Churchill Downs' Derby Dollars

And down the stretch they come.... Could there be any more exciting words in the mind of a thoroughbred-racing fan, particularly when they refer to the finale of the grandest of all races -- the Kentucky Derby? Each spring the racing world converges on the town of Louisville, Ky., for pageantry, tradition, and of course, the "fastest two minutes in sports."

This year's 130th installment of racing's crown jewel culminated with a memorable stretch run for sentimental favorite Smarty Jones. The undersized Pennsylvania-bred colt stalked the front-running Lion Heart, gamely catching him with a furlong left to run, and pulling away for a 2 ¾ length victory. Those collecting the $10.20 payoff for a $2 win ticket weren't the only ones, though, to profit from Saturday's event.

Churchill Downs (NASDAQ:CHDN), owner of the venerable Kentucky race course (as well the CDSN simulcast network, and other tracks in California, Florida, and Illinois) has to be pleased with this year's Run for the Roses. A rainy forecast and ongoing construction did little to dampen the enthusiasm of the 140,000 spectators in attendance. Rain may have deterred a few, as the figure was slightly below last year's crowd, but it was the highest ever for a derby run under muddy conditions.

Total wagering on the race missed the $100 million mark by a nose. Eager gamblers placed $99.3 million in bets, eclipsing last year's handle by 13%. Aggregate wagering for all 12 races on the card edged up 2% to $142.8 million. Both figures set new North American records. Betting was especially brisk at simulcast locations (including Churchill Downs Trackside Louisville OTB), and accounted for roughly 90% of all wagering. Casual at-home viewers were also intrigued by the contest, which handicappers considered the most wide-open in years. General Electric's (NYSE:GE) NBC broadcast earned an 8.3 rating, tying it for the most-watched race since 1992.

Record-setting wagers placed Saturday should help alleviate the frustration on another gaming front. Churchill Downs has fought, thus far unsuccessfully, for the right to operate slot machines in both the Louisville track, as well as Arlington Park in Chicago. The integration of a racetrack-based casino -- something Harrah's Entertainment (NYSE:HET) has accomplished at its Louisiana Downs property -- would surely help augment pari-mutuel revenues.

As one might expect, business at Churchill Downs is highly seasonal, with the vast majority of earnings coming from the second quarter. For a company whose year revolves around a single event, Saturday's derby had to be exhilarating on both a financial and an emotional level.

Will Smarty Jones also win the Preakness and the Belmont Stakes? Talk it over on our Horse Racing discussion board.

Fool contributor Nathan Slaughter actually won a few dollars on Smarty Jones, but doesn't recommend investors abandon their stocks to play the ponies. He owns shares of GE.