Churchill DownsThe Kentucky Derby’s owner,, has changed its approach to betting on sports.

CNBC spoke with CEO Bill Carstanjen that his company plans to double its horse-race betting efforts and move away online gambling and iGaming virtual casino games.

We saw a negative environment in which our company could thrive. CNBC’s Carstanjen explains that they switched strategy and are now focusing on the horse racing industry.

Following a Supreme Court decision in 2018Churchill Downs became a player in the highly competitive and crowded field of sports betting after states allowed it. Carstanjen explained that the online gambling profit margins of sports betting were unattractive. According to Carstanjen, the company has too much expenses, including the huge costs of the technical infrastructure as well as the cost to retain and attract players. Others sportsbook companies are dealing with similar issues.

Churchill Downs is the backbone of the TwinspiresCarstanjen announced that the racing app is in search of potential partners for its iGaming content, and for its customer database.

He stated that “our approach is to be in a place to partner with long-term winners, who are willing spend the hundreds and millions of dollars necessary to grow the business unprofitably over the short and medium term.”

Carstanjen claimed that betting on horse racing online is a lucrative business, and his margins have been around 30% in the past. “We remain completely committed and excited to TwinSpires Horse Racing’s top line, bottomline and margins to continue demonstrating that this is an online business with a sustainable and scalable business model,” he stated at the company’s most recent earnings conference.

The pandemic caused significant disruption in the horse racing industry. exacerbating recent declines. Since 2019, this will be the first year that the “Run for the Roses” has seen a full attendance. Carstanjen indicated that record Derby results are possible due to advance reservation-ticket sales.

As long as it is dry, he expects the Derby to break all records in terms of total bets, or the handle. Horses are often effected by rain, and the bets are refunded.

CNBC interviewed the Churchill Downs CEO about his plan for international growth. Crown Pride from Japan is running this year in the Derby.

Traditional Japanese law prohibits locals placing bets in the Derby. However, this year, betting is allowed because a Japanese-bred horse will run.

Horse racing in Japan has a huge market. Carstanjen claims that the Japanese horse racing industry is three times bigger than the United States.

Churchill Downs’ international connections with horse racing communities helps them to generate new revenue through sponsorships, gambling and ticket sales.

According to the CEO, “It’s about creating a special connection to our race as well as our brand and giving access to our event.”