Churchill Downs Buys Seattle Based Video Game Company

Posted on: Nov 16, 2014

Never a dull moment in the horse racing business. That’s the only way to explain Wednesday’s surprise announcement by Churchill Downs, Inc that they’re buying a Seattle based video game development company. The parent company of the Kentucky Derby has agreed to buy Big Fish Games for $885 million.

So why is a company with primary assets in horse racing and casino gaming buying a video game development company with a focus on mobile games like Gardenscapes 2, Gummy Drop and Midnight Castle? It does initially look ill advised, if not downright insane. There’s a method to the madness, however, and it has to do with the future of the gaming industry and the not so bright future of the horse racing business.

On one level, there’s an obvious overlap between video gaming, mobile gaming and the future of gambling both at the track and at the casino. Churchill Downs CEO William Carstanjen explained some of the thought process behind the acquisition: “The mobile-online gaming space gives us new products, new customers, new geographies. With the trends we see in mobile, smartphones, tablets, and other hand-held devices — the growth we see in mobile and online games, particularly in the social casino games — the segment is a logical adjacency.”

That’s part of the explanation–the other part is simple: Churchill Downs sees the ‘writing on the wall’ for the horse racing business and is looking for some good investments in other industries. There’s truth to Carstanjen’s statement about technology trends in the gaming industry and clearly Big Fish could be valuable in leveraging those trends. But if that doesn’t work out, they still have a growth oriented company in the scorching hot mobile gaming field with over 100 titles. Carstanjen continued to give love to Big Fish:

“Big Fish is a significant player in the mobile games space. You don’t necessarily see this sort of consistent booking growth over 12 years at other public social or mobile games companies, and this speaks to the diversified business that Big Fish is.”

An ancillary benefit for Churchill Downs–they now have access to the braintrust at Big Fish gaming to give them advice on product diversification. Obviously they hope that there are better days ahead for the horse racing industry. If not, however, they don’t want their company to ‘go down with the ship’.