The conclusion of the summer meet at Colonial Downs on Labor Day capped a milestone year for Thoroughbred racing in the Commonwealth of Virginia. With revenue from historical horse racing (HHR) machines proving lucrative for the track's owner, Churchill Downs Inc (CDI), Virginia has become one of the most secure racing circuits in North America.While CDI can tout Virginia's expanded meet this year as a sign of growing interest in its racing product, the real indicator of the circuit's stability is the strength of CDI's HHR franchise there.CDI reported net revenue of $546 million from its Virginia Live and Historical Racing business last year. Only a portion of that came from wagering on live racing at Colonial Downs, which reported handle of $101 million last year.Assume for the sake of simple math that CDI's average takeout is around 20%. That puts CDI's share of the handle at Colonial Downs at approximately $20 million in 2025. That amount is less than the nearly $29 million in purses paid at Colonial Downs last year.It is a poorly kept secret in the industry that live racing fails to cover its costs. As the saying goes, any fool can make a small fortune in horse racing – they simply have to start with a large one.The little appreciated fact is, in Virginia, the bulk of CDI's revenues if not all of its profits come from historical horse racing.According to the Virginia Racing Commission, total handle from Virginia HHR was $6.3 billion last year. Net takeout after mandatory payouts was $484 million.In an investor presentation on June 11, CDI said it had amassed almost as many HHR machines in Virginia (4,835) as in Kentucky (5,355). CDI said the machines generated between $300 and $330 in wagering per day on average.Through its ownership of Colonial Downs, CDI has the sole right to a maximum of 5,000 HHR machines across 10 locations in Virginia. In return, Virginia requires Colonial Downs to host one day of live racing for every 100 machines CDI owns in the state.Colonial Downs held 48 days of racing this year, including one weekend of races around the $500,000 Virginia Derby in March and a 45-day summer meet that concluded Monday.CDI has only one Thoroughbred track to support in Virginia, but 173 race days to support across three Thoroughbred tracks in Kentucky (Churchill Downs, Ellis Park and Turfway Park).Kentucky-based CDI expanded into Virginia four years ago when it purchased assets from Peninsula Pacific Entertainment (P2E) for $2.75 billion, including Colonial Downs, six Rosie's Gaming Emporiums in Virginia, and casinos in New York and Iowa.P2E and its partners Revolutionary Racing had purchased the shuttered Colonial Downs for more than $20 million in 2018, when they teamed with Virginia horsemen to successfully lobby Virginia lawmakers to legalize historical horse racing. The track reopened for racing in 2019.On a July 30 conference call with investors, Bill Carstanjen, CDI's CEO, said the company plans to expand its HHR business in Virginia.“Our portfolio generates strong margins and free cash flow while supporting racing purses, tax revenues, and jobs across the state,” he said. “We are exploring options to run referendums in the town of Pulaski and in Amherst County, both in the western part of Virginia, that would allow us to further expand our [HHR] footprint.”In Virginia, approximately 9% of HHR wagering goes to purses for live racing. Another 1% funds bonus incentives for breeders and horsemen. According to Frank Petramalo at the Virginia Horsemen's Benevolent and Protective Association, VHBPA's share of HHR revenue for purses and bonuses was $22 million last year.Races at Colonial Downs paid an average purse of $66,000 this year, more than all but a handful of Thoroughbred tracks in North America, according to Thoroughbred OwnerView.Because Virginia holds only 48 days of live racing, it pays bonuses for state breds that compete in other jurisdictions when Colonial Downs is closed.In addition to breeder bonuses of 25% for Virginia-bred horses that finish first through fourth in any open race in North America, Virginia pays a developer bonus of 25% to owners of a Virginia-bred at the time of their first start for finishing in the money in open races in Virginia and at Mid-Atlantic tracks in Maryland, Delaware, Pennsylvania, New Jersey and New York.Virginia's Thoroughbred ecosystem is growing again after the five-year closure of Colonial Downs from 2013-2018 and the Covid pandemic in 2020-2022 diminished it.According to The Jockey Club, as many as 626 Virginia-bred starters competed 15 years ago. That number bottomed out at 207 in 2022. Last year, it rebounded slightly to 238.The registered foal crop in Virginia went from a low of 104 in 2020 to an estimated 180 last year, and registered mares bred in Virginia has also rebounded, from a low of 17 in 2022 to 52 last year.“Historical horse racing machines have been the lifeblood of the industry and the reason for its rebirth in Virginia,” said Jeb Hannum, of the Virginia Equine Alliance, which campaigned for HHR's passage in 2018 and represents the industry to lawmakers. “Virginia's legislature has been very supportive of the industry,” Hannum added.“We were very pleased with several positive developments in Virginia during the closing stages of the 2026 legislative session,” CDI's Carstanjen told investors in April. “The governor vetoed legislation [that would have expanded gaming competition for CDI] related to skill games and a proposed new casino in Fairfax County. iGaming also did not receive approval.”“These outcomes support a more attractive operating environment,” Carstanjen noted. “We believe in that jurisdiction and its potential, and we are really glad to be a part of that dynamic and environment.”“Through all this noise, Virginia has been a really strong investment,” he declared. “It has been a positive experience for us, and now it is about focusing on next year and how we want to evolve our business in that state.”The post HHR Puts Virginia Racing on Solid Ground appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.