Led by a strong showing in downtown Las Vegas and solid play by core customers throughout the country, Boyd Gaming’s third-quarter revenue rose 4% year over year, showing no indication that inflation or a slowdown in the economy is impacting the U.S. gaming industry.
Boyd released its third-quarter earnings on Tuesday, with revenue of $877.3 million, up from $843.1 million in the same quarter last year. The company said its numbers are in line with the last several quarters and that the business continues to perform at a high level.
“What stands out are the sequential consistency in consumer trends, year-over-year growth and play from our customers, and continued operational efficiencies,” Boyd Gaming President and CEO Keith Smith told Wall Street analysts. “Continuing into October, customer spending has been very consistent with the trends we’ve seen throughout this year. While there are clearly headwinds in the economy, we haven’t seen any meaningful change in our customers’ behavior.”
Smith said play from customers in its database continued to increase. Core customers increased 5% during the quarter, helping offset year-over-year declines in spending from retail customers at elevated levels a year ago due to the government stimulus, Smith said.
“As for non-gaming revenue, we’re seeing solid growth,” Smith said. “Hotel revenue grew 5% over the prior year, while total rooms occupied were 6% higher than last year. We’re filling our hotel rooms with high-quality guests, as gaming revenue from our hotel guests rose nearly 10% year over year. Looking ahead, hotel reservations are trending above 2021 levels and surpassing 2019 levels at many of our properties.”
Food-and-beverage revenues rose 11% during the third quarter, Smith said.
Downtown Las Vegas recorded the biggest revenue gain at 17.5%, from $42.1 million to $49.5 million. It also delivered record third-quarter adjusted earnings that were 49% higher than the third quarter of 2019. Margins also set a record.
Smith said downtown benefited from strong performance from the company’s Hawaiian customers, as well as the reopening of Main Street Station in September 2021.
“While overall visitation from our Hawaiian guests is still below pre-pandemic levels, total play from Hawaiian guests was 7% higher than the third quarter of 2019.”
The $50 million expansion of the Fremont Hotel & Casino in downtown Las Vegas will be completed by the end of the year. It will feature expanded gaming space, the debut of the FanDuel-branded sportsbook, and enhanced quick-serve dining options.
“We believe this expansion will enhance the Fremont’s appeal to visitors throughout the downtown area and continue our growth in that market,” Smith said.
Revenue at casinos that serve Las Vegas local residents fell 2.4%, but the company said it had the second highest third-quarter margin-performance in history. Las Vegas locals casinos reported $225.7 million in revenue, down from $231.2 million a year ago.
The Midwest and South reported revenue of $601.9 million, a 5.6% increase over $569.6 million a year ago.
Companywide, total adjusted earnings were $337.7 million in the third quarter, compared to $340.7 million in the third quarter of 2021. Margins were 38.5%.
In the Las Vegas locals segment, adjusted earnings rose nearly 75% over the third quarter of 2019 and trailed only last year’s record third quarter. Adjusted earnings in the Midwest and South segments rose 37% compared to 2019. The Midwest and South segment included management fees from the August opening at the Sky River Casino in northern California on behalf of the Wilton Rancheria Tribe. It also included contributions from the company’s online sports-betting partnerships, Smith said.
“As we look forward, we believe gaming revenue will return to more normal growth in 2023 and our ability to manage costs will result in continued high levels of operational efficiency,” Smith said. “Our solid nationwide operating results will be strengthened by several projects that are beginning to come online (such as Sky River Casino). We’ve seen excellent results since opening with very strong visitation and gaming revenues through the first 60 days. We expect business volumes to moderate as we move into the opening phase of this property, but this strong start demonstrates the high level of demand in the Sacramento market and why we’re optimistic about Sky River’s potential.”
During the quarter in September, Boyd launched retail and mobile sports betting with FanDuel in Kansas. They plan to launch in Ohio in 2023. Their business will generate $30 million in adjusted earnings in 2022 and even more in 2023. Boyd has a 5% equity stake in FanDuel.
Excluding these items, on a property-level basis, the Midwest and South segment grew revenues slightly year over year, while EBITDAR nearly matched last year’s record third-quarter results.
Boyd said it expects to complete its acquisition of Pala Interactive for $170 million in the next several weeks.
