by Frank Angst

Following an Internal Revenue Service audit of the company’s income tax returns for the years 2004 through ’07, Churchill Downs Inc. recently submitted a $2.6-million tax payment.

Churchill reported the payment in its third-quarter financial report issued on Wednesday. Because of that payment, Churchill lost $2,325,000 for the three months ended September 30. Last year, Churchill reported $2,468,000 in net earnings, but this year, the company lost nearly that much money, thanks in large part to the tax payment.

For the quarter, Churchill did enjoy a 1% increase in net revenues to $100.9-million, fueled by the company’s account wagering business and increased gaming revenues from its slot machine operations at Fair Grounds. But revenues from the company’s racing operations were down 7% to $68,358,000.

“Total pari-mutuel handle for the U.S. Thoroughbred industry, according to figures published by Equibase, declined 10% during the third quarter compared to the same period in 2008,” said Churchill President Robert Evans. “While we outperformed the industry, with our total pari-mutuel handle down only 3% during the third quarter, gains in our other business segments didn’t offset the decline in racing.

“Our introduction of night racing at Churchill Downs Racetrack and high-definition live racing video from our racetracks, the NTRA Safety and Integrity Alliance accreditation of our racetracks, and our recently announced $1.5-million supplemental purse contribution at Churchill Downs Racetrack are significant investments intended to improve the performance of our Racing Operations,” added Evans, “But, given the economy and industry handle declines, it is increasingly difficult to earn an acceptable return on those investments.”

Frank Angst is a Thoroughbred Times senior staff writer