Louisville-based Churchill Downs Inc. announced Wednesday that it is selling its online social games division to an Australian company, ending a three-year experiment in that emerging technology field.
The $990 million sale of Big Fish Games Inc. now to Aristocrat Technologies Inc.follows the 2014 purchase by Churchill that, according to financial reports, ended up being about $840 million.
Churchill CEO Bill Carstanjen, in a statement, called Big Fish “a very successful business with a bright future,” but said it would be a better fit for Aristocrat.
“We will refocus our strategy on our core assets and capabilities including growing the Kentucky Derby, expanding the casino segment, TwinSpires.com and other forms of real money gaming, and maximizing our thoroughbred racing operations,” Carstanjen said.
Churchill’s purchase in 2014 was the latest — and possibly most dramatic — diversification of its original horse racing business. It went beyond real-money gambling at casinos and racetracks to online social games.
At that time, Carstanjen said the “entry into the rapidly growing mobile and online games industry gives us new products, new customers, new geographies and new sizeable growth opportunities,” adding that many would see it as “a logical extension” to TwinSpires, the company’s online horse wagering site.
Big Fish founder Paul Thelen said then that Churchill “is a company with a commitment to interactive entertainment and a track record of growth and performance.”
It immediately became the company’s biggest revenue producing segment (in 2015 and 2016) and was one of its biggest sources of earnings growth (before consideration of taxes and other factors) from 2015 to 2016.
But the momentum stalled this year as Churchill reported a $27.1 million revenue decrease from Big Fish Games for the first nine months, compared to the same months of 2016. The earnings growth (before taxes and other factors) was the smallest of the company’s major segments for the first nine months of the year compared to the same period of 2016.
The sale brings Churchill back to real-money gambling as opposed to the credits-based social gaming arena.
The slowdown in Churchill’s social gaming business hasn’t hurt the company’s stock price. Churchill stock continues to be at an all-time high — peaking at $223.21 during the day Wednesday before closing at $220.10. The Big Fish sale was announced after the close of trading.