Boyd Gaming’s online gambling division grew in the third quarter, but higher costs lowered its net profit.
Boyd decided to take a serious run in online gambling last year by purchasing Pala Interactive. Boyd bought the supplier in November 2022 for $170.0m. The majority owner of the company was the Pala Band of Mission Indians.
In the year since its purchase, the operator spent 12 months integrating Pala Interactive within the business. Boyd Interactive’s online division, now operating under the Boyd name, has launched the Stardust Platform in Pennsylvania and New Jersey.
Keith Smith, CEO and President of Boyd has praised this success. He said that he does not see online gambling as an investment with a short-term payback.
Smith stated, “We purchased the business and chose to become more involved or directly in the online gambling business.” We view it as long-term. It wasn’t a matter of calculating a quick-term IRR or return on investment.
This is about long-term control of the journey of the client, having an holistic view of this customer, and helping to build another growth database. We can also market to them.
We’re still not talking about the return on investment. It is more of a play for the long term. We see it as an essential part of our long-term plan; we need both a land-based and an online presence to be competitive.
Boyd Gaming Q3: online drives revenue growth
Boyd’s Q3 results clearly show the effect of online operations on its overall business. The revenue for the quarter ending September 30 increased by 3.0%.
The gaming industry continues to be the primary revenue source, but its $641.2m in revenue for Q3 was 4.0% less than it had been last year. Food and beverage revenues increased by 4.7%, to $71.0m. Room revenue also grew 4.3%, to $48,7m.
Boyd’s biggest growth was online. The revenue from Boyd’s online activities increased by 72.3%, to $90.3m. This more than offset the decline in gaming.
Other revenue increased 7.7% to $34.8m, with revenue from the management fee up 71.6%.
Location-wise, 513.0m dollars of revenue were generated by Midwest and South operations. Las Vegas Locals generated $221.8m and Downtown Las Vegas brought in $49.5m. Online generated $90.3m in revenue, whereas managed and other revenues reached $28.5m.
Costs increase in Q3 as Online Spending Rises
Costs and expenses for this segment increased as well. The total costs of the Boyd company were $7.1% higher, at $685.3m.
Online was the most obvious area where spending was up. Boyd’s online costs increased by 73.4%, to $79.4m.
In Q3, the pre-tax profits were $177.1m after accounting for an additional $40.7m of group finance costs. It was 12.9% less than the $203.4m of revenue in Q3 last year.
Boyd had to pay $41.9m tax. This left a profit of 135.2m. That’s a 13.9% decline. Boyd also reported that the total EBITDAR adjusted fell 5.0%, to $320.8m.
Boyd Revenue and Net Profit Rise at Boyd
Revenue for the nine-month period ending September ended up 5.8% higher than the year-todate figure of $2.78bn. Gaming revenue was $1.97bn with $298.2m coming from online.
The other revenue comes from $212.9m in rooms, $148.5m for food and beverages, $54.6m management fees, and $103.6m of activities.
The total spend for the period of nine months was $7.3% more at $2.044bn. Financial expenses were $107.1m leaving a pre-tax profit of $639.7m. This is an increase of 6.1%.
Boyd spent $112.3m resulting in $527.4m of net profit, an increase by 13.0%. The adjusted EBITDAR increased by 0.9%, to $1.04bn.
Smith, CEO of the company said: “We continue to achieve solid results on a corporate basis.” We are able, due to the company’s low leverage, strong cash flow and continued operational strength, to implement a capital allocation plan that includes investing in our properties as well as returning capital to shareholders.
