[toc]Churchill Downs Inc. (CDI) is letting go of Big Fish Games Inc., but not without first receiving $990 million in cash from its buyer.
Churchill Downs, a Louisville company, signed the agreement to sell the company it acquired in November of 2016. Already, the CDI board of directors approved the deal. Now, it awaits (and will be subject to) the regulatory and closing conditions of the transaction.
CDI expects the deal to close in the first quarter of 2018. Until then, the company is returning its focus to its traditional brand.
In a company news release, Churchill Downs CEO Bill Carstanjen said this:
“Big Fish is a very successful business with a bright future that will be best realized by being part of Aristocrat’s strategy and vision for their online and mobile gaming portfolio.”
CDI to return to its core operations
Carstanjen instead will return the company to its strongholds:
- Core assets and capabilities within the Kentucky Derby
- Casino segment, TwinSpires.com
- Real-money gaming
- Thoroughbred racing operations
CDI, as part of the deal, will not operate any business competitive to Big Fish Games for four years, nor will they take or solicit any of Big Fish employees to work with them across three years.
CDI’s goal was diversification
In 2006 when CDI bought Big Fish, the company planned to expand its social casino gaming opportunities. The company fit the business model; CDI wanted to diversify and compete in the mobile and online gaming world.
The company began heavily investing in Big Fish to develop and market games, and in turn, saw revenue growth over the last few years.
Big Fish committed to the same pond
When CDI relocated its TwinSpires employees to Louisville and didn’t relocate Big Fish Games, CDI had no plans to relocate them. Big Fish and its executive team valued its place on the West Coast. Carstanjen told Business First that there’s a larger pool for game development talent in the area.
“If it ain’t broke, don’t fix it,” Carstanjen said to Business First.
Not the first rodeo for Churchill
In 2015, Churchill closed Bluff Magazine. First, it shut down its print version. The digital publication soon followed. The Courier-Journal reported that Churchill acquired Bluff in 2012 to start an online poker business “as states or the federal government allowed it.”
The company ceased operations in August of that year. Even so, Churchill did tell the Courier-Journal that it would retain ownership of the name and intellectual property associated with Bluff. A spokeswoman for the company asserted that the name could still hold value for the internet casino gambling platform Churchill is developing.
Social gaming continues to be the lucrative sell
Another in the social gaming scene bites the dust (but not without some advantages), but they aren’t alone. Caesars Entertainment Corp. sold of their social wing, Playtika Ltd., for $4.4 billion in 2016.
This isn’t exactly a new trend. Big gaming companies attempt to diversify by adding social companies to their offerings. After some time, companies realize that there is more value in selling the company then spending on maintenance and development costs.
The social casino sphere isn’t exactly struggling though. Those who make it their core focus can be profitable. Believe it or not, Zynga profits in the third quarter topped franchise history records for the company in that sphere.