Boyd Gaming expects up to $5m in online earnings in 2015

TAGs: Boyd Gaming

boyd-gaming-earn-moreCasino operator Boyd Gaming’s online gambling operation in New Jersey generated $1.8m in earnings in Q4. Boyd CEO Keith Smith reported the figure as Boyd handed in its fiscal report card, which showed gains in Atlantic City and Las Vegas.

Boyd CFO Josh Hirsberg said the $1.8m “kind of reflects a clean operating quarter” and Boyd expects similar online cleanliness in 2015. With 2014’s startup costs behind them, Hirsberg believes Boyd’s online business could generate “anywhere from $3m to $5m” of EBITDA in the current year.

Boyd and MGM Resorts each hold a 50% stake in Atlantic City’s Borgata Casino, which has partnered with UK-listed operator for online gambling in New Jersey. Borgata-licensed sites have been the overall revenue leaders since the market launched in November 2013. The combo recently added a new partner in Pala Interactive, the first tribal online gambling operator licensed in New Jersey.

Overall, Boyd revenue nudged up 1.4% to $531.6m but the company posted a net loss of $32.4m in Q4, dragged down by $40.6m in impairment charges. Boyd operates 22 casinos across eight states but the star performers were the Las Vegas Locals and Atlantic City markets.

Borgata revenue was up 14% to $179.1m thanks to a $7m contribution by its online operations. Smith said the property “set all time quarterly records for market share in every single metric.” January revenue is up 17%, leading Smith to conclude that the business freed up by the rapid-fire closure of four of AC’s casinos “has stayed in the market.”

In Las Vegas, Boyd’s locals market had its best quarter since the 2008 global economic mélee. Smith said he was “unwilling to create a trend after two or three months of positive news” in the locals market but Boyd will “sure be paying attention” to see if the good times last.

Locals revenue rose 2% to $151.7m, the only quarter of growth last year, driven by 13% gains in room revenue. But earnings jumped 19.7%, the seventh consecutive quarter of earnings growth, as Smith noted that “even modest revenue growth helps improve margins tremendously, given our current cost structure.”

Elsewhere, revenue at Boyd’s Midwest and South properties rose 2% to $200m while the Peninsula and Downtown Las Vegas segments were flat at $120.2m and $59.6m respectively.

Hirsberg was encouraged that Boyd’s regional markets had continued the stabilization exhibited in Q3 but he cautioned that “discerning between favorable weather impacts and consumer trends is very dicey.” Smith said Boyd still hadn’t figured out “whether there’s a direct connect, a direct drive, if you will, between the decline in gas prices” and boosted revenues.

One analyst commented on “the stiff arm” Smith gave to a query about Boyd’s possible plans to launch a real estate investment trust (REIT) like some of its competitors. Smith said “the stiff arm I gave it was the same stiff arm I’ve given it every quarter.” Smith says Boyd spent “a couple million dollars” studying the process last year but no decision has been made. Until that day comes, Smith plans to go on stiff-arming REIT questions.


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