One Wall Street analyst said Boyd Gaming’s sale of its 5% stake in FanDuel to its parent company Flutter Entertainment should benefit the shares of its stock. Another said it could result in a reduction in market-access fees for the industry.
David Katz with Jefferies Equities Research said Boyd’s stake in FanDuel has been “an underappreciated call option” for shareholders that came into focus Thursday with the announcement Flutter is acquiring the position for $1.755 billion.
“With multiple years still left on the current agreement (2028), some may be surprised that the trigger was pulled now, but we view the sale as a positive for the shares given the balanced risk/reward of the U.S. online sports betting business long term,” Katz said.
Katz estimates net proceeds equate to about $1.355 billion assuming a 23% tax rate. With the deal expected to close in the third quarter, Flutter will now own 100% of FanDuel. Boyd intends to use the proceeds to reduce debt.
With the deal, Boyd and FanDuel will terminate certain existing market-access agreements in order to enter new agreements with an extended term through 2038 from the current 2028, Katz said. The agreements will provide Boyd with a fixed fee per state from FanDuel’s mobile sports-betting operations in Iowa, Indiana, Kansas, Louisiana, and Pennsylvania, as well as FanDuel’s online casino operations in Pennsylvania.
FanDuel will also continue to operate Boyd’s retail sportsbooks outside of Nevada through mid-2026, after which Boyd will assume responsibility for them.
“Our impression from our conversation with management suggests no changed inclination toward mergers and acquisitions in general or any specific opportunity post the announcement, and leverage was not a primary gating factor before and is not now,” Katz said. “Further, while the board would decide on allocations, our impression is that a special dividend is unlikely given the company’s history. For now, deleveraging remains the focus, with the potential of reducing lease-adjusted leverage by 1x upon completion of the sale.”
The new agreement is likely less favorable but still provides guaranteed income, Katz said. The prior market-access agreement between Boyd and FanDuel was struck before online sports betting legalization.
“In this new environment, it was inevitable that the terms of a new agreement would be less favorable for Boyd, but we still see the ongoing partnership with the No. 1 U.S. online sports betting operator as a positive for the company. When new states legalize where Boyd has a presence, we think it’s logical that the two would continue to partner.”
Katz said the lost EBITDAR of about $30 million is far more than offset by the net proceeds of $1.35 billion, which supports upside in the shares as a result.
“While more significant growth does not appear readily available to Boyd, it is best positioned to capitalize among its peers should it present, which is bolstered by today’s announcement as leverage likely falls below the already manageable 3x,” Katz said. “Our take from recent investor meetings and ongoing conversations is that management remains focused on capital discipline in terms of accretion, leverage, and structure with limited opportunities in the current market. Focus appears to be on executing the current projects in Virginia and California, internal capital improvements, and longer-term growth from digital gaming should igaming legalization proliferate longer term.”
J.P. Morgan analyst David Politzer said they view Boyd’s sale as mixed.
On the positive side, the deal represents a highly accretive multiple of 14.6x FanDuel 2027 EBITDA guidance versus Boyd’s current 7.8x 2027 earnings. It implies a value of $16.50 for Boyd’s 5% stake after taxes versus the $13 a share they currently ascribe. It also provides Boyd with “dry powder” to reduce debt and annual interest payments by $80 million.
On the negative side, Boyd restructured its market-access fees from a variable-rate structure to fixed, which for Flutter will result in $65 million in annual cost savings.
“Net, we view the transaction as mixed,” Politzer said. “With the sale expected to close in the third quarter, we wouldn’t be surprised if investors begin to wonder about Boyd’s mergers and acquisition aspirations, but we expect the company will maintain its consistent capital allocation of share buybacks and a stable balance sheet.”
For DraftKings, Flutter’s acquisition of its remaining 5% “may not necessarily be the best mark-to-market,” as Flutter is effectively valuing itself, but the implied transaction multiples are 19x the Street’s 2026 U.S. EBITDA and 14.6x Flutter’s 2027 U.S. EBITDA guidance, Politzer said.
“Extrapolating these multiples to U.S. pure-play DraftKings would imply a fair value of $50 to $55, based,” Politzer said. “Perhaps more importantly, this transaction implies DraftKings may be able to reduce/restructure its market access-fee agreements and similar to FanDuel, generate material-cost savings.”
For Penn Entertainment and other market-access-fee providers, this transaction could be viewed negatively, as FanDuel’s move toward more fixed-market access-fee agreements could result in a reduction in market access fees, Politzer said.
Barry Jonas with Truist Securities called it a “win-win” for both companies. “Boyd will see $16 a share of net proceeds and while it will lose $50-$55 milion of online EBITDA with revised market-access terms, it will gain $80-$85 million of interest savings post debt paydown. Flutter simplifies its FanDuel ownership to 100% (before the FoxBet option) at an attractive 16x valuation, while gaining $65 million in annual operating savings. Reiterate Buy on Boyd and Flutter.”
John DeCree, director of equity research at CBRE, said Boyd’s war chest keeps getting bigger. With leverage already at all-time lows and the share price at all-time highs, the additional windfall has the investment community intrigued with Boyd’s possibilities.
“However, Boyd is uniquely conservative with its balance sheet, and we expect the company will maintain its current strategic priorities, including investing organically, repurchasing stock, and staying disciplined as it relates to external investments, including M&A. That said, the M&A environment has been slow for years, and we believe it is a matter of when, not if, deal activity gets more interesting. When that day comes, Boyd will be one of the best positioned companies in gaming to capitalize on it.”
DeCree said Boyd doesn’t need to get acquisitive for the stock to continue working, as it “has clearly benefited from its balance sheet conservatism and could now see an uplift in consumer demand following tax cuts enacted with the One Big Beautiful Bill last week. The wind continues to be at Boyd’s back, and the shares remain one of our top picks as a core long-term holding. We are maintaining our Buy rating and raising our price target to $100 (from $88), which implies an 8.6x multiple of 2026 Pro Forma EBITDA.”
