Investment in FanDuel shares and emphasis on strong presence in local and Las Vegas markets by Boyd Corporation
Boyd Gaming Announces Second Quarter Earnings and FanDuel Sale
Boyd Gaming, the Las Vegas-based casino and entertainment company, has announced its second quarter earnings and the sale of its 5% stake in FanDuel Group to Flutter Entertainment for $1.755 billion in cash.
Keith Smith, President and CEO of Boyd Gaming, stated that the transaction has improved the company's financial position and aims to deploy the proceeds from the FanDuel sale to attractive and higher returning investments. Smith asked analysts to focus on the second quarter results during the earnings call.
The second quarter results showed a 4% growth in revenues and adjusted earnings. The Las Vegas locals segment of Boyd Gaming achieved its strongest quarterly growth in more than two years, with segment margins nearly reaching 50%. The Midwest & South segment saw a revenue and adjusted earnings growth of more than 3%.
However, the Orleans west of the Strip was the property that struggled the most in the second quarter. Hirsberg noted a pickup in unrated business during the second quarter, with customers staying closer to home.
In downtown, revenue and adjusted earnings were up more than 1% over the first six months of 2024. Segment margins were also strong, indicating a steady performance.
Following the sale of its FanDuel stake, Boyd Gaming expects its online segment to generate operating income and adjusted EBITDAR of $50 million to $55 million in 2025 and approximately $30 million in 2026. This reflects the impact of restructuring the partnership with FanDuel while maintaining collaboration through 2038 with new fixed-fee arrangements in certain states.
Under revised market-access agreements with FanDuel, Boyd Gaming expects its online segment to generate $50 million to $55 million in operating income and adjusted EBITDAR for the full year 2025. The transaction with FanDuel extends market-access agreements for mobile sports betting and online casinos through 2038.
Smith stated that the FanDuel transaction is not a precursor to another transaction. He believes the stock price hasn't reflected the "true price" for the FanDuel investment.
Finally, Boyd Gaming announced that it will take back operation of its retail sportsbooks outside of Nevada in 2026.
With the proceeds from the $1.8 billion sale of the FanDuel stake, Boyd Gaming will primarily use the funds to reduce its debt, strengthening its financial position and allowing greater investment and shareholder returns.
Flutter and FanDuel have created tremendous value for themselves and Boyd Gaming. The companies have expressed their gratitude for the successful partnership and look forward to continued collaboration in the future.
In conclusion, Boyd Gaming's second quarter earnings and the sale of its stake in FanDuel mark a significant milestone for the company. Despite exiting direct ownership, Boyd will maintain a strategic partnership generating significant income through fixed fees, with the online segment’s operating income and adjusted EBITDAR forecasted as above for 2025 and 2026.
- The proceeds from Boyd Gaming's $1.8 billion sale of its FanDuel stake will be primarily used to reduce debt, thereby strengthening the company's financial position and allowing for greater investing opportunities.
- Keith Smith, President and CEO of Boyd Gaming, plans to deploy the proceeds from the FanDuel sale to attractive and higher-returning investments, including casino-games and other casino-culture ventures.
- Boyd Gaming expects its online segment, despite exiting direct ownership, to generate operating income and adjusted EBITDAR of $50 million to $55 million in 2025 and approximately $30 million in 2026, through its strategic partnership with FanDuel, reflecting the impact of restructuring the partnership with fixed-fee arrangements in certain states.
