Online Gambling Boosts Boyd Gaming Revenue in Third Quarter of 2023
LISTEN TO THIS ARTICLE:Boyd Gaming has attributed its increase in Q3 revenue to the success of its online gambling sector, even though increased expenditures led to a decline in net profit.
Last year, Boyd Gaming decided to commit to the online gambling space and, to that end, acquired Pala Interactive for $170 million in November 2022. Since then, the company has been busy incorporating Pala Interactive into its operations. Renamed Boyd Interactive, this online arm has reintroduced the Stardust platform in Pennsylvania and New Jersey.
Boyd to Focus on iGaming
Keith Smith, the CEO and president of Boyd, explained that the company is not looking for a fast return on investment but is planning for a long-term commitment to online gambling.
We bought the business and we chose to get more directly involved in the online gaming business. 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.
Encouraging Q3 Results
According to Q3 financial results, Boyd's revenue for the quarter ending September 30 stood at $903.2 million, marking a 3% increase from the previous year. Although gaming continues to be its main revenue source, the $641.2 million generated was 4% lower than last year. In comparison, revenue from online activities surged by 72.3% to $90.3 million, essentially compensating for the dip in the gaming sector.
Related: Boyd Gaming's August Jackpot Success and Big Wins
Additionally, the company saw revenue boosts in other areas. Food and beverage revenue increased 4.7% to $71 million, and room revenue went up 4.3% to $48.7 million. On the geographic front, most of the revenue came from the Midwest and South, totaling $513 million, followed by $221.8 million from Las Vegas locals.
Increased Costs and Reduced Profits
However, this revenue growth came at a cost. Total expenses for Boyd were up by 7.1% at $685.3 million. The online segment experienced a 73.4% increase in costs, totaling $79.4 million. After accounting for $40.7 million in group finance costs, the pre-tax profit for the quarter was $177.1 million, down by 12.9% from $203.4 million in the previous year.
For the year to date, revenue increased by 5.8% to $2.78 billion. The company’s total expenditure for the nine-month period also increased by 7.3% to $2.04 billion. Despite higher expenses, Boyd's pre-tax profit went up by 6.1% to $639.7 million.
Smith expressed satisfaction with the company's overall performance and emphasized their capacity to balance investments and returns to shareholders, owing to their operational strength and low financial leverage.
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