It’s Boyd Gaming vs. Penn National Gaming (PNG) in a Q3 battle of US regional casino operators!
First up is Boyd, whose numbers are hopelessly skewed by a couple major factors, including the sale of Boyd’s 50% stake in Atlantic City’s market-leading Borgata casino to former partner MGM Resorts. The sale, which was completed on August 1, added $181.7m to Boyd’s Q3 bottom line.
Boyd’s revenue in the three months ending September 30 was $531.9m, down from $546.3m in the same period last year. Earnings were down $3.1m to $121.9m but net income jumped from $25.4m last year to $342.6m, aided by the Borgata sale as well as $190.4m of noncash income tax benefits.
Boyd’s Las Vegas Locals market reported flat revenue of $149m but earnings rose 12% to $36.2m thanks to continued cost-cutting and improved marketing. Boyd expects this number to jump in Q4 thanks to a full quarter’s contribution from the Aliante property it purchased this spring.
Downtown Las Vegas revenue and earnings were flat at $56.6m and $10m, respectively. Things were less rosy in the Midwest and South segment – into which the old Peninsula segment is now incorporated – as revenue dipped 4% to $326.4m and earnings fell 6% to $90.6m, for which Boyd blamed increased competition in Illinois and Mississippi, as well as August floods in Louisiana.
PNG SAYS FOCUS ON MILLENNIALS IS A MONEY-LOSER
Switching to PNG, its Q3 revenue nudged up 3.5% to $765.6m, which is more than Boyd, so we guess Penn wins. (You can stop reading now.) Earnings were flat at $211.3m but net income rose nearly tenfold to $46.5m.
PNG’s mainstay Northeast division was the only one in negative revenue territory, slipping nearly 3% to $395.7m, while Midwest gained 5.7% to $221.1m, South/West jumped 14.4% to $135.1m and ‘other’ more than doubled to $13.5m.
The ‘other’ category includes non-casino racing operations as well as PNG’s new Rocket Games social casino operation, which CEO Timothy Wilmott called “an attractive addition” to PNG’s Penn Interactive Ventures. Wilmott claimed the Interactive businesses are “profitable, growing and provide synergies to our casino business.”
PNG’s Q4 got off to an auspicious start with October’s opening of Hollywood Casino Jamul – San Diego, which PNG is managing on behalf of the Jamul Indian Village of California.
Speaking on the analyst call, Wilmott had a word to say about the push to introduce skill-based games into US casinos. Wilmott said that while Las Vegas was attracting a much younger demographic, “60% of our revenues come from customers between the ages of early 50s to early 70s, the heart of the baby boomers, and that hasn’t changed much.”
Wilmott maintained that “over the next, say five to 10 years, I’m of the belief that focusing on millennials is not going to produce good economic results.” Wilmott said PNG planned to focus on ”the 50 million group of Gen-Xers out there that will be moving into the period of when they become more interested in casino entertainment.”
