Boyd Gaming leaders waved away talk this week that they could be set for a significant acquisition, insisting that their sale of their remaining FanDuel stake is not setting them up for a pre-planned M&A move.
Boyd sold its 5% interest in FanDuel to the U.S. sports betting market leader’s parent company Flutter for around $1.76 billion, a fee that is nearly half of the entire revenue Boyd generated in FY 2024. The deal will give Flutter 100% ownership of FanDuel.
Unsurprisingly, the deal came up as a topic during Boyd’s Q2 earnings call on July 24. After executives briefly referenced it in the presentation portion, the very first question during the Q&A was about what Boyd plans to do with the proceeds.
CEO and President Keith Smith was prepared for the question, reading a two-and-a-half-minute statement in response.
“First, and I’ll go ahead and say it upfront, this FanDuel transaction is not a precursor to another transaction,” Smith said.
Boyd has repeatedly been linked with a potential bid to acquire part or all of PENN Entertainment in a multi-billion-dollar deal, a suggestion that Smith has not flatly rejected in past comments. Boyd did make a firm move last September, buying the Resorts Digital online gambling operation of New Jersey-based Resorts Casino last September.
Slow and steady
Smith added on Thursday’s call that the FanDuel stake sale is expected to close in the next few weeks.
“This transaction doesn’t change our strategy of having a balanced approach to capital allocation,” he said. “This transaction doesn’t change the cadence of our current investment strategy or our views on capital deployment or potential M&A.
“We have a successful track record of disciplined capital allocation that has served us and our shareholders well, and we remain committed to this approach. This transaction merely allows us to continue our strong track record of making sound capital allocation decisions from a stronger position.”
“We’ve been really disciplined,” echoed Chief Financial Officer Josh Hirsberg. “Just because we have a ton of flexibility doesn’t mean we’re going to go out and try to do something that doesn’t make sense.”
$2 billion from $10 million ain’t bad
Boyd received 5% of FanDuel in 2018 and serves as a market access partner for FanDuel in states where online sportsbooks need partnerships with brick-and-mortar casinos.
Smith said on the call that Boyd’s partnership with FanDuel since 2018 has created around $2 billion in value for our shareholders, all from a $10 million investment.
“As we analyze our equity value, it’s our belief that our stock price doesn’t properly reflect the true value created by this investment,” he added. “And, as a result, we determined that as we’re approaching the end of this partnership, now is an appropriate time to monetize this investment and to focus the proceeds on future growth.”
Boyd will initially use some of the proceeds to reduce debt, before deploying capital in high-returning investments to support long-term growth.
Boyd expects further online growth
Boyd and FanDuel have now extended their long-term strategic partnership until 2038. As part of the new terms, both companies have extended their market-access agreements for mobile sports betting and online casinos through 2038, and FanDuel will benefit from reduced future market access costs in states where FanDuel’s market access is provided by Boyd.
Boyd will take back the operations of its retail sportsbooks outside of Nevada from mid-2026, and will receive 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.
Boyd’s online segment grew 33.2% year over year in Q2 to reach revenue of $173 million.
Under the revised market-access agreements, the company expects its online segment will generate $50 million to $55 million in operating income and adjusted EBITDAR for the full year 2025 and about $30 million in 2026, executives said.
