Fanatics Could Be Suitor for TwinSpires, According to… – Casino.Org News

Posted on: December 6, 2021, 10:27h.

Last updated on: December 6, 2021, 10:59h.

Speculation surfaced last week that Churchill Downs (NASDAQ:CHDN) is shopping its TwinSpires Racing unit. At least one market observer sees a familiar name potentially making a bid.

Roundhill Investments analyst Brian Lichtor says its likely Fanatics will be mentioned as a possible suitor for TwinSpires, citing Fanatics well-known sports wagering aspirations.

The privately held sports merchandise giant has been tied to takeover rumors involving Rush Street Interactive (NYSE:RSI) and Swedens Betsson. But that chatter is about three months old. At least in public circles, it hasnt evolved past the rumor stage. Recently valued at $30 billion, including its non-fungible tokens (NFT) and trading card units, Fanatics could easily digest the rumored asking price for TwinSpires.

Though it remains unclear at this point whether a potential sale would be of TwinSpires in its entirety or just TwinSpires Racing (the horse racing division), a deal potentially worth $1.5 billion for a company with a market cap just over $8.5 billion ($8.8 billion today) would be significant in either case, says Roundhills Licthtor.

Sources with knowledge of the matter told Bloomberg its possible Churchill could sell all or part of TwinSpires or opt to keep the entire business in-house.

At a time of deal-making and related rumors reaching fevered pitches in the iGaming and sports wagering industries, TwinSpires is an undeniably compelling target for any suitor.

In the third quarter, earnings before interest, taxes, depreciation and amortization (EBITDA) derived from online horse racing surged 56 percent from the comparable period in 2019, said Churchill CEO Bill Carstanjen on the companys recent earnings conference call. He noted online horse racing handle jumped 31 percent in the September quarter.

Pari-mutuel strength is an advantage for TwinSpires, because, as is the case with competitors, the online casino and sports wagering part of the business isnt yet profitable.

Our TwinSpires sports and casino business delivered topline growth as well. However given the additional marketing spend to support the growth, we had a net loss in adjusted EBITDA of nearly $11 million in the quarter for this business, said Carstanjen on the call.

He said TwinSpires offers sports betting in eight states and that the operator should be live in Louisiana and Maryland early next year.

TwinSpires horse racing business has been operational since 2007, and is one of the largest online pari-mutuel platforms for horse racing in the US, adds Roundhills Lichtor.

Regarding Fanatics, the company filed patents for various sports betting-related brands, confirming intent to be a player on that stage. As Licthor notes, the company is making clear its desire to gain market access to New York something TwinSpires doesnt have.

Still, there are likely to be other suitors for the enterprise, and if Churchill is successful in commanding the aforementioned $1.5 billion price, itd have one of the more impressive balance sheets in the gaming industry.

Last month, the operator reached an agreement to sell more than 115 acres of land it owns at its Calder Casino in South Florida for $291 million. Throw in $1.5 billion from a possible sale of TwinSpires, and Churchill would gross proceeds of nearly $1.8 billion from those two transactions, indicating itd have nearly a quarter of its market value sitting around in cash.

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Fanatics Could Be Suitor for TwinSpires, According to... - Casino.Org News