Authors: Mahesh Gupta¹, William G. Ferko², and Thomas E. Lambert³ 

¹Department of Information Systems, Analytics, and Operations, College of Business, University of Louisville, Louisville, KY, USA 

²Department of Equine Administration, College of Business, University of Louisville, Louisville, KY, USA  

³Departments of Equine Administration and Economics, College of Business, University of Louisville, Louisville, KY, USA 

Mahesh Gupta is a professor in the Department of Information Systems, Analytics, & Operations, University of Louisville. Dr. Gupta’s areas of expertise and interest include evaluation and improving the organizational performance by using management philosophies such as Theory of Constraints, Lean and Six Sigma. Dr. Gupta has worked extensively with local companies and published his work in numerous journals including Journal of Operations Management, Decision Science Journal, International Journal of Operations and Production Management, International Journal of Production Research, and European Journal of Operational Research, Journal of Operational Research Society 

William G. Ferko is a lecturer in Equine Finance and a section leader for the Online MBA Contemporary Financial Management Course at the University of Louisville College of Business. He received the UofL Gustafson Adjunct Teaching award for teaching excellence.  He serves as a board member for public and not nonprofit organizations.  He served as a finance leader, CFO and consultant for large publicly traded and private equity sponsored industrial and financial services companies.  He has led over 80 merger and acquisition transactions with a focus on creating stakeholder value from synergies and productivity improvements.   

Thomas E. Lambert is an associate professor of practice of equine administration and economics for the Departments of Equine Administration and Economics in the College of Business at the University of Louisville. His research interests include the areas of the business of gambling, the tax and fiscal issues of gambling, public policy and gambling, and economic history

ABSTRACT

This paper provides a comprehensive analysis of Churchill Downs Incorporated (CDI), a cornerstone of the Thoroughbred racing industry and the distinguished host of the Kentucky Derby™.  Situated at a critical juncture in the rapidly evolving spheres of gambling and entertainment, CDI faces unique challenges and opportunities to maintain its preeminence and adapt to new market demands.  Through the lens of the Service Triangle framework, this study not only explores CDI’s strategic responses but also aims to contribute to broader theoretical discussions in sport management, particularly regarding how traditional sport organizations can innovate and evolve in the face of modern competitive pressures.  CDI has been able to adapt successfully to competitive threats posed by the expansion of gambling in the US since the 1980s due to renovating and upgrading facilities and customer service experience and by expanding into other forms of gambling besides horseracing such as historical horse racing machines and sports gambling.  The paper concludes with pragmatic recommendations aimed at reinforcing CDI’s market leadership, enhancing customer satisfaction, and ensuring financial stability.  With horseracing facing a shrinking market, this case analysis offers suggestions on how many tracks can stay competitive and thrive.

Keywords: Horseracing, Gambling, Positioning

Introduction
Churchill Downs Incorporated (CDI) has been a cornerstone of the Thoroughbred racing industry for over a century and a half, not merely serving as an institution but actively shaping the sport’s very fabric. Since its establishment in 1875, Churchill Downs Racetrack (originally known as the Louisville Jockey Club), celebrated for the iconic Kentucky Derby™, has transformed from its modest beginnings into the most revered venue in horse racing. The Kentucky Derby, known as the prestigious first jewel of the Triple Crown, has evolved from a national contest to a globally recognized event, attracting international attention and admiration. This historic racetrack has been the stage for the triumphs and challenges of the finest Thoroughbreds in history, becoming a dynamic archive of the sport’s most unforgettable achievements.

In examining Churchill Downs Inc. (CDI), this study addresses significant gaps in sport management theory, particularly concerning the adaptation and strategic innovation within traditional sports organizations facing modern competitive pressures. While existing literature extensively covers the operational strategies of various sport entities, there is a paucity of research focusing on the integration of advanced technological solutions and diversification strategies within historic sport institutions. By applying the Service Triangle framework to CDI, this paper provides novel insights into how a venerable organization can leverage its rich heritage while simultaneously adopting cutting-edge innovations to remain competitive. This dual approach not only preserves the historical value of the institution but also positions it advantageously within the rapidly evolving gambling and entertainment landscape, thus contributing to a more comprehensive understanding of strategic adaptation in sport management.

The choice of CDI as a case study is grounded in its unique position at the intersection of tradition and innovation within the sport management field. CDI’s longstanding history and cultural significance, epitomized by the Kentucky Derby, present a rare opportunity to explore how historic sport organizations can navigate and thrive amidst contemporary challenges. The case of CDI is particularly relevant as it illustrates broader industry trends such as digital transformation, market diversification, and the integration of new entertainment forms within traditional sport settings. This study contributes to theoretical discussions on how sport organizations can balance heritage preservation with modern strategic imperatives, offering valuable insights for similar entities facing analogous challenges.

In the forthcoming sections of this paper, we embark on a comprehensive journey through the operational dynamics and strategic positioning of CDI, illuminated by the Service Triangle framework. More specifically, first we will discuss CDI’s historical perspective and background and then, we will dissect the company’s strategic approaches to service delivery, customer engagement, and market competition, revealing how these strategies are manifested through its systems and the pivotal role of its people—both employees and customers—in shaping the service experience. Subsequent analyses will scrutinize the alignment between CDI’s strategic ambitions and operational realities, evaluating the effectiveness of its service systems in executing these strategies and the impact of its human resources in realizing organizational goals. We will also explore the intricate relationships between the company’s core (customer/market) and the elements of strategy, systems, and people, identifying areas of strength and opportunities for improvement. This exploration culminates in actionable recommendations designed to bolster CDI’s competitive edge, enhance customer satisfaction, and secure its financial future. Through this detailed inquiry, readers can anticipate a deep dive into the operational intricacies and strategic complexities of CDI, providing valuable insights into how the company can continue to thrive in the rapidly evolving landscape of the gambling and entertainment industries.

Background and Historical Perspective
The significance of Churchill Downs Incorporated (CDI) transcends the racetrack; it embodies the transformation of the gambling and entertainment sectors in the United States. In an era where horse racing was the sole legal gambling avenue, Churchill Downs Racetrack emerged as a beacon of American culture. Through times of war, economic downturns, and societal shifts, it has proven to be a symbol of resilience and innovation. Despite excelling within the Thoroughbred industry, largely due to flagship events like the Kentucky Oaks and Kentucky Derby, the institution faces challenges such as a gradual decline in attendance and inflation-adjusted gambling revenues, a trend common across the sector. In response, CDI has embarked on strategic diversifications over the past 25 years to enhance its appeal and reach a broader audience.

Noteworthy among these strategies is the “Hold and Convert” customer service approach, leveraging friendly, courteous staff to elevate the customer experience. Operational upgrades such as improved simulcasting facilities, family-oriented offerings, and reduced concession prices have been implemented following insights from a 1996 customer survey, addressing key areas of dissatisfaction. Simultaneously, Churchill Downs Racetrack has expanded its offerings to include whole card simulcasting, and dining options ranging from fine to casual, cultivating a venue that is as much a social hub as it is a haven for racing aficionados. In response to the 21st century’s rapidly changing entertainment landscape, marked by digital advancements and shifting consumer preferences, CDI has adeptly transitioned from a traditional racetrack owner/operator into a diverse entertainment conglomerate. This evolution highlights CDI’s dedication to innovation, particularly through its foray into historical horse racing machines and the development of online betting platforms like TwinSpires.

At CDI’s flagship track at 4th and Central, attendance has been declining gradually over the years along with inflation adjusted gambling revenues, which has been the case with almost all tracks across the country (Lambert, 2022a). See Figure 1 below. The introduction of the Kentucky Lottery in 1989 brought gambling competition to the racetrack (Klotter, 1989). Currently only about 20% of CDI’s total revenues now come from its main racetrack in Louisville. Casino gaming, sports gambling, charitable gaming, and lotteries, although their primary competitors, are not CDI’s only competition. It competes with all discretionary spending on entertainment, and gambling can be considered a luxury good (Lambert, 2023a). To improve their customer base and draw a more diverse crowd, CDI has implemented several business and operational strategies over the last 25 years or so. Although live Thoroughbred racing is their main product at Churchill Downs Racetrack in Louisville, Churchill has several secondary offerings such as whole card simulcasting, fine and casual dining, on premises sports wagering, and off-site gaming via slot-like machines called historical horse racing (HHR) machines. HHR machines yield outcomes based on the results of past horse races and how horses in these “historical” races have placed. Kentucky law allows such parimutuel gaming as well as sports wagering, but not regular slot machines or table games. These different entertainment venues can be as much of a social gathering place with a nostalgic atmosphere at the track as it is a gambler’s heaven with competitive, quality races (live or simulcasted), sports gambling with games often being broadcasted live, and an assortment of HHR machines. There have never been two races that are the same and variety becomes even more apparent as differences in quality among the races themselves. Additionally, CDI’s expansion into two other gaming areas (machines and sports wagering) further enables it to diversify its product portfolio as it has moved into the “racino” business model where horseracing and other forms of gambling typically seen in casinos are now under one roof (Lambert, Srinivasan, Dufrene, and Min 2010, Lambert, 2022a). This has developed as gambling operations in general are seeing mergers and consolidations and with CDI buying different operations over the years and sometimes closing declining racetracks it has purchased (Lambert, 2023b).

Figure 1: Number of Races, United States, 1989-2023 

Source: US Jockey Club, 2024a, Fact Book, https://jockeyclub.com/default.asp?section=FB&area=6. 

Figure 2: Inf Adj Total On and Off Track Handle, $ Millions, US, 1990-2023 

Source: US Jockey Club, 2024b, Fact Book, US Parimutuel Handle, https://jockeyclub.com/default.asp?section=FB&area=8. 

Fig. 3: Inf. Adj. Purse per Race, US, 1988-2023  

Source: US Jockey Club, 2024c, Factbook, https://jockeyclub.com/default.asp?section=FB&area=7. 

The HHR machines also allow purse sizes per race to stay competitive, and throughout the US, casino dollars and other sources of revenue are used to supplement winnings for runners despite overall attendance and parimutuel wagering (on and off track) falling when adjusting for inflation. Figure 2 displays how inflation adjusted on and off-track wagering has declined over the decades. However, as Figure 3 indicates, purse sizes or winnings per race to horse owners have grown over the last 14 years or so thanks to supplements to purses from casino and HHR operations (Lambert, 2023a). Despite the number of races, the number of racetracks, and wagering dramatically contracting, racetracks have endeavored to attract quality horses to races so as to keep patrons interested.

Additionally, since around the turn of this century, Churchill Downs Racetrack has been part of a state and local government tax increment financing district (TIF) which has allowed it to use tax incentives and rebates to help it renovate and upgrade its facilities in the amount of over $200 million (Lambert, 2022b). Despite overall declining attendance, the upgraded and expanded facilities have been useful in keeping the Oaks and Derby as two of the most attended, watched and betted races in the world. At one time before the pandemic, Churchill Downs had planned to build a combination gaming center with HHR machines and a hotel on its premises but then changed plans (Paulick Report Staff, 2021). Instead, a hotel has been built on the site of one of its current business holdings, Derby City Gaming (DCG), which is a few miles from the racetrack. Around 88% of parimutuel wagering in Kentucky is now done through HHR machines rather than at the racetracks, and Churchill Downs and the other tracks it owns in the state rely upon HHR revenues from gaming centers to help fund the purses of races. Gambling on races is now not enough to keep purse levels up to competitive levels. Recently, DCG opened another facility in downtown Louisville next to an entertainment complex (bars, restaurants, dance clubs, and bowling alley) called Fourth Street Live and across from Kentucky’s International Convention Center.

The market is CDI’s main constraint to bringing in more throughput. Their primary money-making output are the HHR machines. For regular races, they make money when patrons bet, but, unfortunately, they can’t put on any more live races within the course of a racing day. The best thing they can do is to increase their secondary offerings such as HHR machines and sports gambling and to improve the customer service quality of everything. CDI is doing just that and, fortunately for them, adopting a “racino” model on its main premises would help them to be even more competitive against casinos nearby or elsewhere. This has already been done at their Ellis Park and Turfway Park Racing and Gaming centers, two other tracks in Kentucky that Churchill Downs has bought over the last few years. Given the continued growth of HHR revenues in the state (these revenues now outpace regular horseracing or parimutuel wagering in the state by at least $7 to 1), machines at the track in addition to sports gambling appear in order (Kentucky Horse Racing Commission, 2023a and 2023b). The only caveat would be the possible saturation of these machines in the Louisville market since two locations of Derby City Gaming with hundreds of machines at each location already exist. In fact, HHR revenues per machine have already reached a peak according to Ky Horse Racing Commission reports.

CDI stands out in the gambling and racing industry through its innovative approaches and strategic adaptations. In comparison, companies like the New York Racing Association (NYRA) and Del Mar Thoroughbred Club have also pursued modernization efforts, but often with varying degrees of success. While NYRA has focused on enhancing live racing experiences through improved facilities and marketing, Del Mar has prioritized expanding its off-track betting and entertainment options. CDI distinguishes itself by not only upgrading its physical venues but also by embracing digital platforms like TwinSpires and historical horse racing machines, thereby creating a diversified portfolio that appeals to a broader audience. This comparative analysis underscores CDI’s leadership in blending tradition with innovation, a strategy that has proven essential in maintaining its competitive edge.

The Service Triangle Framework -Analysis
Amidst this backdrop of rich history and strategic adaptation, this paper introduces a fresh perspective for analyzing Churchill Downs Incorporated’s (CDI’s) operations strategy through the Service Triangle framework (Gronroos, 1990; 1994; Asya et al., 2023). This framework (Figure 4) presents a holistic model for understanding and enhancing service delivery by emphasizing the critical interplay among four principal elements: the company’s strategy, its employees, the system, and importantly, the customers. This framework not only illustrates the necessity of strategic alignment across these dimensions to foster customer satisfaction and operational efficiency but also serves as a blueprint for constructing a service culture that values and acts upon customer feedback, employee empowerment, and strategic clarity. In this paper, we delve into each component of the Service Triangle in the context of CDI, exploring their individual roles and importantly, mutual interdependencies. Empirical support exists that support the importance of these concepts (Anderson and Smith 2016, Anderson and Smith 2017)

Figure 4: The Service Triangle Framework for CDInc 

 
(adapted from Grönroos,1990) 

By examining CDIs operations through this lens, we aim to highlight identified opportunities for refinement and propose strategies and tactics to elevate operational performance, thereby ensuring the company’s sustained competitive advantage and market leadership. This approach, introduced hereafter, centers on the interconnections between the company’s service strategy, the systems that support service delivery, and the pivotal role of people—employees and customers alike—in shaping the service experience. Thus, this paper is dedicated not only to celebrating Churchill Downs’ storied past but also to outlining a strategic vision for its future, leveraging the Service Triangle Framework to navigate the complexities of today’s gambling and entertainment industries.

The Four Pillars of Excellence: Unpacking the Service Triangle
In this section we will discuss the Service Triangle’s four elements (Strategy, Systems, People and Customer) as foundational pillars that upholds the structure of organizational excellence Service and Operations Strategy: Blueprint of Excellence at Churchill Downs Incorporated

The service strategy component of the Service Triangle framework underscores the importance of designing and implementing a coherent approach that meets or exceeds customer expectations through effective service delivery. This strategy encompasses the planning, development, and execution of service offerings, aligning them with the company’s overall objectives and customer needs. In essence, the service strategy is about defining what services will be offered, how they will be delivered, and ensuring that these services are developed in a way that they can be consistently delivered at a quality level that satisfies customers.

Churchill Downs Incorporated (CDI) exhibits a comprehensive approach to its service and operations strategy, deeply rooted in the principles of the Service Triangle. This strategy showcases a harmonious integration of service objectives with operational capabilities, aiming to elevate customer experiences and achieve operational excellence. At the heart of CDI’s operational strategy lies a commitment to leveraging its rich heritage while innovatively meeting contemporary market demands. The company orchestrates a complex mix of event management, betting systems, customer service, and facility management to enrich the experience at Churchill Downs Racetrack and its affiliated properties.
In a strategic move to cater to changing consumer preferences and the evolving competitive landscape, CDI has broadened its service offerings. Beyond traditional horse racing, it now includes diverse gambling products such as HHR machines and the TwinSpires online betting platform. These initiatives are designed to attract a wider audience segment and respond proactively to market dynamics.

CDI places a strong emphasis on enhancing the customer experience through substantial investments in facility upgrades and the integration of cutting-edge technology. These efforts aim to improve seating, visibility, and accessibility, and to offer seamless digital interactions for betting and information access, ensuring memorable and engaging experiences for visitors and bettors alike.

The company’s dedication to operational excellence is evident in its meticulous event planning and resource management, which ensure the smooth execution of racing events. CDI strategically optimizes the use of its assets year-round, not just during peak seasons, to maximize revenue potential and foster ongoing customer engagement.
Furthermore, CDI recognizes the significance of community and stakeholder support, actively engaging in partnerships and collaborative initiatives that benefit both the company and its broader ecosystem. Engagements with local governments on tax incentives and participation in community development projects have bolstered CDI’s public image and solidified stakeholder relations.

Adaptability and innovation are hallmarks of CDI’s response to the competitive and regulatory challenges of the industry. The company’s innovative approaches to online betting and HHR machines not only diversify its revenue streams but also align with the shifting preferences of gamblers and racing enthusiasts. In essence, CDI’s strategic application of the Service Triangle framework underscores its unwavering commitment to customer service excellence, operational efficiency, and innovation. This strategic orientation has ensured CDI’s enduring leadership and adaptability in the Thoroughbred racing industry, navigating through the complexities of the modern entertainment and gambling landscapes.
Service Operational Systems: Execution Framework at Churchill Downs Incorporated

The Service Triangle framework’s “service operational system” component is integral to how an organization leverages procedures, technologies, and resources to cater to its customers effectively. It embodies all the necessary tools, processes, infrastructure, and technological support crucial for efficient, effective customer interactions that resonate with the company’s overarching service strategy. This foundation is pivotal for fulfilling service promises, boosting customer satisfaction, and achieving operational efficiency.
Service systems serve as the backbone of a company’s service delivery, facilitating the seamless execution of service strategies with practical, on-the-ground mechanisms. They encompass software and hardware that aid service transactions and customer interactions, workflows and procedures for consistent, quality service delivery, and the physical and organizational infrastructure supporting these services. Moreover, the human resources aspect denotes the roles and responsibilities within the organization tailored to deliver the service, backed by comprehensive training and development programs. The hallmark of effective service systems lies in their adaptability to customer needs, integration of new technologies, and sustenance of high service quality across all touchpoints.

Focusing on Churchill Downs Incorporated (CDI), the service system reveals a complex network supporting a broad spectrum of services that extend beyond traditional Thoroughbred racing. CDI’s embrace of technology, through platforms like the TwinSpires betting platform and HHR machines, marks a significant enhancement in its service offerings and customer experience. These innovations allow CDI to broaden its reach beyond the physical confines of the racetrack, offering an immersive and convenient betting experience to customers far and wide.
The operational processes at CDI are meticulously designed to cater to a wide range of customer needs, from the casual visitor to the serious bettor. The organization and execution of live racing events, the upkeep of facilities, and the management of betting systems are all geared towards operational excellence. This excellence is crucial, especially during high-profile events like the Kentucky Derby, ensuring smooth operations and high customer satisfaction.

The physical infrastructure of CDI, particularly the iconic Churchill Downs Racetrack, is a critical component of its service system. Designed to host large crowds, the facility offers various viewing experiences, from general admission to the opulence of luxury suites. Recent expansions and upgrades underscore CDIs dedication to improving the guest experience, aligning with modern expectations while preserving the venue’s historic charm.

Interaction with customers, including the provision of betting services, hospitality, and entertainment options, forms a vital part of CDI’s service system. Through various engagement strategies, CDI actively solicits customer feedback and adapts its offerings to meet evolving preferences. Initiatives like customer service programs, loyalty incentives, and marketing campaigns are instrumental in promoting the Derby and other events, fostering a deeper connection to the sport and to the sense of place offered by the racetrack.
Human Resources (People): The Heartbeat of Service at Churchill Downs Incorporated

The “Human Resource (People)” element of the Service Triangle framework is pivotal in the service delivery process, emphasizing the critical role of employees who interact directly with customers. This dimension focuses on the human aspect of service delivery, recognizing that employees are not just part of the service; they are the service. The quality of interaction between employees and customers can significantly influence customer satisfaction and perception of the brand. Therefore, investing in employee training, motivation, and satisfaction is essential for ensuring that they can deliver exceptional service.

Employees serve as the brand ambassadors of the company, and their attitudes, skills, and behaviors directly impact the customer experience. The people element stresses the importance of internal marketing efforts by the company to effectively recruit, train, and retain talented individuals who can uphold the company’s service standards. It highlights the necessity of creating a positive work environment that fosters employee engagement and satisfaction, as happy employees are more likely to make customers happy.

At Churchill Downs Incorporated (CDI), the people element plays a crucial role in delivering the unique and memorable experiences that visitors to the racetrack have come to expect. The company employs thousands of individuals across various roles, from corporate headquarters personnel and track workers to gaming center employees. The workforce includes a significant number of seasonal employees, particularly during peak events like the Kentucky Derby, when the employee count can swell to meet the demands of an influx of visitors.
CDI recognizes the importance of its people in maintaining the legendary status of the Kentucky Derby and ensuring the operational excellence of its various entertainment and gambling offerings. To this end, the company invests in extensive training programs to ensure that all employees, regardless of their role, have the knowledge and skills necessary to contribute positively to the customer experience. This includes specialized training for those in customer-facing roles, such as parimutuel clerks and concessions personnel, to ensure they can effectively engage with customers and handle any inquiries or issues that may arise.

Moreover, CDI supports its employees through motivational incentives that recognize and reward superior service. These incentives not only include financial rewards but also opportunities for personal recognition within the organization. Such practices demonstrate CDI’s commitment to empowering its employees, acknowledging their contributions, and fostering a culture where everyone is motivated to deliver their best.

Management at CDI also emphasizes the decentralization of the decision-making process, allowing employees closer to the customer to make on-the-spot decisions. This approach not only speeds up response times to customer needs but also instills a sense of ownership and responsibility among employees, further enhancing their commitment to providing top-notch service.
In summary, the people element at CDI underscores the company’s understanding that its employees are central to its success. By prioritizing employee satisfaction, training, and empowerment, CDI ensures that its team is equipped and motivated to deliver the exceptional experiences that customers expect, thereby reinforcing the company’s legacy in the Thoroughbred racing industry and beyond. Anderson and Smith (2016, 2017) find that among the three components of the service triangle that employee-firm (EF) relations are the most important. Customers can sense and feel better about an organization when they believe that employee-firm relations are good.

Customer/Market Engagement: The Foundation of Churchill Downs Incorporated
At the core of the Service Triangle framework lies the customer/market element, which underscores the essential role of customer engagement, satisfaction, and service delivery within the broader business strategy. This component stresses the necessity of grasping and fulfilling customer needs, delivering high-quality services, and sustaining a dynamic feedback loop for continual improvement and adaptation. Mastery of this central aspect crucially impacts customer loyalty, the likelihood of repeat business, and the overall reputation of the brand in the marketplace.

Within the framework, the importance of the direct relationship between service providers and customers is accentuated, marking the points where service value is both perceived and evaluated by customers. This interaction spans all stages of the service journey—from the initial setting of expectations through marketing efforts, the actual service encounter, to post-service support and solicitation of feedback. An effective approach to this element requires a nuanced understanding of customer expectations, preferences, and behaviors, allowing companies to customize their services to not only meet but exceed these expectations. The strategy of engaging customers with personalized experiences, prompt support, and consistent fulfillment of service promises cultivates trust and fosters enduring relationships.

Churchill Downs Incorporated (CDI), situated in the fiercely competitive and constantly evolving sector of gambling and entertainment, has adeptly navigated the shifting sands of customer expectations. The company has unveiled a series of key strategies and initiatives aimed at effectively engaging with the market/customer component. Recognizing the varied preferences of its audience, CDI has expanded its portfolio to include not just live Thoroughbred racing but also innovative offerings like HHR machines and the TwinSpires online betting platform. These initiatives serve a dual purpose: catering to traditional racing aficionados and attracting a broader audience seeking diverse entertainment options.
CD has also made significant investments in enhancing customer experiences through facility upgrades and the incorporation of cutting-edge technologies, ensuring a spectrum of service experiences from casual to luxurious. Moreover, the company employs targeted marketing strategies to effectively communicate the unique value of its offerings, thereby broadening its reach and setting clear expectations about the entertainment and betting opportunities it provides.

A pivotal element of CDI’s strategy is its emphasis on customer feedback, which forms an essential part of its service improvement efforts. By leveraging various channels for gathering insights into customer satisfaction and preferences, CDI is poised to make informed decisions regarding service enhancements, operational adjustments, and the introduction of new offerings.

Furthermore, CDI’s proactive stance on adapting its services in response to changing customer behaviors and regulatory landscapes illustrates its commitment to maintaining both relevance and competitive edge. Through a strategic, customer-centric approach to the market/customer element of the Service Triangle, CDI is dedicated to evolving its offerings, improving customer experiences, and engaging with its customer base. This dedication is foundational to CDI’s aspirations to uphold its leadership in the gambling and entertainment industry and to ensure its sustainability and success over the long term.
Weaving the Web of Success: The Interconnected Service Triangle

In this section, we discuss the interconnections between the elements as a complex and intricate web of relationships that are essential for the holistic success of the organization. It emphasizes the synergy and interconnectedness within the service triangle, illustrating how these linkages contribute to a cohesive service strategy.

Bridging Strategy and Systems: Operationalizing Vision at CDI
The interconnection between strategy and system within the context of the Service Triangle and Churchill Downs Incorporated (CDI) illuminates the dynamic alignment of organizational goals with operational execution to optimize service delivery and customer experience. This intricate relationship is crucial for translating strategic intentions into effective and efficient customer interactions that drive satisfaction and loyalty. The interconnection between strategy and system at CDI is manifested in the way strategic objectives are operationalized through its systems. This alignment is essential for ensuring that strategic goals are not only set but are also achievable through the practical application of the company’s resources and capabilities.
Technology Integration: CDI’s strategy to embrace digital transformation and expand its betting platforms requires sophisticated systems capable of supporting online betting, mobile applications, and gaming technologies. This involves investing in IT infrastructure, cybersecurity, and user experience design, ensuring that strategic initiatives like TwinSpires are effectively implemented and aligned with customer expectations.

Customer Experience Enhancement: CDI’s strategic focus on enhancing the customer experience across its offerings necessitates systems that are customer centric. This includes training programs for staff to ensure high-quality service, feedback mechanisms to gather customer insights, and amenities that improve the overall experience at the racetrack. The system must support a culture that values customer satisfaction, aligning with the strategic aim of building a loyal customer base.
Operational Efficiency: The strategic goal of operational excellence requires systems that optimize processes, reduce inefficiencies, and ensure that services are delivered effectively. This might involve logistics planning for events, management of betting operations, and maintenance of facilities. The system’s design and execution are crucial for realizing strategic goals related to operational performance and financial sustainability.

To further enhance the connection between strategy and system at CDI, it is essential to focus on continuous improvement, innovation, and alignment with evolving customer expectations and technological advancements. The following suggestions aim to strengthen this interconnection, ensuring that CDI’s strategic objectives are effectively translated into operational excellence and superior customer experiences:

Adopt Agile Operational Models: CDI should consider adopting more agile operational models that allow for rapid response to market changes and customer feedback. This involves creating cross-functional teams that can work collaboratively on short-term projects with clear, customer-focused goals. Such an approach encourages innovation, speeds up the implementation of strategic initiatives, and ensures systems are always aligned with current strategic objectives.
Enhance Data Analytics Capabilities: Leveraging advanced data analytics and business intelligence tools can provide CDI with deeper insights into customer behavior, market trends, and operational performance. By integrating these tools into their systems, CDI can make more informed strategic decisions, identify areas for improvement, and personalize the customer experience. Data-driven strategies ensure that systems are optimized to meet the most current and relevant business objectives.
By focusing on these suggestions, CDI can further improve the interconnection between its strategy and systems, ensuring that the company remains a leader in delivering exceptional service and entertainment experiences to its customers. These efforts will not only support CDI’s strategic objectives but also contribute to its long-term sustainability and success in the evolving landscape of the gambling and entertainment industry.

Empowering People in Strategy Execution: Human Dynamics at CDI
The interconnection between strategy and people within the Service Triangle framework, particularly in the context of Churchill Downs Incorporated (CDI), exemplifies how strategic objectives and human resources align and interact to drive operational success. This relationship is crucial for CDI, a stalwart in the Thoroughbred racing industry, navigating the complexities of modern entertainment and gambling markets. By examining CDI’s approach, we can unravel the intricate ways in which strategy and people synergize to cultivate a competitive edge and foster innovation.

The interconnection between strategy and people manifests in several key areas:
Internal Marketing and Employee Empowerment: CDI’s strategy involves internal marketing efforts aimed at engaging and empowering employees. By aligning employee goals with organizational objectives, CDI ensures that its workforce is motivated, well-trained, and committed to delivering exceptional service. This includes providing employees with the necessary tools, resources, and incentives to excel in their roles, thereby directly influencing customer satisfaction and loyalty.
Culture and Communication: The strategy of fostering a customer-centric culture is communicated across all levels of the organization. By embedding this culture in its people, CDI ensures that customer satisfaction is a shared responsibility, driving employees to go above and beyond in their service delivery. Effective communication channels between management and employees facilitate feedback loops, allowing for continuous improvement in service strategies and execution.
Adaptation and Flexibility: As CDI’s strategic goals evolve in response to market dynamics, so too must its people. The ability of employees to adapt and embrace new technologies, service offerings, and customer engagement strategies is crucial. This adaptability ensures that CDI’s strategic objectives are met with agility and innovation, keeping the company at the forefront of the industry.

Training and Development: Investing in employee training and development is a strategic priority for CDI, equipping its people with the skills and knowledge needed to meet the high standards of service excellence. This investment not only enhances service delivery but also fosters a sense of loyalty and belonging among employees, further strengthening the link between strategy and people.

There are several ways CDI can further strengthen this relationship. These enhancements aim to align organizational goals more closely with employee actions and motivations, fostering an environment conducive to innovation, employee satisfaction, and exceptional customer service.

Regular Strategy Workshops and Town Halls: CDI can host periodic strategy workshops and town hall meetings where employees at all levels are briefed on strategic directions and encouraged to share their insights and feedback. This not only reinforces the strategy among the workforce but also promotes a culture of openness, where employees feel valued and heard.
Aligning Incentives with Strategy: Reviewing and aligning incentive structures, including bonuses, promotions, and non-monetary rewards, with strategic goals ensures that employee efforts are directly contributing to organizational objectives. This alignment should be transparent and communicated effectively to all employees.
Digital Platforms for Collaboration: Utilizing digital platforms to enhance collaboration across departments can help break down silos and encourage the sharing of ideas that contribute to strategic goals. These platforms can serve as a repository for strategic documents, a forum for discussion, and a tool for tracking progress towards strategic objectives.
Data-Driven Decision Making: Encouraging a data-driven culture, where decisions are made based on analytics and insights, can align employee actions with strategic priorities. Providing employees with access to relevant data and training them on data interpretation can empower them to make informed decisions that support strategic goals.
By focusing on these areas, CDI can further improve the interconnection between strategy and people, ensuring that its workforce is fully engaged and aligned with the company’s strategic objectives. This alignment is critical for maintaining CDI’s position as a leader in the Thoroughbred racing and entertainment industry, driving innovation, enhancing customer experiences, and achieving sustainable growth.

Synergizing People and Systems: The Human-System Interface at CDI
The interconnection between Service Delivery Systems and People within the context of Churchill Downs Incorporated (CDI), as illuminated by the Service Triangle framework, is a pivotal aspect of ensuring operational excellence and customer satisfaction. This relationship is intricate, as it involves the seamless integration of operational processes, technological systems, and human elements to deliver an exceptional service experience. The Interconnections and Implications can be further elaborated as:
Operational Effectiveness and Employee Empowerment: The efficiency of service systems directly impacts employee performance and satisfaction. Well-designed systems simplify tasks, reduce errors, and allow employees to focus more on enhancing customer experiences. Investing in technology and infrastructure not only streamlines operations but also empowers employees by providing them with the tools needed to excel in their roles.

Training and Development: The complexity of CDI’s service systems necessitates continuous employee training and development. By ensuring that employees are well-versed in the latest operational procedures and technologies, CDI can maintain high service standards. This includes training on the use of betting platforms, customer interaction protocols, and emergency response procedures.

Feedback Loops: Integrating feedback mechanisms into service systems allows for the continuous improvement of both systems and employee performance. Customer feedback can inform system upgrades and highlight areas where employees may need additional support or training. Similarly, employee feedback can identify system inefficiencies or technological improvements that could enhance service delivery.

Cultural Alignment: The alignment of service systems with CDI’s organizational culture and values fosters a sense of belonging and purpose among employees. When employees perceive their work as meaningful and see how their roles contribute to the company’s success, they are more likely to be engaged and motivated. This alignment enhances the customer experience, as employees are more committed to delivering services that reflect CDI’s standards of excellence.

To further strengthen the interconnection between service systems and people, CDI could consider several strategies:

Enhance System Usability and Accessibility: In the context of CDI, enhancing the usability and accessibility of systems involves refining the digital and physical interfaces that employees use to manage races, betting, customer service, and other operational tasks. Simplifying these interfaces can significantly reduce the time and effort required to perform tasks, leading to more efficient operations and an improved ability to serve customers effectively. For instance, CDI. could streamline the TwinSpires betting platform’s backend system for easier navigation and quicker resolution of customer issues. Similarly, simplifying the software used for managing dining reservations or ticket sales at the venue can enable staff to serve customers more swiftly and with fewer errors, enhancing the overall customer experience at Churchill Downs Racetrack.

Leverage Technology for Training: Leveraging technology for training involves adopting advanced tools like virtual reality (VR) and online platforms to provide immersive and interactive learning experiences for employees. For CDI, this could mean using VR simulations to train customer service staff on handling busy race days, allowing them to practice their skills in a realistic but controlled environment. Online training platforms can offer flexible learning options for employees, enabling them to access training modules and assessments at their convenience. By focusing on the symbiotic relationship between service systems and people, CDI can create a dynamic environment where operational efficiencies are maximized, employee potential is fully realized, and customers receive unparalleled service experiences.

Navigating the Nexus: Customer at the crossroads of Strategy, Systems and People
The interconnections between the core (customer/market) and the three elements of the Service Triangle (Strategy, Systems, and People) at Churchill Downs Incorporated (CDI) reveal a multifaceted approach to maintaining a leading position in the Thoroughbred racing and entertainment industry. This complex interplay is central to CDI’s efforts to adapt to changing competitive landscapes and consumer preferences, ensuring the company’s offerings remain appealing and relevant.

Strategic Alignments: Tailoring Vision to Voice
The relationship between CDI’s customer/market core and its strategy is foundational. The strategy is developed with a deep understanding of the customer base, including their evolving needs, preferences, and behaviors. For instance, recognizing the shift towards digital consumption, CDI. introduced the TwinSpires betting platform, directly responding to the market’s demand for accessible, online betting options. This strategic move not only catered to existing customers’ preferences but also opened new avenues for reaching potential customers, thus expanding CDI’s market presence.

Systemic Responses: Engineering Experiences for the Customer
The systems at Churchill Downs Incorporated (CDI) are designed and implemented with the customer/market at their core, ensuring that all operational processes enhance the customer experience. The integration of historical horse racing (HHR) machines and the development of entertainment venues like Derby City Gaming are examples of how CDI’s systems have evolved in response to customer interests and the competitive entertainment landscape. These systems are not static; they are continually refined to improve service delivery, efficiency, and customer satisfaction, demonstrating a dynamic response to market feedback and trends.

People Power: Cultivating Connections through Human Touch
The interaction between Churchill Downs Incorporated (CDI’)s employees (People) and its customers is where the company’s strategy and systems manifest in the real world. Employees are the frontline representatives of CDI, directly influencing customer perceptions and experiences. Training programs, employee empowerment initiatives, and a culture that values high-quality customer service are crucial for ensuring that every customer interaction reflects CDI’s commitment to excellence. The employees’ ability to provide exceptional service, informed by a deep understanding of the customer/market, strengthens customer loyalty and supports CDI’s strategic objectives. To further enhance these interconnections, CDI could consider several strategies:

Customer Feedback Loops: Regularly gather and analyze customer feedback to continuously refine strategies, systems, and training programs, ensuring they align with customer expectations and market trends.
Employee-Customer Interaction Training: Invest in specialized training that equips employees with the skills to better understand and anticipate customer needs, improving the personalization and quality of service.
Technology Integration: Utilize technology to create more engaging and interactive customer experiences, both online and at physical locations, ensuring that systems are responsive to customer preferences.
Market Analysis and Adaptation: Continuously monitor market trends and competitive movements to anticipate changes in customer preferences, allowing CDI to adapt its strategy and systems proactively.

By focusing on these interconnections, CDI can ensure that its strategy, systems, and people are cohesively aligned with the core customer/market, driving sustained growth and reinforcing its position as an industry leader. The application of the Service Triangle framework to CDInc reveals several novel insights and potential theoretical advancements. Strategically, CDInc exemplifies how historic sport organizations can pivot by integrating digital betting platforms and diversifying entertainment offerings, thus aligning with evolving consumer preferences. From a systems perspective, the seamless integration of technology into service delivery highlights the critical role of operational flexibility in maintaining service quality across diverse platforms. The emphasis on employee empowerment and customer engagement within the framework underscores the importance of a cohesive internal culture in driving external success. These findings suggest that the Service Triangle framework can be evolved to better account for the dynamic interplay between technological innovation and traditional service elements in sport management, offering a more robust model for other organizations in similar sectors.

Conclusions, Recommendations, and Future Research Direction

In conclusion, this paper has meticulously examined Churchill Downs Incorporated (CDI) through the innovative lens of the Service Triangle framework, shedding light on the company’s strategic navigations within the rapidly evolving gambling and entertainment sectors. Our exploration has underscored the integral role of strategy, systems, people, and the core customer/market interplay in driving CDI’s operational excellence and customer satisfaction. Through this analytical journey, we have unveiled the strategic foresight of CDI in embracing technological advancements, diversifying its entertainment portfolio, and fostering deep-rooted customer engagements to maintain its revered status in the Thoroughbred racing domain.
The analysis reveals that CDI’s ability to adapt to market dynamics, regulatory changes, and shifting consumer behaviors stands as a testament to its resilience and innovative spirit. By leveraging the Service Triangle framework, we have identified both commendable strengths and critical areas for enhancement. The strategic recommendations provided can be summarized as follows:

1. Enhance Digital Engagement (“Service and Operations Strategy”): CDI should further develop its digital platforms, such as the TwinSpires betting app, to enhance user experience, interface design, and accessibility. This would cater to the growing demand for online betting and digital engagement, especially among younger demographics. 

2. Broaden Entertainment Offerings (“Service and Operations Strategy”): Beyond racing and betting, CDI could diversify its entertainment portfolio to include concerts, cultural events, and family-friendly activities at its venues to attract a wider audience and increase year-round attendance. 

3. Implement Advanced Data Analytics (“System Element”): By leveraging big data and advanced analytics, CDI can gain deeper insights into customer behavior, preferences, and trends. This information can inform targeted marketing strategies, service improvements, and personalized customer experiences. 

4. Invest in Employee Training and Development (“People Element”): Continuous training programs designed to enhance customer service skills, technological proficiency, and operational efficiency among employees are crucial. Special emphasis should be placed on front-line staff to ensure they embody the company’s commitment to excellence in customer service. 

5. Strengthen Customer Feedback Mechanisms (“Customer/Market”): Developing more robust channels for customer feedback, including digital platforms, surveys, and direct engagement initiatives, will enable CDI to better understand and respond to customer needs and preferences. 

6. Foster a Culture of Innovation (“Linking The Circles of The Service Triangle”): Encouraging a company-wide culture that values creativity, experimentation, and innovation can drive continuous improvement and adaptation to market changes. 

7. Expand Market Reach through Strategic Partnerships (“Customer/Market”): Forming partnerships with other entertainment entities, sports teams, and cultural institutions can broaden CDI’s market reach and introduce its offerings to new audiences. 

8. Embrace Sustainability Practices (“Service and Operations Strategy”): Integrating sustainability into operations and services can appeal to environmentally conscious consumers and contribute to the company’s long-term viability and social responsibility goals. 

9. Enhance On-site Customer Experience (“System Element”): Upgrading facilities with the latest technology for betting, improving food and beverage services, and enhancing the overall ambience can enrich the on-site customer experience, making visits to CDI venues more memorable and enjoyable. 

10. Explore New Revenue Streams (“Service and Operations Strategy”): Investigating additional revenue streams, such as virtual racing, esports betting, and digital content creation, can provide alternative income sources and engage customers beyond traditional racing and betting activities. 

An exciting avenue for future innovation at Churchill Downs Incorporated (CDI) lies in leveraging immersive technologies such as virtual reality (VR) to enhance customer experiences. For instance, the use of Apple Vision Pro headsets connected to GoPro or Cambox helmet cameras on jockeys could allow patrons to experience races from a jockey’s perspective in real-time. This immersive offering, targeted at premium clients in high-value venues like The Mansion, aligns with CDI’s focus on exclusive, high-tech experiences. Exploring the feasibility, customer reception, and operational integration of such innovations represents a promising area for future research and strategic development. 

Another intriguing direction for future research involves the application of decision-making tools, such as Goldratt’s Evaporating Clouds method introduced in *It’s Not Luck* (Goldratt, 1994). This tool can help top management systematically analyze and resolve conflicts between competing objectives, such as balancing the costs and technological challenges of immersive innovations with customer satisfaction and market differentiation. Employing such a structured decision-making framework could facilitate the exploration of complex ideas like VR integration, ensuring alignment with organizational goals and resource constraints. Investigating how decision-makers at CDI and similar organizations can effectively implement this methodology offers valuable opportunities for advancing both theoretical and practical insights.” 

APPLICATION TO SPORTS 

These recommendations aim to solidify CDI’s leadership position in the Thoroughbred racing and entertainment industry while navigating the challenges and opportunities presented by the rapidly evolving market landscape. Based on the theoretical advancements identified through the application of the Service Triangle framework to CDInc, several actionable recommendations emerge for sport organizations. Firstly, enhancing digital engagement through user-friendly online platforms can significantly broaden audience reach and improve customer satisfaction. Secondly, diversifying entertainment offerings beyond core sport events can attract new demographics and increase year-round engagement. Investing in advanced data analytics can provide deeper insights into customer behavior, informing targeted marketing and service improvements. Additionally, continuous employee training and development are essential for maintaining high service standards and fostering a customer-centric culture. By implementing these strategies, sport organizations can navigate the complexities of modern market demands while preserving their unique heritage, thus ensuring sustainable growth and competitive advantage. 

Looking ahead, CDI is positioned at a crossroads, with opportunities to further harness digital technologies, expand its market reach, and innovate within its service offerings. The implementation of the proposed recommendations could catalyze CDI’s journey towards sustained growth, market leadership, and the continued celebration of its storied legacy. However, the journey does not end here. Continuous reassessment, innovation, and adaptation to the ever-changing entertainment and gambling landscapes will be paramount for CDI to navigate future challenges and seize emerging opportunities. 

Future research directions may delve into the long-term impacts of integrating the suggested strategic initiatives, assessing their effectiveness in enhancing operational efficiencies, customer loyalty, and financial performance. Moreover, exploring the evolving consumer trends, technological advancements, and regulatory landscapes will provide further insights into CDI’s strategic adaptability and resilience. In essence, the journey of Churchill Downs Incorporated is one of enduring legacy, strategic evolution, and an unwavering commitment to excellence, setting a benchmark for others in the industry to follow. 

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