During its Q4 earnings call, Boyd Gaming said it would be spinning out its interactive assets into its own division as soon as Q1 of this year. This includes the newly acquired Pala Interactive, the tax pass-through from FanDuel, and its interactive revenue share deals.
FanDuel’s tax pass-through diluting margins
Boyd’s CEO Keith Smith elaborated on the tax-pass through during the company’s Q and A session.
“In terms of the margins for us, remember we have this enormous amount of taxes that are essentially a pass-through from FanDuel that we pay on behalf of them because we have the license in the jurisdictions that we operate, and that shows up as revenue and then 100% as an expense as well, so that dilutes our margins pretty significantly. So just to put it in perspective, our margins online last year, were about 14%,” he explained.
Smith credited the performance of the online sector, Las Vegas properties, and management fees from Sky River Casino, the Wilton Rancheria Tribe-owned casino which launched last August. The Wilton Racheria project will eventually move over into a new special projects segment for the company as well.
Boyd Interactive will focus on online casino vs. sports betting
Once Boyd Interactive gets up and running, the company intends to focus on the online casino segment with its Stardust Casino brand and generally leave the sports betting to FanDuel.
“We believe in the long-term potential for igaming. Owning and operating our own igaming operation will allow us to leverage our nationwide portfolio and extensive customer database to create a profitable online casino business. We will start by transitioning our current online casinos in New Jersey and Pennsylvania to our platform over the next several months. We will also selectively target growth in the B2B segment of the business by adding new B2B customers and enhancing our platforms, products, features, and capabilities which will benefit both us and our partners,” Smith said.
Q4 buoyed by Vegas and Sky River performance
Smith also applauded the overall performance of the company in Q4.
“The fourth quarter was a strong conclusion to another record year for our company. We achieved records for revenue and EBITDAR on both a fourth-quarter and full-year basis, as our operating teams remain focused on growing revenues and building loyalty among our core customers while successfully managing expenses,” he said.
Like other land-based casino companies, the bad weather in the Midwest softened Q4 earnings, but Smith said those were more than wiped out by performance from Vegas and other ventures.
Here is a look at Boyd’s top-line numbers for Q4:
- Revenue: $922.9 million, up 4.9% YoY
- Net income: $172.6 million, up 57% YoY
- Adjusted EBITDA: $333.2 million, up 2.8% YoY
And here is a look at Boyd’s full-year numbers:
- Revenue: $3.6 billion, up 5.5% YoY
- Net income: $639.4 million, up 37.8% YoY
- Adjusted EBITDA: $1.3 billion, up 1.8% YoY
