Executive Summary / Key Takeaways

• Strategic Repositioning and Financial Strength: Boyd Gaming has significantly strengthened its balance sheet and financial flexibility through the $1.755 billion sale of its FanDuel equity stake, reducing total leverage to 1.5x and generating substantial after-tax proceeds of approximately $1.4 billion.
• Consistent Operational Performance: The company continues to demonstrate robust operational performance across its diversified portfolio, driven by consistent growth from core customers and improving trends in retail play, with property-level margins consistently exceeding 40%.
• Targeted Capital Investments for Future Growth: Boyd Gaming is executing a disciplined capital expenditure program, including major growth projects like the $750 million Norfolk resort and the Cadence Crossing Casino, targeting 15-20% cash-on-cash returns and enhancing long-term growth.
• Enhanced Shareholder Returns: Bolstered by strong free cash flow and a fortified balance sheet, the company has increased its share repurchase target to $150 million per quarter, alongside recurring dividends, underscoring its commitment to returning capital to shareholders.
• Regional Focus with Digital Integration: Boyd Gaming maintains a strategic regional focus in its land-based operations and through its scalable Boyd Interactive online gaming platform, which complements its physical properties and positions it for growth in legalized online markets.

Boyd Gaming: A Diversified Powerhouse with a Clear Strategy

Boyd Gaming Corporation, a name synonymous with gaming entertainment for half a century, has evolved from its 1975 origins with the California Hotel and Casino into a geographically diversified operator of 28 wholly owned brick-and-mortar properties across 10 states. This extensive footprint, coupled with its online gaming presence, underpins a resilient business model. The company's overarching strategy is defined by a balanced approach to capital allocation: investing in its existing business, pursuing attractive growth opportunities, consistently returning capital to shareholders, and maintaining a robust financial position.

The industry landscape in which Boyd Gaming operates is dynamic, yet the company benefits from several favorable broad trends. The Southern Nevada economy, a cornerstone for Boyd, exhibits remarkable resilience and diversification. Average weekly wages in the region were up more than 6% over the trailing 12 months through August 2025, outpacing the national average, while the local population has grown at twice the national rate over the last decade, reaching 2.4 million residents. This economic strength, coupled with approximately $11 billion in ongoing construction activity across the Las Vegas Valley, provides a solid foundation for Boyd's local properties. Furthermore, a tax bill passed in summer 2025 is expected to benefit customers nationwide through new deductions for tips and overtime, an additional deduction for seniors, and a larger standard deduction, potentially boosting discretionary spending for Boyd's diverse customer base.

In the competitive arena, Boyd Gaming carves out a distinct niche. While larger rivals like Caesars Entertainment , MGM Resorts International , Wynn Resorts , and Las Vegas Sands often pursue aggressive national or global expansion and luxury-focused strategies, Boyd Gaming emphasizes a regional, community-oriented approach. This focus allows for operational efficiencies and a deeper understanding of local customer preferences, fostering strong customer loyalty. Boyd's market positioning is built on providing accessible, quality entertainment, often leading to a more efficient cost structure compared to the high-end investments of some competitors.

Technological Edge in the Digital Arena

In an increasingly digital world, Boyd Gaming has strategically embraced online gaming through its Boyd Interactive business, which operates the Stardust iGaming platform. This platform serves both business-to-business (B2B) and business-to-consumer (B2C) segments, representing Boyd's core technological differentiator in the evolving gaming landscape. The company's online strategy is distinctly regional, aiming to provide a compelling and competitive product in the markets where it operates and in surrounding states from which it draws customers, rather than striving for a national leadership position.

The tangible benefits of Boyd Interactive are rooted in its strategic integration and scalability. The platform is designed to be fully integrated with Boyd's land-based rewards program, allowing players to earn and redeem points seamlessly across both online and physical properties. This integration enhances customer loyalty and provides a complementary offering for guests who wish to continue gaming off-premise in legally permitted states. While specific quantifiable technical performance metrics for the platform itself (e.g., processing speed, proprietary algorithms) are not publicly detailed, its scalability is a key operational advantage. This scalability means that as more states legalize online casino gaming, Boyd Interactive can expand its footprint without requiring significant additional capital expenditure, positioning the company to capture a substantial market share in new jurisdictions. For investors, this technological approach contributes to Boyd's competitive moat by future-proofing its business against shifts in consumer preferences towards digital channels, enhancing customer lifetime value through integrated loyalty, and providing a cost-effective pathway to growth in the burgeoning online gaming sector.

Operational Excellence and Segment Performance

Boyd Gaming's operational discipline and diversified portfolio were evident in its recent financial performance. For the three months ended September 30, 2025, total revenues increased by 4.5% to $1.00 billion, compared to $961.25 million in the prior year period. This growth was primarily fueled by a $35.5 million increase in online reimbursements revenue and a 2.6% rise in gaming revenues, which saw a 4.1% increase in slot handle and a 3.9% increase in slot win. However, operating income for the quarter decreased by 36.5% to $139.76 million, largely due to a $65.12 million increase in impairment of assets related to property and equipment in the Las Vegas Locals and Midwest South segments. Net income, however, saw a substantial increase of $1.31 billion, reaching $1.44 billion, primarily driven by a $1.75 billion gain from the FanDuel Equity Sale.

The Las Vegas Locals segment, a core strength, reported revenues of $210.84 million for Q3 2025, a slight decrease of 0.5% year-over-year. While the segment experienced softness in destination business, particularly at The Orleans, strong demand from local and core customers drove gaming revenue growth. Excluding The Orleans, the Locals segment delivered 2% year-over-year growth in both revenues and EBITDAR, with gaming revenue growth in line with the broader locals market and margins consistent at 47%. The ongoing modernization of Suncoast, including casino floor and public space renovations, is performing in line with the prior year despite construction, boosting confidence in its long-term potential.

Downtown Las Vegas revenues remained generally consistent at $53.22 million for Q3 2025. This stability was supported by continued strength in play from Hawaiian customers, a key demographic for this segment, which saw a 2.9% increase in visitation for the nine months ended September 30, 2025. However, softness in destination business, including lower hotel revenues and reduced pedestrian traffic, offset some of the gains.

The Midwest South segment achieved its strongest third-quarter revenue and EBITDAR performance in three years, with revenues rising 3.1% to $538.85 million and Adjusted EBITDAR growing 2.4% to $201.60 million. This broad-based growth included continued strong performance from the Treasure Chest Casino, which opened its new land-based facility in June 2024 and has consistently exceeded expectations. Operating margins in this segment once again exceeded 37%, reflecting disciplined cost management despite some competitors increasing promotional activity. Notably, Sam's Town Tunica will permanently close on November 9, 2025, a decision driven by its small EBITDA contribution and increasing maintenance capital requirements.

The Online segment's revenues increased by 17.2% to $165.60 million for Q3 2025, driven by growth from Boyd Interactive and a $35.5 million increase in online reimbursements revenue. However, Adjusted EBITDAR for the segment decreased by 63.8% to $9.42 million. This decline was primarily due to a $20.5 million decrease in revenue from market access agreements, which were renegotiated to lower fixed fees following the FanDuel equity sale. These new agreements, while extending the partnership through 2038, are expected to result in lower online margins going forward.

Finally, the Managed Other category, primarily comprising management fees from Sky River Casino in northern California, continued its strong performance. Revenues increased by 10.7% to $35.85 million for Q3 2025, with Adjusted EBITDAR up 16.6% to $26.27 million, largely due to an $8.1 million increase in Sky River Casino management fees for the nine months ended September 30, 2025.

Strategic Investments Fueling Future Expansion

Boyd Gaming's commitment to long-term growth is evident in its robust capital investment program, projected at approximately $600 million for 2025. This comprehensive plan is designed to enhance existing properties, capitalize on demographic shifts, and expand into new, underserved markets. The company targets a 15-20% cash-on-cash return for its growth projects, a benchmark successfully met by the Treasure Chest expansion.

The 2025 capital plan includes approximately $250 million for recurring maintenance, ensuring the quality and competitiveness of its extensive portfolio. An additional $100 million is allocated for hotel room renovation projects at properties such as the IP, Valley Forge, and The Orleans, with these refurbishments expected to be completed by mid-2026. These maintenance investments, even at properties like Suncoast, are already showing positive early signs, including new customers and increased visitation.

Significant growth capital, totaling $100 million in 2025, is directed towards strategic expansion initiatives. The Ameristar St. Charles meeting and convention center expansion, completed in September 2025, nearly triples the property's meeting space and has already secured strong pre-bookings, with over 90% from new customers, indicating a substantial expansion of its customer base. In Southern Nevada, construction is progressing on Cadence Crossing Casino, scheduled to open in Q2 2026. This new property will replace the existing Joker's Wild casino, offering a modern entertainment facility designed to serve the rapidly growing Cadence master-planned community, with future plans for a hotel and additional casino space.

Boyd Gaming's most significant growth opportunity lies in its $750 million resort development in Norfolk, Virginia. This project will introduce a 65,000 square-foot casino, a 200-room hotel, eight food and beverage outlets, and an entertainment deck. A modest transitional casino is set to open in November 2025, with the full resort scheduled for completion in late 2027. The Norfolk development strategically targets the 1.8 million residents of the Hampton Roads region and 15 million tourists visiting nearby Virginia Beach, positioning it as a market-leading destination. The company expects to spend $150 million on this project in 2025. Additionally, plans are underway to replace the 30-year-old Par-A-Dice riverboat casino in Illinois with a new land-based facility, with construction anticipated to begin in late 2026, pending regulatory approvals.

Fortified Balance Sheet and Shareholder Returns

A pivotal event in Boyd Gaming's recent history was the sale of its 5% equity interest in FanDuel to Flutter Entertainment (PDYPY) for $1.755 billion in cash, which closed on July 31, 2025. This strategic divestiture unlocked significant value, yielding estimated after-tax proceeds of approximately $1.4 billion. The proceeds were primarily utilized to repay outstanding debt under the company's credit facility, including the full retirement of the Term A Loan. This action dramatically reduced Boyd Gaming's total leverage ratio from 2.8x at the end of Q2 2025 to a robust 1.5x at the end of Q3 2025, with lease-adjusted leverage declining from 3.2x to 2.0x. The company now boasts $1.43 billion in contractual availability under its Credit Facility.

This deleveraging translates into significant financial benefits, including estimated annualized interest expense savings of approximately $85 million. While management anticipates leverage will gradually tick up to around 2.5x over the next 1.5 years due to ongoing capital plans, particularly the Norfolk development, they emphasize that they are not actively seeking to increase leverage without compelling opportunities. The company remains in compliance with all financial covenants of its debt instruments.

Boyd Gaming's strong free cash flow and fortified balance sheet enable a robust shareholder return program. The company has increased its target for share repurchases to $150 million per quarter, supplemented by its recurring quarterly dividend of $0.18 per share. This commitment translates to over $650 million in annual capital returns to shareholders. For the nine months ended September 30, 2025, Boyd Gaming repurchased 7.84 million shares for $593.00 million. Since October 2021, the company has returned over $2.5 billion to shareholders through repurchases and dividends, reducing its share count by 30%. This disciplined approach to capital allocation, balancing growth investments with shareholder returns, underscores management's confidence in the company's financial health and future prospects.

Competitive Dynamics and Strategic Positioning

Boyd Gaming operates in a highly competitive industry, facing both large, diversified rivals and niche players. Direct competitors like Caesars Entertainment (CZR) and MGM Resorts International (MGM) leverage their vast scale, iconic brands, and extensive loyalty programs to attract a broad customer base, often with a focus on high-end or destination markets. Wynn Resorts (WYNN) and Las Vegas Sands (LVS) further intensify competition in the luxury and international integrated resort segments.

Boyd Gaming differentiates itself through a strategic focus on regional and local markets, where its properties are deeply integrated into their communities. This approach fosters strong customer loyalty and allows for more efficient, targeted marketing, contributing to consistent property-level margins that have exceeded 40% since 2021. While some competitors have increased promotional activity in various markets, Boyd has maintained a disciplined cost structure and marketing spend, avoiding "room rate wars" in Las Vegas. This cost discipline is a key competitive advantage, potentially leading to superior cash flow resilience compared to rivals with higher operational overheads or aggressive promotional strategies.

The company's online gaming strategy, centered on Boyd Interactive, is a deliberate counter to the national ambitions of pure-play online operators. By focusing regionally and integrating its digital offerings with its land-based loyalty program, Boyd aims to capture a significant share of its existing customer base in legalized online markets. This contrasts with the broader, often more capital-intensive, digital expansion efforts of companies like Caesars, which has a strong brand in sports betting. Boyd's ability to transition to operating its own sportsbooks outside Nevada, leveraging decades of experience, further highlights its operational adaptability.

However, Boyd Gaming faces vulnerabilities due to its relatively smaller scale compared to industry giants, which could impact customer acquisition costs and broader market share capture. While its regional focus is a strength, it also means less exposure to high-growth international markets or the premium luxury segment where competitors like MGM and Wynn excel. The pace of technological innovation in the broader gaming industry, particularly in online platforms, remains a factor. While Boyd Interactive is scalable and performing well, the rapid evolution of digital offerings from tech-heavy rivals could pose a challenge if not continuously addressed. Regulatory approvals and high capital requirements for new developments serve as significant barriers to entry, protecting Boyd's established positions and favoring its disciplined, long-term investment strategy.

Risks and Outlook

While Boyd Gaming presents a compelling investment thesis, several risks and challenges warrant consideration. The softness in destination business, particularly impacting properties like The Orleans in Las Vegas, remains a concern. This weakness, driven by factors such as lower hotel revenues and reduced pedestrian traffic, could persist and affect overall revenue mix, potentially impacting higher-margin segments. Ongoing construction projects, such as the Suncoast renovation and future work at The Orleans, carry inherent risks of disruption to operations, even with careful planning. The permanent closure of Sam's Town Tunica also reflects the need for continuous portfolio optimization in response to market dynamics.

Despite these challenges, Boyd Gaming's outlook remains positive, underpinned by strategic initiatives and a strong financial position. Management expects core customer growth to continue in 2025, with retail customer play stabilizing and potentially improving, especially in markets outside Las Vegas. The company's capital expenditure program, including the Norfolk resort and Cadence Crossing, is on budget and schedule, poised to deliver strong returns and diversify revenue streams. The successful sale of the FanDuel stake has provided substantial financial flexibility, allowing for aggressive debt reduction and increased shareholder returns, while mitigating interest rate risk. The company has also taken proactive steps to mitigate potential tariff impacts on capital projects and has identified deferrable projects, demonstrating its ability to manage economic uncertainties.

Conclusion

Boyd Gaming Corporation stands at a pivotal juncture, having strategically divested its FanDuel equity stake to unlock substantial value and fortify its financial foundation. This move has dramatically reduced its leverage, providing unparalleled flexibility to execute a disciplined capital allocation strategy focused on long-term growth and enhanced shareholder returns. The company's core investment thesis is rooted in its proven ability to generate consistent operational performance across a diversified portfolio, driven by a loyal customer base and efficient property management.

Looking ahead, Boyd Gaming is strategically deploying capital into high-return growth projects like the Norfolk resort and Cadence Crossing, while continuously enhancing its existing properties. Its regionally focused online gaming platform, Boyd Interactive, serves as a crucial complement to its land-based operations, positioning the company for future digital expansion. Despite facing competitive pressures and economic uncertainties, Boyd Gaming's strong balance sheet, disciplined management, and clear strategic roadmap underscore its potential for sustained value creation for discerning investors.