Last year, Boyd took the decision to make a proper run at online gambling by acquiring Pala Interactive. Boyd purchased the supplier, which was majority owned by the Pala Band of Mission Indians, for $170.0m in November 2022.
The operator has spent the 12 months since the purchase integrating Pala Interactive into its business. Now operating as Boyd Interactive, the online division has relaunched the Stardust platform in Pennsylvania and New Jersey.
Boyd CEO and president Keith Smith has talked up this early success. He says rather than short-term return on investment, he sees online gambling as a long-term journey for Boyd.
“We bought the business and we chose to get more directly or directly involved in the online gaming business,” Smith said. “We view it as a long-term play. This wasn’t about a short-term kind of IRR or ROI.
“This is really about kind of long-term controlling the journey of the customer having a holistic view of that customer and wanting to help build kind of another growth database and somebody we can market to.
“We’re not at a point of talking about returns on investment, but it is a long-term play. It is something where we view it as an important part of a long-term strategy; having both an online business as well as a strong land-based business to compete effectively.”
Boyd Gaming Q3: online drives revenue growth
As for the impact of online on overall operations at Boyd, this is clear to see in its Q3 results. Revenue for the three months to 30 September was $903.2m, an increase of 3.0% on the previous year.
Gaming remains its primary source of revenue but the $641.2m generated in Q3 is 4.0% lower than last year. In contrast, food and beverage revenue edged up 4.7% to $71.0m and rooms revenue climbed 4.3% to $48.7m.
Online, however, was where Boyd witnessed the most growth. Revenue from online activity hiked 72.3% to $90.3m, more than offsetting the gaming decline.
Elsewhere, revenue from management fees climbed 71.6% to $17.5m and other revenue was 7.7% higher at $34.8m.
As for location, $513.0m of all revenue came from Midwest and South operations. Las Vegas Locals drew $221.8m in revenue and Downtown Las Vegas $49.5m. As stated, online drew $90.3m, while managed and other revenue hit $28.5m.
Q3 costs increase as online spending rises
While online revenue increased in Q3, so did costs and expenses in this segment. Total costs for the entire Boyd business were 7.1% higher at $685.3m.
Spending was higher across a number of areas, although it was online where this was most evident. Online costs jumped 73.4% to $79.4m as Boyd continues to grow this segment.
After accounting for a further $40.7m in group finance costs, pre-tax profit in Q3 amounted to $177.1m. This was 12.9% lower than $203.4m in the previous year.
Boyd paid $41.9m in tax, leaving a net profit of $135.2m, down 13.9%. In addition, Boyd says total adjusted EBITDAR slipped 5.0% to $320.8m.
Year-to-date revenue and net profit rise at Boyd
As for year-to-date, revenue in the nine months to the end of September was 5.8% higher at $2.78bn. Revenue from gaming was $1.97bn, with online the second highest contributor on $298.2m in revenue.
Other revenue includes $212.9m from rooms, $148.5m food and beverage, $54.6m worth of management fees and $103.6m other activities.
Total spend in the nine-month period was 7.3% higher at $2.04bn. Finance expenses were $107.1m, leaving $639.7m in pre-tax profit, up 6.1% year-on-year.
Boyd paid $112.3m, resulting in a net profit of $527.4m, up by 13.0%. In addition, adjusted EBITDAR edged up 0.9% to $1.04bn.
“On a company-wide basis, we continue to deliver solid results,” CEO Smith said. “Given our company’s continued operating strength, low leverage and strong free cash flow, we are able to execute a balanced capital allocation programme that includes reinvesting in our properties and returning capital to our shareholders.”