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Howard Stutz
 

Boyd Gaming not getting on the DFS train

23 October 2015

Boyd Gaming Corp. isn't planning on jumping into the daily fantasy sports business, the casino operator's CEO said Thursday.

On a conference call with analysts to discuss the company's third quarter results, Boyd CEO Keith Smith was asked about events swirling around the daily fantasy sports business. Last week, state gaming regulators banned unlicensed companies from offering daily fantasy sports in Nevada, but said licensed casino and sportsbook operators could offer the product.

Smith said Boyd Gaming wasn't looking to fill the hole left by the departure of DraftKings and FanDuel, which aren't licensed in Nevada and control some 90% of the U.S. daily fantasy sports market.

"It's clear to me that it's gambling and it needs to be regulated," Smith said.

In an interview after the conference call, Smith said the company, which operates its own sports books, does not have immediate plans to offer daily fantasy sports wagering.

Smith questioned if the product could work in Nevada, which has a small population. He likened daily fantasy sports to Internet poker, which is legal in Nevada. Online poker "hasn't had much financial success" in Nevada because of the state's small customer base, which is a reason Boyd hasn't launched an online wagering site.

In New Jersey, Boyd's online gaming operations through the Borgata Hotel Casino and Spa in Atlantic City has been the market leader from the start two years ago.

"I want to make it clear that I'm not opposed to fantasy sports, but we really haven't look at the business model," Smith said.

Smith told analysts the discussion about daily fantasy sports and the potential for legalizing sports wagering in the U.S., "are two different conversations."

In the quarter, which ended Sept. 30, Boyd Gaming reversed a net loss from a year ago as the Las Vegas-based company saw revenue increases from its four market segments.

Boyd said its net income of $25.4 million translated into earnings of 22 cents per share. A year ago, the company lost $15.1 million, due primarily to a tax impairment charge at the Borgata.

The company's overall net revenue for the quarter increased 3.3% to $546.5 million.

Smith said the company's development initiative to enhance restaurants, hotel rooms and other nongaming amenities in its key markets, has been paying off.

"The positive momentum that began late last year carried into the third quarter," Smith said.

In Las Vegas, the company is completing a remodel of the oyster bar at the Suncoast Hotel and Casino and will begin a complete renovation of the restaurant offerings at The Orleans.

Smith said the environment in the locals market remained competitive. Boyd's locals division, which includes the Coast Casinos and Sam's Town, grew revenue 4.8% quarter. In a statement, the company said gaming revenue increased again and nongaming revenue grew for the ninth consecutive quarter.

Boyd's downtown Las Vegas casinos saw revenue rise 6%, fueled by increased pedestrian traffic on Fremont Street and the company's Hawaiian-based customer base.

At the Borgata, which Boyd operates and owns in a 50-50 partnership with MGM Resorts International, revenue increased 13.1%. The company's Midwest and Southern resorts saw revenue increase 2.4% in the quarter.

Prior to the earnings call, Union Gaming Group analyst Christopher Jones said the investment community was valuating Boyd on the company's fundamentals, the Borgata results and the improvements in the downtown and Las Vegas markets.

"We believe there is incremental upside in the shares stemming from the potential for a strategic transaction," Jones said, alluding to potential casino acquisition or the company's potential to spin-off properties into a real estate investment trust.

"We believe there are plenty of opportunities for Boyd to further enhance value," Jones said.

Shares of Boyd increased 2.16% or 39 cents Thursday, to close at $18.44 on the New York Stock Exchange. Following the earnings release, Boyd's share price jumped 7%.
Boyd Gaming not getting on the DFS train is republished from Online.CasinoCity.com.