Following a year of soaring stock market value, Churchill Downs Inc. (CHDN 2.52%) now faces the fallout from the COVID-19 pandemic. The racing and gambling company still plans to run its full slate of races at Turfway Park, including the Jeff Ruby Steaks race Saturday, but with no physical spectators, in order to maintain "safe social distancing."

Horses racing along a muddy track.

Image source: Getty Images.

The decision to run the race with no physical attendees beyond staff, media, and a few close associates of that select group came in part because of the weather. With cold, rainy conditions expected during upcoming races, Churchill Downs anticipated dense indoor crowds, creating a situation where viruses like SARS-CoV-2 could spread easily. The company has said it will issue full refunds to all customers who purchased tickets to view the events in person.

While Churchill Downs is willing to operate smaller races free of spectators, the same may not be true of the massive, world-famous Kentucky Derby. The company is moving ahead with plans to run Kentucky Derby 146 as scheduled on May 2, but is keeping open the possibility of postponement depending on the COVID-19 situation, suggesting it intends to allow physical attendance of spectators as normal.

With 150,000 to 170,000 fans coming to the Derby in recent years, and total wagering running as high as $225 million, the company has a high incentive to permit in-person attendance to maximize betting and cash in on ticket sales. A postponement or cancellation would also have a negative impact on the local economy of Louisville, Kentucky, whose hospitality industry makes bank annually providing food and hotel rooms to fans.