The Rose would, by any other name, smell just as sweet to Truist Securities analyst Barry Jonas. In a December 18 investor note, he gave his favorable impressions of Churchill Downs’ newest casino in northern Virginia.
Churchill Downs hosted stock analysts at the Dumfries slot parlor, which opened on November 7. It hosts 1,650 historical horse racing machines, along with a 102-room hotel and eight restaurants and bars. The parking garage has capacity for 2,450 vehicles.
The opening of The Rose had been pushed back several times due to inclement weather. When it did eventually blossom, it received 200,000 visitors in a six-week period.
Since Churchill Downs did no advance marketing for the casino, opting to wait until after the November 5 presidential election, Jonas expected foot traffic to improve. Management claimed that outside sources had vastly understated visitation, with their own metrics being 100 percent higher.
“Promotional activities are also beginning to ramp, with a ‘million-dollar-giveaway’ promotion in November recording the 10th largest coin-in in [Churchill Downs] history,” chronicled Jonas. He added the area around The Rose had 6.5 million inhabitants and affluent demographics.
Management sought to allay concerns about a slowish debut by pointing to its Derby City Gaming casino in Kentucky. There, early returns worried investors, but Derby City ramped up quickly, recovering its entire cost in the first two years of operation. Executives “also noted that they have not seen and don’t expect any cannibalization to the smaller Rosie’s Dumfries property as each casino primarily caters to different clientele.”
Following the rollout of The Rose, Churchill Downs can still deploy another 550 gambling devices in the Cavalier State. Those not allocated to its controversial Henrico County slot parlor (still on the drawing board) will go into Richmond.
Jonas reported that Churchill Downs’s top brass are still of the opinion that sufficient appetite for gambling in Virginia will go beyond their full quota of machines. The company is limited to 5,000 devices in the state, but has repeatedly said it wants more.
The possibly temporary ban on skill-based games, or gray-market slots, in Virginia has been a boon for Churchill Downs, Jonas said. There had been 9,000 such devices at large in the state and disagreement between Gov. Glenn Youngkin and the legislature has kept them at bay. Jonas was of the view that the ban will remain in place for the foreseeable future.
Churchill Downs “also noted it has seen an increase in opposition toward gray games, citing the Prince William County School District adding the ban of SBGs to their legislative agenda in 2025.” Calling the company “politically astute in the state,” Jonas noted that Churchill Downs had upped its commitment to horse racing. The sport of kings is slated for 50 events at CHDN-owned racing ovals this year, along with a Kentucky Derby qualifying race.
Although Churchill Downs would like to add electronic table games to The Rose’s offerings in the long term, Jonas didn’t see that as an immediate priority. Tamping down gray-market slots and removing the gambling-device cap are the company’s near-term goals.
Outside of Virginia, the company is targeting a Feb. 12 opening of its Owensboro, Kentucky, slot parlor, with 600 machines planned. “Several new projects continue to progress for the Kentucky Derby, including the reimagination of the infield and the Finish Line/First Turn projects,” Jonas added.
Overall, the analyst concluded, Churchill Downs is looking for ways to grow further, including franchising. He pointed out that the company had “a very successful M&A track record,” along with a price-to-earnings ratio that consistently outperformed anticipated numbers, especially in Virginia.
