s HHR platform. It currently works with HHR operators in Kentucky, New Hampshire, Virginia, and Wyoming.

For nearly a decade, Exacta has been a creative force supporting the growth of historical horse racing in the US,” CDI CEO Bill Carstanjen said. “We look forward to expanding Exacta’s national footprint and further diversifying the game offerings available to players at HRM facilities around the country.”

The deal is expected to close sometime in 2023, according to the CDI release.

Churchill Downs is one of the country’s leading HHR operators. In Kentucky alone, it has more than 4,000 machines at five locations, and work is underway to build two more in the state. The company also acquired six HHR venues in Virginia through its acquisition of several Peninsula Pacific Entertainment (P2E) properties earlier this year. There are plans for two more facilities in that state as well.

In addition, CDI recently closed on the purchase of Chasers Poker Room in New Hampshire, which company officials say holds potential for both HHR and table game growth.

HHR Fast-Growing Game

HHR is a slot machine-like game. However, instead of a random number generator to determine whether a wager wins, HHR uses the outcomes of previously run races to determine winning wagers. HHR wagers are considered pari-mutuel wagers.

HHR isn’t just growing in Kentucky and Virginia, either. Several other states, including Kansas and Louisiana, have approved the gaming machines for their markets.

The machines have been in Kentucky for more than a decade. Churchill Downs was a late adopter in the state, as the company’s Derby City Gaming didn’t open until September 2018. In the years since, CDI has grown its HHR business aggressively through a mix of new development and acquisitions. The most recent purchase was Ellis Park in September for $79 million.

Churchill Downs now controls about 60% of the HHR machines that operate in the state.

Now, in addition to operating thousands of machines, Churchill Downs will soon own a key supplier to other tracks and entities that offer HHR machines at their venues.

Busy Year for Churchill Downs

Monday’s transaction likely caps what has been a busy year for Churchill Downs. In addition to buying Ellis Park and most of P2E, the company also sold a 49% stake in its United Tote division to NYRA as the two racing powers look to introduce pari-mutuel horse racing to bettors using fixed-odds sports wagering apps. In that vein, Churchill Downs also signed agreements with FanDuel and DraftKings.

CDI also broke ground in June on a new casino it will operate in Terre Haute, Ind. That $290 million development is expected to open in early 2024.

Churchill Downs is also investing millions in its namesake track in Louisville. While there are no current plans for HHR machines at the historic site, the company is building a new parlor in the city’s downtown district.