Churchill Downs CEO Bob Evans sees the regulated market for online gambling in the United States as a “significant opportunity,” one in which Churchill plans to be a “significant player.”
His comments were made during a recent earnings call covering the first quarter of 2014 in response to a question from Justin Sebastino of Brean Capital.
As a result of their belief in the potential of the U.S. regulated market, Churchill executives signaled that they plan to commit millions more to the development of their in-house online gambling platform.
Evans confirmed that the current pace of roughly $1.1mm in quarterly expenses stemming from the platform will continue “at least through this year.”
Where Churchill plans to deploy the platform remains an open question. The company attempted to gain a foothold in the New Jersey market through an attempted purchase of the Showboat in Atlantic City, an attempt that ended in litigation.
But point your view toward the future and Churchill’s prospects improve. The company has an extended footprint in California and Illinois, two high-population states considered reasonably likely to authorize online gambling in the coming years.
And, as a technology provider, Churchill need not necessarily have a physical presence or be licensed as an operator in every market to profit from those markets.
Justin Sebastiano – Brean Capital: Okay. And then just lastly, you spent another $1 million plus on your Internet gaming platform, is this something that you’re going to continue to invest in? Is there an ROI on this fashion? I mean, where can we think this is going and when will we maybe start to see some good returns on this?
Bob Evans – Chairman and CEO: That’s a good and fair question. Okay, a short and sweet answer which is that we believe that over time the Internet gaming market in the U.S. will develop into a significant opportunity for us and for others as well of course. We plan to be a significant player in that.
We will continue to make the investments at about the current rate at least through the rest of this year building the technology platform which I think we’ve got some real advantages in and the kind of long-term view on this. We can’t make states legalize Internet gaming any faster than they would otherwise. But as that occurs, we want to be a player. We will make the appropriate investment to do that. Bill, anything else you want to add?
Bill Mudd – Chief Financial Officer: No, Bob just highlighted, we did have $1.1 million as expense in our fourth quarter of last year. We said that will continue, so we’ve got about $1.1 million in this quarter also. I think it’s fair to assume that will continue, as Bob just mentioned.
Bob Evans – Chairman and CEO: As least through this year.