Share
During the company’s Q2 earnings call last week, Boyd Gaming laid several breadcrumbs regarding the company’s direction. Most notably were two key points it stressed were important to the company’s continual foray into US online gambling: new markets and a new deal.
President and Chief Executive Officer Keith Smith said the acquisition of Pala Interactive would help further cement its place in the US online gambling industry.
The second aspect of those plans includes focusing on online sports betting in the Kansas and Ohio markets.
Pivoting to new markets for US online gambling
A significant component of Boyd’s plans is purchasing Pala Interactive. But why?
Once that deal is finished, Smith said it would provide the tools needed to build a profitable online casino business.
“Our online gaming strategy is built upon leveraging our geographic distribution, loyalty program and customer database to build a profitable regional online casino business.”
“Pala will provide us the full suite of products, technology and expertise we need to execute that strategy without the need for additional significant investments or acquisitions.”
As far as Kanas and Ohio, Smith also touched on the company’s 5% ownership of FanDuel and how that partnership will become more valuable over time.
“Subject to regulatory approvals, we expect to launch sports betting in Kansas in the fall and Ohio around the first of the year, expanding our FanDuel partnership to eight of our nine regional states. We expect our existing online sports betting partnerships to generate approximately $30 million in EBITDA this year, and this contribution should grow next year as sports betting expands into Kansas and Ohio.”
Boyd aims to return profits to shareholders
Lastly, Smith commented on the company’s financial balance sheet and its commitment to shareholders.
“With our steady operational performance, attractive growth opportunities, substantial free cash flow, and commitment to maintaining a solid balance sheet, we are in an excellent position to continue returning capital to our shareholders.”
He continued:
“We remain committed to returning $500 million to our shareholders this year through a combination of share repurchases and dividends. As we’ve noted before, we are targeting $100 million per quarter in recurring share repurchases supplemented by quarterly dividend payments.”
Boyd Gaming’s previous second-quarter developments
On July 27, Boyd provided updates on revenue and reported its second-highest quarterly adjusted earnings in history.
Boyd touched on several other projects it has in development, including US casino projects pending in California, Las Vegas and Louisiana. The new Sky River Casino south of Sacramento is on track to open in early September. The property will house 2,000 slot machines, 80 table games and 17 food and beverage venues.
Boyd will run the casino on behalf of the Wilton Rancheria Tribe under a seven-year agreement.
Additionally, the company’s gaming sector was the top revenue generator for the quarter bringing in almost $685 million. Despite fears of a recession and rising interest rates, Smith said customer trends remain consistent.
“Our customer trends in the second quarter and so far in July remain consistent with what we have seen over the last four quarters. And while these trends are encouraging, we recognize there are also challenges in the economy.”
