In a significant development in the gaming industry, Boyd Gaming has finalized the acquisition of Resorts Digital, the online gaming division of Resorts Casino located in Atlantic City, New Jersey. This transaction, which was confirmed by Resorts Casino president Mark Giannantonio, took place on September 1 and the financial terms of the deal remain undisclosed.
Overview of the Acquisition
The acquisition encompasses the operations of two key online platforms: ResortsCasino.com and MoheganSunCasino.com. Both platforms operate under the license of Resorts Casino in New Jersey, indicating a strong regulatory framework backing the online operations. Importantly, Boyd Gaming has assured that the existing partnerships with DraftKings, ESPN Bet, and PokerStars will continue, suggesting a strategic alignment in online offerings and partnerships post-acquisition.
Financial Performance of Resorts Digital
In the first half of 2024, Resorts Digital reported a gross operating profit of $9.6 million, marking a 5.6% increase from the same period in the previous year. This positive performance is notable in the context of the wider gaming industry, which has been grappling with various challenges. In contrast, the physical Resorts Casino experienced a stark decline, with a gross operating profit of $355,000, down nearly 89% compared to the prior year. This discrepancy highlights the growing importance of online gaming platforms in the current market landscape.
Boyd Gaming’s Financial Standing
For the quarter ending June 30, 2024, Boyd Gaming reported revenues of $967.5 million, reflecting a 5.5% increase compared to the same quarter in the previous year. This growth is primarily attributed to the expanding online segment, underscoring the increasing relevance of digital platforms in driving revenue.
Despite this growth in revenue, Boyd’s net income for the quarter was $139.8 million, translating to earnings of $1.47 per share. This represents a 22% decrease in earnings per share from the previous year. This decline is largely due to a one-time tax benefit reflected in last year’s results, which lowered the tax rate to 5%, in stark contrast to the current rate of 24%.
Furthermore, the adjusted EBITDAR for the second quarter of 2024 saw a slight decline of 2%, settling at $344.2 million. Adjusted earnings for the same quarter reached $150 million, or $1.58 per share. These figures illustrate the ongoing challenges Boyd faces amidst fluctuating market conditions, despite their notable revenue increases.
New Development Project in New Jersey
In addition to the acquisition, Resorts Casino and Morris Bailey, chairman of JEMB Realty, have launched a new development project on an 80-acre site adjacent to Monmouth Park Racetrack in Oceanport, New Jersey. This ambitious project aims to include the phased development of a 298-unit residential building, a 200-room hotel, and a youth sports community center.
Phased Development Plans
The first phase of this development is in collaboration with the State of New Jersey and Dennis Drazin’s Darby Development. The groundbreaking for this phase is scheduled for the fourth quarter of 2025. The initiative reflects a broader trend in the region, where partnerships between gaming entities and real estate developers are increasingly common.
Morris Bailey has been proactive in engaging with various stakeholders, including the New Jersey Thoroughbred Horsemen’s Association (NJTHA), the New Jersey Sports & Exposition Authority (NJSEA), local community members, and elected officials. The cooperation and extensive planning indicate a comprehensive approach to community involvement and sustainable development in the area.
Strategic Implications of the Acquisition
Boyd Gaming’s acquisition of Resorts Digital is not merely a financial transaction; it is a strategic move to enhance its position in the competitive online gaming market. With the growing trend of digital gaming, the acquisition allows Boyd to strengthen its portfolio and expand its reach in New Jersey, a state known for its progressive stance on online gambling.
Expanding Online Presence
The acquisition enables Boyd Gaming to leverage existing brands and platforms, enhancing its ability to attract a wider customer base. The continued partnerships with major players like DraftKings, ESPN Bet, and PokerStars will likely provide significant synergies, allowing Boyd to offer a more comprehensive suite of gaming options to consumers.
Moreover, as consumer preferences shift towards online platforms, this acquisition positions Boyd Gaming favorably to capitalize on the growth of the digital gaming sector. With Resorts Digital already showing promising profit margins, Boyd’s investment aligns with the industry’s upward trajectory, particularly in states with favorable regulations for online gaming.
Challenges Ahead
Despite the positive outlook, Boyd Gaming must navigate several challenges following this acquisition. The competitive landscape in online gaming is rapidly evolving, with numerous established players vying for market share. Boyd will need to invest in marketing, technology, and user experience to differentiate its offerings and retain customers.
Additionally, regulatory changes and market volatility can impact the profitability of online gaming operations. Boyd must remain agile and responsive to these shifts, ensuring compliance while also adapting to consumer demands and trends.
The acquisition of Resorts Digital by Boyd Gaming represents a significant milestone in the gaming industry, particularly in the context of online gaming in New Jersey. With promising financial performance from Resorts Digital and Boyd’s strong market presence, the deal holds potential for future growth and expansion.
As Boyd Gaming continues to explore opportunities in the online segment, the integration of Resorts Digital will likely be a pivotal factor in its strategy. Furthermore, the ongoing development projects in New Jersey highlight the company’s commitment to enhancing its portfolio beyond gaming, indicating a holistic approach to growth in the region.
In summary, the acquisition signifies Boyd Gaming’s intent to remain competitive in an increasingly digital landscape, while also contributing to local development and community engagement in New Jersey. As the online gaming sector continues to evolve, Boyd Gaming’s strategic decisions will be crucial in determining its success in the coming years.