Churchill to Acquire Exacta Systems

Churchill Downs Incorporated has entered into a definitive agreement to acquire all outstanding equity interests of Exacta Systems, expanding CDI’s reach in the historical horse racing market, and instantly making it the dominant player.

Churchill Downs Incorporated (CDI) and Exacta Systems, one of the top companies producing a platform for porting slot games over to the historical horse racing (HHR) format, announced that they have entered into a definitive agreement under which CDI will acquire all outstanding equity interests of Exacta Systems for a total consideration of $250 million in cash.

Subject to certain working capital and other purchase price adjustments, the transaction is set to provide CDI the opportunity to realize synergies related to the company’s recent acquisition of Colonial Downs Racetrack and Rosie’s Gaming Emporium HHR facilities in Virginia.

Exacta’s HHR platform has for years competed with the platform created by Ainsworth Game Technology in partnership with CDI. Most of the top slot manufacturers utilized the Ainsworth platform to release their games in HHR versions. Ainsworth has been at the center of HHR expansion in Kentucky, where more than 2,000 Ainsworth games—on Ainsworth cabinets—are operating across seven venues.

Ainsworth’s technology to present historical racing data as slot machine results in popular themes led Ainsworth’s competitors to fast-track their own entries into the burgeoning HHR market by partnering with Ainsworth to port their games to HHR on Ainsworth’s platform. Today, companies including IGT, Aristocrat, Light & Wonder and Konami are introducing HHR versions of their most popular slot titles via the Ainsworth technology.

Some other slot suppliers have opted for the Exacta platform to introduce its games to the HHR market. The Exacta Connect platform is used by AGS, Aurify, Bluberi, Everi, Gaming Arts, IGT, Incredible Technologies, Konami, Light & Wonder and Sega Sammy, with many of those slot suppliers opting to partner both with Ainsworth and Exacta.

Exacta’s acquisition by CDI completes the variety of games the operator is able to offer in Kentucky, where Churchill offers thousands of HHR units at its tracks.

“For nearly a decade, Exacta has been a creative force supporting the growth of historical horse racing in the U.S.,” said Bill Carstanjen, chief executive officer of CDI. “We look forward to expanding Exacta’s national footprint and further diversifying the game offerings available to players at HRM (historical racing machine) facilities around the country.”

“We are very excited about this partnership,” said Jeremy Stein, president and chief executive officer of Exacta Systems. “This not only aligns our highly flexible HHR technology with a tremendously successful horse racing and gaming company, but also provides Exacta with new opportunities for growth, all while continuing to passionately support our customers.

“Exacta is known for its system flexibility and first-class customer service. This partnership would not have been possible without the amazing and talented team we have assembled since our humble beginnings in 2012. The progress we have made is something we are very proud of, and we are excited about what we can achieve in the future with our new partnership with CDI.”

Exacta Systems is the only platform supplier dedicated solely to the HHR market. Founded to address what had become a rapidly growing market, Exacta currently has 3,800 HHR machines active in three states connected to its Exacta Connect system.

HHR was developed as an alternative way to offer popular slot titles at venues in states like Kentucky, where traditional Class III slot machines remain illegal.

Eric Jackson, who was general manager of Arkansas’ Oaklawn Park racetrack, installed the first HHR machines, then known as “instant racing,” in 2000. The idea was to use data on past horse races—winners, odds, etc.—in a program that would let bettors wager on randomly chosen anonymous races, all on a slot-like cabinet. The first games included handicapping information on the historical races taken from the Daily Racing Form, and let players use that information to pick a horse.

The platform developed by Ainsworth and CDI perfected the presentation of that historical information as slot game results. HHR machines carrying popular slot themes have allowed tracks to raise purses and attract the quality of races that already were benefiting tracks in neighboring states where they were permitted to add Class III slots.