Churchill Downs Incorporated 2007 Third-Quarter Conference Call Transcript

Operator:

Good day, ladies and gentlemen, and welcome to the third-quarter Churchill Downs Incorporated earnings conference call. My name is Mishayla, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session toward the end of this conference.

(OPERATOR INSTRUCTIONS)

As a reminder, this call is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Ms. Julie Koenig Loignon, Vice President of Communications. Please proceed, ma'am.

Julie Koenig Loignon- Churchill Downs Incorporated - VP Communications

Thank you, Mishayla. Good morning and welcome to this Churchill Downs Incorporated conference call to review the Company's results for the third quarter and first nine months of 2007. The results were released yesterday afternoon in a news release that has been covered by the financial media. A copy of this release announcing results and any other financial and statistical information about the period to be presented in this conference call, including any information required by Regulation G, is available at the section of the Company's website titled Company News, located at Churchilldownsincorporated.com. Let me also note that a news release was issued advising of the accessibility of this conference call on a listen-only basis via
phone and over the Internet.

As we begin, let me express that some statements made during this call will be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results, or are otherwise are not statements of historical fact. The actual performance of the Company may differ materially from what is projected in such forward-looking statements.

Investors should refer to statements included in reports filed by the Company with the Securities and Exchange Commission for a discussion of additional information concerning factors that could cause our actual results of operations to differ materially from the forward-looking statements made in this call. The information being provided today is of this date only and Churchill Downs Incorporated expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in expectations.

President and CEO Bob Evans, Chief Financial Officer Bill Mudd, Vice President of Corporate Finance and Treasurer Mike Anderson, and Executive Vice President of Churchill Downs Steve Sexton will begin our call with some formal remarks and then respond to your questions after their formal presentations. I will now turn the call over to Bob Evans, our president and CEO.

Bob Evans - Churchill Downs Incorporated - President, CEO

Thanks, Julie. Good morning, everyone. Thank you for joining us today.

As we did during our second-quarter conference call back in August, I will make a few opening comments. Steve Sexton will then discuss our racing and slot operations. Bill Mudd will discuss our financial results. I will return with a couple of comments, and then we will be happy to take your questions.

During our last conference call, I said that we would no longer be issuing reports on attendance and handle at the conclusion of each race meet. Going forward, we will include handle information in our quarterly and annual reports so that you will be able to review handle from live race days and from simulcast-only days at our racetracks and from off-track betting facilities on a quarterly basis with year-over-year comparisons. I refer you to our 2007 third-quarter 10-Q filing, where on pages 24 and 29 you will find that information. We continue to report on-track attendance to the governmental agencies that regulate horse racing in the states where we operate. So that data is also available to you and the public.

Just to remind everyone why we made this change, our financial results are and will increasingly be driven by things other than, and in addition, to handle and attendance, including how that handle converts to revenue, our advance-deposit wagering or ADW business, and our alternative gaming or slots and video poker business at the Fair Grounds in New Orleans.

Here is a quick summary of our third-quarter reported financial results. We had a $6.2 million negative swing in after-tax profits related to our discontinued operations. Those include, as you will recall, the sale of Hollywood Park back in 2005, the sale of Ellis Park in 2006, and the sale of Hoosier Park earlier this year. Last year we had a $1.8 million pre-tax gain in Q3 from insurance recoveries, net of losses, related to Hurricane Wilma's impact. Fortunately this year, we did not have that pre-tax gain. Not only do those insurance gains, which totaled $19 million in all of last year, make the year-to-year comparisons difficult, they also drive up depreciation expense this year compared to last.

We had $1.5 million or so in pre-tax expenses this quarter from pre-opening costs at our temporary Fair Grounds slot operation; plus political campaign costs related to our efforts to secure alternative gaming in Illinois, Kentucky, and Florida; and the write-down of our investment in Empire Racing related to our withdrawal from the process to run racing in New York. Those things have very little to do with our core business in the third quarter, so let me give you the highlights there.

The financial results of our racing operations at the three tracks that were running in the third quarter were soft. Churchill Downs had a solid spring-summer race meet, but had six fewer days of racing during the third quarter compared to last year. Remember, Churchill only runs in early July. Steve will give you the details there.

Arlington Park improved, but over the very depressed 2006 levels. Calder's business was significantly affected by rain, which caused us to take 55 or about one-third of all our turf races off the soggy grass course and run them on dirt. This typically causes many of the entered horses to scratch out of the races. Field sizes decline, and handle declines as well. EBITDA from continuing operations held steady year-over-year. Keep in mind that EBITDA from continuing ops a year ago included that $1.8 million of insurance recoveries, net of losses, related to Hurricane Wilma.

Our video poker business in Louisiana was roughly comparable to levels from a year ago. During the third quarter we opened for 12 days our temporary slot operation at the Fair Grounds, where we now have 245 machines in operation. In just a minute, Steve will give you an overview of how our gaming business has performed since the temporary facility opened.

We spent about $770,000 in the quarter on political activities, pursuing alternative gaming legislation and rights in Florida, Illinois, and Kentucky. Besides reducing our reported EBITDA, these expenses are not tax-deductible, and you can see the effect on our overall tax rate, which was 60 percent for the quarter. As we have previously stated, we will spend about $3 million on these legislative initiatives in total this year. Of that, the majority, slightly over $2 million, will be spent in the fourth quarter.

Our ADW business did exceptionally well in the third quarter, which was a pleasant surprise since our access to content – that is, the races we were able to accept ADW wagers on – was at its weakest point during the third quarter. We did not have Calder at all during the quarter and only picked up Arlington in early August. And we did not have premier tracks such as Belmont, Saratoga, or Del Mar during the quarter. TVG and Youbet, through Youbet's content sublicensing agreement with TVG, had this content during Q3.

The content situation, however, has changed markedly as we have gotten into the fourth quarter, and we now have the stronger content lineup, including Churchill Downs, Fair Grounds, Santa Anita, Gulfstream, and Oaklawn Park. We have also just this week reached an agreement to exchange Santa Anita and Golden Gate content, through our TrackNet Media Group joint venture with Magna Entertainment, for Hollywood Park and Bay Meadows content that was previously exclusive to TVG. As part of this arrangement, our ADW platforms have been licensed to take wagers from California residents. The California market accounts for about 30 percent of the total US ADW market.

This week's developments in California coupled with the better-than-expected performance of our ADW business during the third quarter means that we now project our ADW business will be slightly accretive to earnings per share in 2007. Previously, we had said that it would be dilutive this year, 2007, and not accretive to earnings per share until 2008.

Let me turn this over to Steve Sexton who will cover your racing in gaining operations, and then I will be back a little later. Steve?

Steve Sexton - Churchill Downs Incorporated - EVP, President-Churchill Downs Racetrack

Thank you, Bob.

In the third quarter, as Bob indicated, we had one less week of racing at Churchill Downs this year. In 2006, we ran an expanded season with an additional week in July. With the sale of Ellis Park, we agreed to reduce our schedule by one week and also agreed to an overlap during Fourth of July week with Ellis.

The Churchill meet finished very positive, up on track and daily averages, up 5 percent in attendance, up 6 percent on track handle – that is – wagering. Our team continues to improve on the cost structure. Additionally, they worked in tandem with our TwinSpires.com family to help launch the ADW platform, which launched Kentucky Derby week by the way, and continued through the race meet, signing up new accounts at our Louisville operation.

At Arlington, we are pleased with the turnaround that was accomplished this year, resulting in field sizes increasing from 7.4 starters per race to 8.3, combined with fewer horse injuries, as a result of the Polytrack installation. We experienced strong growth in the export market for the meet as a result, up 11.5 percent over prior year. Arlington also improved its on-track business through concentrated marketing efforts. Arlington was up 17 percent in attendance and 10.6 percent in on-track wagering to prior year. Arlington will gain an additional live racing day and 14 host days in 2008 as a result of the Illinois Racing Board dates allocation this past September. Arlington's EBITDA performance includes approximately $1 million of one-time purse recovery from the recently concluded race meet.

At Calder, we have had a difficult year with South Florida weather. Continued rain has plagued the meet early on and on Summit of Speed day in July, which is their premier race day of the year. It continued through the third quarter, producing unusually high levels of rainfall. Bob mentioned the many races that were taken off the turf this summer. Year-to-date, we have had 20 percent less turf races than in 2006 and experienced a significant number of scratches in all of our races. We began a cross-simulcast experiment in South Florida on Sept. 22 by sending our signal to Pompano Park and the Gulfstream Park. To date, while in the early stages, that experiment is indicating short-term loss with a potential for long-term gain by growing the market for pari-mutuel wagering in South Florida. Efforts now are focused on passing the referendum in Miami-Dade County, which would afford us a level playing field with slot machines.

Finally at Fair Grounds, we have three areas of business. Our video poker business continues at the same levels as last year, and we are working to utilize two OTB licenses in new locations, each which will have video poker. Within that OTB system, our import simulcasting business has continued to produce lower results than in 2006. We were pleased, as Bob indicated, to open a temporary slots operation with 245 machines while concurrently building a permanent location adjacent to the grandstand. We are pleased with the results through October of $155 net win per machine for temporary operations, and are actively growing our slot players club for marketing purposes. Construction on our permanent building is on schedule and will house up to 700 machines to open in late 2008.

We're looking forward to the race meet at Fair Grounds in the traditional Thanksgiving Day opening. In fact, any of you on the call interested in obtaining a dining table on opening day may do so via eBay in the next few days, as we have taken an innovative approach by auctioning dining tables for opening day, typically very high in demand, while benefiting local charities in New Orleans. You'll see new faces in the trainer colony at Fair Grounds. Our team is ready for a strong race meet, and there will be over $350,000 per day in purses. That concludes my comments. We will entertain questions at the conclusion of the call.

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

Thank you, Steve, and good morning, everyone.

I will try to tie in Bob and Steve's comments into my review of the results for the third quarter, as well as make a few comments about our balance sheet. I will be reviewing the information as set forth in the tables of the press release that can be found under the Company's section that Julie referred to earlier, which is at our Web site, Churchilldownsincorporated.com. Following my comments, we will open up the call for Q&A, in which Bob, Steve, Mike, and I will respond to your questions.

First, let's begin by reviewing the segment information which is contained in the schedule titled “Supplemental Information by Operating Unit” in the release. As a reminder, the Discontinued Operations section of our financial statements and tables contain the operations of Hoosier Park, which was sold during the first quarter of 2007; Ellis Park, which we sold during the third quarter of 2006; and Hollywood Park, which we sold during the third quarter of 2005. My comments will focus on operational performance from continuing operations.

As Steve mentioned, we have the same number of live race days overall compared to 2006, but Churchill Downs had six fewer race days. Those were days that reverted back to Ellis Park as part of the sales agreement. The reduction in live race days from 12 to six is the primary driver of the revenue drop in this segment.

At Arlington Park, two additional live days, coupled with increases in field sizes – which we believe may stem from the popularity of our Polytrack racing surface – drove the increase of $2.7 million.

As Bob and Steve mentioned, Calder Race Course was significantly affected by rainy weather. The turf races we lost and the reduction in handle as a result more than offset the four additional race days at this track.

We had no live racing at the Fair Grounds during the quarter, but conducted import simulcasting, video poker operations, and started our temporary slots operation.

In addition, under Other Investments, we had our first full quarter of ADW operations, including the TwinSpires.com rollout that happened in May and the June acquisition of AmericaTAB and BRIS. In total, our quarterly revenues grew 7 percent from $97.1 million to $103.9 million.

Dropping down to the bottom of the segment data, I will highlight some of the EBITDA changes by segment for the quarter.

EBITDA from continuing operations in total decreased $131,000 to $10 million. The overall decrease is a result of $1.8 million in net insurance recoveries recorded in the third quarter of 2006, which impacted the EBITDA of Calder.

Churchill Downs’ EBITDA declined by $1.3 million year-over-year as a result of the reduction in live race days, but still remains $1.4 million over 2006 year-to-date.

Arlington Park with two more live race days improved over last year's performance by $4.4 million. More than one-half of this positive variance was the result of purse recoveries of approximately $1 million in 2007 coupled with the purse overpayment expense in 2006 of $1.3 million, resulting in a $2.3 million turnaround. Arlington on a year-to-date basis is up $6.9 million over last year.

Calder's pari-mutuel business was significantly off of last year's performance, as the weather played a key role in taking races off the turf. Also note that 2006 EBITDA figure includes $1.8 million of insurance recoveries.

This additional factor -- an additional factor in the negative variance is lobbying expenses related to our campaign to get the Jan. 29 referendum regarding Miami-Dade slots, which Bob mentioned earlier.

In Louisiana operations, EBITDA performance declined by $1.5 million, primarily due to the pre-opening costs related to the temporary slot machine gaming facility; as a result of slots pre-opening costs, which amounted to approximately $800,000; coupled with softer pari-mutuel import simulcasting results compared to last year.

Other Investments include our new ADW acquisition of AmericaTAB and BRIS; our internally built ADW platform, TwinSpires; and our investments in TrackNet Media, HRTV and Racing World. The EBITDA grew by $700,000 primarily from acquisitions.

Now let's look at the “Condensed Consolidated Statements of Net Earnings.” The third-quarter operating profit of $4.6 million is down slightly versus last year's $5.2 million.

Operating expenses grew $3.4 million and are primarily driven by tote and simulcast fees related to our acquisition of AmericaTAB and BRIS.

SG&A expenses grew by $2.2 million, primarily as a result of the acquisition of our ADW platforms, but also includes spending on gaming campaigns and pre-opening cost at the temporary Fair Grounds slot facility, as previously mentioned.

As we all have previously mentioned, we recorded net insurance recoveries of $1.8 million during the third quarter of 2006 for hurricane damages from 2005.

Interest expense grew by approximately $800,000 as a result of our debt levels to finance the acquisitions in June.

Equity loss of unconsolidated investments increased by $1 million as a result of equity losses recorded for HRTV and TrackNet, as well as our exit from Empire Racing.

Our effective tax rate for the quarter reflects the higher state income tax expense coupled with nondeductible lobbying costs. Our year-to-date effective tax rate is 42 percent, compared to 41 percent in 2006.

Net earnings from continuing operations is $1.1 million, which includes $770,000 of legislative initiative cost and pre-opening cost related to the opening of the slots facility.

As a reminder, the corresponding EPS amount for the third quarter of 2006 includes a pretax net insurance recovery of $1.8 million.

Turning now to the balance sheet at Sept. 30, besides our normal working capital accounts that continue to be influenced by racing calendars and the timing of pari-mutuel related settlements, the biggest change in our balance sheet is as it relates to the acquisitions of AmericaTAB and BRIS in June of this year. Goodwill and other intangibles are up $53.5 million and $23.8 million respectively as a direct result of our acquisitions.

Net additions to plant and equipment were impacted by two major capital projects at Arlington Park -- the installation of the Polytrack synthetic racing surface for approximately $11 million, and the addition of a new dormitory for approximately $3 million, both completed in April of this year. Additionally, at Fair Grounds we spent nearly $8.5 million toward the opening of the temporary slots facility and are also constructing a dormitory as well that is scheduled to be completed in December. The acquisition of AmericaTAB and BRIS in June added roughly $800,000.

Our deferred revenue decreased since December as a result of the Kentucky Derby and other second- and third-quarter revenues recognized for spring and summer meets. Our long-term debt increased $55 million as a direct result of the AmericaTAB and BRIS acquisitions.

We are now breaking out the convertible note payable to related parties separately on our balance sheet. This concludes my remarks and I will now turn it back over to Bob.

Bob Evans - Churchill Downs Incorporated - President, CEO

Thanks, Bill.

Our focus for the balance of the year is unchanged from our last conference in August. We are working the legislative process intently in Florida and Illinois and Kentucky, where we see opportunity to secure legislation to enable us to conduct alternative gaming operations in those states. We congratulate Kentucky Governor-elect Steve Beshear on his victory in Tuesday's election.

The construction of our permanent slots facility at the Fair Grounds is underway and on target. Our temporary operation is up and running. We will have the first full quarter of results to report when we meet in March of next year.

Our TwinSpires.com team in Mountain View, Calif., and Lexington, Ky., are focused on growing our share of the advance-deposit wagering business. We are running ahead of our plan in this area. With this week's approval of our license in California, which we had not included in our 2007 plan, we expect to make even more progress, as we can now accept wagers from customers in the nation's largest ADW market.

We talked last time about the efforts we have underway to grow our revenue by capturing greater share of handle on our races; by capturing a greater share of total handle wagered across on-track, OTB, and ADW channels that we operate; and by building and better monetizing our intangible assets like our media rights, licensing, sponsorships, and our brands. There is really no “big bang” here but only continued progress over time.

We will continue to focus on driving our costs lower relative to revenue.

Finally, we spent over eight months recruiting Bill Mudd from General Electric as our new CFO. We are excited to have him on board. We have strengthened our management team's capabilities considerably with his arrival.

Now we will be happy to address your question. Mishayla, could we have the first question please?

Operator

(OPERATOR INSTRUCTIONS)

Our first question comes from Ryan Worst with Brean Murray.

Ryan Worst - Brean Murray - Analyst

Thanks, good morning, guys. Just a question. Bob, you mentioned something about exchanging signals with TVG. Could you just go over that in more detail? I didn't quite catch that.

Bob Evans - Churchill Downs Incorporated - President, CEO

In California, we have exchanged the Santa Anita and Golden Gate tracks, which were part of TrackNet Media -- that is us and Magna -- for a Hollywood Park and Bay Meadows, which were previously exclusively controlled by TVG. So, TVG can take bets on our tracks -- technically Magna's tracks, but they are both part of TrackNet. And we can take wagers on theirs via our ADW platforms.

Ryan Worst - Brean Murray - Analyst

Right, okay. So I mean it is nothing different than what California requires, basically?

Bob Evans - Churchill Downs Incorporated - President, CEO

Well, that was not the case before this week.

Ryan Worst - Brean Murray - Analyst

Right. But you're not exchanging signals anywhere else other than California at this point?

Bob Evans - Churchill Downs Incorporated - President, CEO

No, we're not.

Ryan Worst - Brean Murray - Analyst

I mean, do you see this is a model that could be used for other tracks outside of California?

Bob Evans - Churchill Downs Incorporated - President, CEO

I think the idea of exchanging content, so that all the ADW platforms have access to the content or the races at all tracks, I think is a model. We have been talking about that since the beginning. We just can't get the other guys to go along with us on that.

As far as the specific arrangements with respect to the California tracks, I am not sure that that is a model that can be repeated elsewhere, simply because of a bunch of the unique dimensions of racing in California. But the concept, I think, is one that hopefully we can pursue.

Ryan Worst - Brean Murray - Analyst

Okay. Then as far as the ADW platforms go, could you give us an idea of the comparison for handle year-over-year?

Bob Evans - Churchill Downs Incorporated - President, CEO

Really tough to do, simply because a year ago the TwinSpires didn't exist. The AmericaTAB and BRIS platforms that we acquired at that point had access to all content. So year-to-year comparisons are extremely confusing, and I would prefer not to even try to sort all those details out on a conference call.

Ryan Worst - Brean Murray - Analyst

Okay. Then, Bill, just what are the reasons behind the increase in the depreciation? Is that a good number going forward or is that going to rise more, I guess, with the full quarter of profit?

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

Yes, the primary reason for the increase in depreciation is the acquisitions of ATAB and BRIS, as well as increases related to TwinSpires.

Ryan Worst - Brean Murray - Analyst

Okay, I thought that was in the second-quarter number.

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

Versus prior year, we would continue to see increases to the prior year driven by the acquisitions.

Ryan Worst - Brean Murray - Analyst

Right. What about sequentially? I mean, you're up almost $0.5 million in depreciation from the second quarter.

Bob Evans - Churchill Downs Incorporated - President, CEO

We didn't acquire ATAB and BRIS until --.

Steve Sexton - Churchill Downs Incorporated - EVP, President-Churchill Downs Racetrack

June 12.

Bob Evans - Churchill Downs Incorporated - President, CEO

June 12, so that was the effect.

Ryan Worst - Brean Murray - Analyst

Great, thanks. Then, Bob, how long do you think before we could see potentially a referendum in Kentucky, now that there is a pro-slots Governor?

Bob Evans - Churchill Downs Incorporated - President, CEO

I think we have clearly established that I'm the world's worst handicapper of political events. So I really have no idea. It is up to the legislature and the new governor, and at what pace they want to work on that issue. Hopefully sooner rather than later.

Ryan Worst - Brean Murray - Analyst

Okay, great. Now there is a smoking ban at Churchill Downs, is that correct? What kind of effect is that going to have on operations?

Bob Evans - Churchill Downs Incorporated - President, CEO

Steve, do you want to do that one?

Steve Sexton - Churchill Downs Incorporated - EVP, President-Churchill Downs Racetrack

This is Steve Sexton. We saw, when the smoking ban was implemented in our Calder operation, we saw a double-digit handle decline right away there. A little bit of a difference at Churchill is we have got one room that is dedicated for smoking currently that has a couple hundred seats. That will become non-smoking, and the rest of the building has been non-smoking. It's important to note that the outdoor areas are going to be and will be smoking the way the ban is written. So the Champions Lounge here currently will become non-smoking on Nov. 25.

Ryan Worst - Brean Murray - Analyst

Okay, thanks.

Bob Evans - Churchill Downs Incorporated - President, CEO

Mishayla, are you still with us?

Operator

Steve Altebrando with Sidoti.

Steve Altebrando - Sidoti & Company - Analyst

Hi, guys. I missed the exact number, but was it $1 million in pre-opening costs in the -- from Louisiana? Is that in the Louisiana EBITDA line?

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

$800,000, yes, it is in the Louisiana EBITDA line.

Steve Altebrando - Sidoti & Company - Analyst

Okay. The note payable on the balance sheet that is resulting from the ADW acquisition, is that interest-bearing?

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

No, it is not a result of ADW. It is a result of the sale of Kentucky Downs from a couple years ago. It is a note to a related party, one of our investors.

Steve Altebrando - Sidoti & Company - Analyst

Okay.

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

Yes, it's interest bearing.

Steve Altebrando - Sidoti & Company - Analyst

Interest bearing.

Bob Evans - Churchill Downs Incorporated - President, CEO

There has been no change there. We just broke it out and reported it separately.

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

Correct. It used to be part of the long-term debt balance.

Steve Altebrando - Sidoti & Company - Analyst

Okay. Do you have, I guess, updated what CapEx will be for the full year of '07, or what it will be for the fourth quarter?

Bill Mudd - Churchill Downs Incorporated - EVP, CFO

I am going to let Mike answer that one.

Mike Anderson - Churchill Downs Incorporated - VP Finance, Treasurer

We don't have anything projected yet. We are right in the middle of the budget cycle for 2008, so I don't have a number that I can put --

Bob Evans - Churchill Downs Incorporated - President, CEO

He said '07.

Mike Anderson - Churchill Downs Incorporated - VP Finance, Treasurer

For '07?

Bob Evans - Churchill Downs Incorporated - President, CEO

Yes.

Mike Anderson - Churchill Downs Incorporated - VP Finance, Treasurer

No, Steve, I don't have a number for you right now for the fourth quarter.

Steve Altebrando - Sidoti & Company - Analyst

Okay. I wanted to touch a little bit on just the Arlington situation, what your guys' thoughts are with the legislation that has been talked about. I guess, just the plans for that property in general. It is still pretty far from generating a decent return versus the real estate value. I just wanted to, I guess, get your overall thoughts, how you think you can improve the property, where you can get to, just along those lines.

Bob Evans - Churchill Downs Incorporated - President, CEO

Well, there are a lot of sub-questions in your question there, Steve. So, first of all, on the legislative front, this issue is being discussed by the Illinois Legislature and executive branch. We will sort of leave it to them to come up with whatever is going to happen there. We will certainly want to wait and see how that resolves itself before we make any significant decisions.

In the meantime, we are setting things up to run another successful meet in 2008. We have, I think, one extra racing date next year, and how many extra dark days? 14. So we have a little bit more share of market going in than we did this year.

We're pretty encouraged by the fact that we got field sizes back up. We were able to generate significantly greater attendance this year. I think there is a bit of momentum there.

But at the same time, I understand your question, and I think it would be prudent to just wait and see how the legislative issues resolve themselves.

Steve Altebrando - Sidoti & Company - Analyst

Okay, thank you very much guys. That is all I have.

Operator

Amit Kapoor with Gabelli & Company.

Amit Kapoor - Gabelli & Company - Analyst

Hi, guys. Given the numbers coming out a Gulfstream, win per day, etc., and the competitive environment there, assuming Calder sees slots in the future, what is the caution? What are the learnings coming out of Gulfstream that are available to you that will avoid a similar performance there?

Bob Evans - Churchill Downs Incorporated - President, CEO

I don't know if these are learnings from Gulfstream or not. I'll leave that to somebody else to decide. I think two things in our thinking have to be focused on consistently here. One is, we have to know what the offering is in the market that we are trying to serve. So whatever -- assuming there is a successful vote at the end of January – we then have to make sure we know what we want that consumer entertainment offering to be in that particular market so that is unique, differentiated, and competitive.

The second thing is that capital dollars matter a lot. So we want to be exceptionally prudent in committing capital to this type of development. Beyond that, we don't really have a whole lot to talk about at this point.

Amit Kapoor - Gabelli & Company - Analyst

Right, just following up on that, if the compact goes through, and it looks imminent, then table games competing versus table games, is that a scenario that you can comment on?

Bob Evans - Churchill Downs Incorporated - President, CEO

Not really. I mean -- we have done a lot of work in thinking through the different options that are available to us, but we haven't made any final decisions yet. I think we should wait and see what develops with the referendum in January.

Amit Kapoor - Gabelli & Company - Analyst

Okay, thanks.

Operator

(OPERATOR INSTRUCTIONS)

Steve Altebrando with Sidoti. I apologize; it looks he actually came out of the queue. There are no more questions in the queue at this time.

Bob Evans - Churchill Downs Incorporated - President, CEO

Okay, well, Mishayla, thank you very much for your help on this one.

Everybody, thanks for joining us today and look forward to talking to you again soon. Bye-bye.

Operator

Ladies and gentlemen, this concludes today's presentation. You may now disconnect.