Casino operator Boyd Gaming released its Q3 report card on Thursday, revealing a $37.3m loss, more than twice the red ink on Q3 2012’s books. Boyd lost money despite revenue rising 20.6% to $738.6m, largely attributable to cash flow from Peninsula Gaming, whose operations Boyd acquired in Nov. 2012. Boyd’s adjusted earnings rose nearly 50% to $155.3m, but costs associated with the Peninsula purchase were sufficiently large to erase these gains. Disappointed investors beat Boyd’s stock bloody, pushing it down 18.6% to $10.56, the company’s biggest one-day drop since 2001.
On a more upbeat note, Boyd is eagerly awaiting the Nov. 26 launch of New Jersey’s online gambling market. That said, CEO Keith Smith played cagey with analysts as to Boyd’s online strategy, not wishing to provide “a roadmap for our competitors.” Smith noted that Atlantic City’s market-leading Borgata casino – co-owned by Boyd and MGM Resorts – “occupies more than 50%” of AC’s land-based poker business and Boyd intends to leverage the strength of that brand. Smith said Boyd had “dollars budgeted and we’re prepared to be aggressive in terms of attacking the market to acquire players.”
Smith confirmed that New Jersey regulations allowed for up to five websites to operate underneath each online gaming license. In addition to the Borgata site, Smith expects its joint venture partner Bwin.party digital entertainment will launch its own brand “at about the same time we launch, and there could be others that we choose to launch at the same time.”
Boyd CFO Josh Hirsberg said the company doesn’t expect online gambling will result in any cannibalization of the Borgata’s land-based business, but even if it does, the online gains “will more than offset any kind of impact on our existing bricks and mortar.” (Sheldon Adelson would beg to differ.) Hirsberg said Boyd was of the opinion that the online site would be of net benefit to Boyd’s business, otherwise “we probably wouldn’t be doing it.”
Lest Nevada feel left out, Boyd plans to join many of its brick-and-mortar competitors by releasing its own mobile sports betting app, which will only be accessible within Nevada borders. The app will be dubbed B Connected Sports, following up on last year’s release of Boyd’s game-style loyalty incentive app, B Connected Social. The company’s official social gaming offering Stardust Casino – developed with Bwin.party’s social gaming offshoot Win – is currently in a test period with a proper rollout across the US expected in the coming months.
