Executive Summary / Key Takeaways

• Strategic Capital Deployment: Boyd Gaming is leveraging a strengthened balance sheet, notably from the $1.755 billion FanDuel equity sale, to aggressively reinvest in high-return organic growth projects and enhance shareholder returns, targeting a long-term leverage of 2.5x.
• Diversified and Resilient Operations: The company's diversified portfolio across Las Vegas Locals, Downtown Las Vegas, and Midwest & South segments, coupled with its growing Online and Managed businesses, consistently delivers strong property-level margins exceeding 40%, supported by robust core customer play and improving retail trends.
• Targeted Growth Initiatives: A substantial capital expenditure plan of $600-$650 million for 2025, including the $750 million Norfolk Casino resort and strategic expansions like Ameristar St. Charles and Cadence Crossing, is set to drive long-term revenue and EBITDAR growth.
• Commitment to Shareholder Returns: Boyd Gaming is increasing its quarterly share repurchase target to $150 million, alongside a regular dividend, projecting approximately $700 million in annual capital returns, demonstrating confidence in its free cash flow generation.
• Regional Online Gaming Edge: The company's Boyd Interactive platform, focused on a regional online casino strategy, provides a complementary digital offering integrated with its loyalty program, positioning it for opportunistic growth as iGaming legalization expands.

The Enduring Foundation: Boyd Gaming's Diversified Playbook

Boyd Gaming Corporation, celebrating its 50th anniversary in 2025, has evolved from a single Downtown Las Vegas casino in 1975 into a geographically diversified gaming powerhouse. This half-century journey has forged a resilient business model, characterized by a balanced approach to capital allocation: strategic investments in its properties, disciplined pursuit of growth opportunities, consistent return of capital to shareholders, and a steadfast commitment to a strong balance sheet. This foundational strategy has enabled Boyd to consistently deliver robust financial performance, even amidst evolving market dynamics.

The company operates a portfolio of 28 gaming entertainment properties across 10 states, complemented by its online gaming arm, Boyd Interactive, and a managed tribal casino in California. This diversification is a cornerstone of its strength, allowing it to adapt to regional economic nuances and customer preferences. Broad industry trends, such as the continued economic vitality of Southern Nevada with its growing employment and rising wages, and the potential tailwinds from recent tax legislation (including deductions for tips and overtime benefiting local consumers), further underpin Boyd's market positioning.

Technological Edge: Boyd Interactive and the Digital Frontier

Boyd Gaming's core technological differentiation lies in its Boyd Interactive platform, a strategic asset in the burgeoning online gaming space. Unlike competitors aiming for national dominance, Boyd's approach is distinctly regional, focusing on delivering a compelling and competitive online casino product in states where it operates and in adjacent markets. This strategy is designed to complement its brick-and-mortar operations by allowing customers to engage with the Boyd brand and its integrated loyalty program even when off-premise.

The tangible benefits of this regional focus are clear. Boyd Interactive is integrated with the company's land-based rewards program, ensuring that online play contributes to a unified customer experience and loyalty. While specific quantifiable metrics for Boyd Interactive's technological superiority are not publicly detailed, its strategic intent is to provide a seamless, localized digital experience that enhances customer retention and engagement. The acquisition of Resorts Digital Gaming in September 2024 further bolstered this business, expanding its database and market reach in key states like New Jersey and Pennsylvania. This targeted investment in its digital capabilities positions Boyd to capitalize opportunistically on future iGaming legalization without the significant capital outlays required for a national footprint, thereby enhancing its competitive moat in its core markets.

Competitive Arena: A Disciplined Regional Powerhouse

Boyd Gaming operates in a highly competitive landscape, facing off against industry giants and specialized regional players. Its primary direct competitors include Caesars Entertainment (CZR), MGM Resorts International (MGM), Penn Entertainment (PENN), and Wynn Resorts (WYNN).

Boyd's competitive positioning is rooted in its operational efficiency and strong regional brand presence. While Caesars and MGM command larger scales and luxury segments, Boyd excels in delivering consistent, community-oriented gaming experiences, particularly in its Las Vegas Locals and Midwest & South segments. This focus on local appeal and customer loyalty, bolstered by its Boyd Rewards program, translates into stable revenue streams and robust margins. For instance, the Las Vegas Locals segment consistently maintains margins near 50%, a testament to disciplined expense management. Boyd's marketing reinvestment rate has remained stable since the post-COVID recovery, indicating a disciplined approach to promotional spending, even as some competitors engage in more aggressive tactics. The company explicitly avoids "room rate wars" in Las Vegas, prioritizing profitability over volume at any cost.

Compared to Penn National Gaming, which has aggressively diversified into online sports betting, Boyd's online strategy is more focused on regional iGaming, leveraging its existing customer base. This allows Boyd to maintain a more resilient financial profile in its traditional operations, as evidenced by its consistent cash flow generation and lower debt-to-equity ratio (3.12x TTM) compared to Penn's (3.93x TTM). While Wynn Resorts targets the high-end luxury market, Boyd's value-driven approach caters to a broader customer base, potentially yielding more consistent profitability relative to its operational scale.

Boyd's competitive advantages, or "moats," include its deep-rooted regional brand presence and comprehensive loyalty programs, which foster strong customer retention and recurring revenue. Its extensive portfolio of regulatory licenses across 10 states provides a significant barrier to entry for new competitors and ensures stable market access. However, Boyd's dependence on physical locations makes it more susceptible to economic downturns or local disruptions compared to digitally diversified rivals. While it is investing in its online capabilities, its technological scale in the digital realm may lag behind larger, more aggressive online operators.

Financial Strength and Operational Momentum

Boyd Gaming delivered a strong second quarter in 2025, demonstrating broad-based growth across its diversified segments. Total revenues, excluding tax pass-through amounts, grew 4%, with EBITDAR increasing 4% to $358 million. Property-level revenue and EBITDAR growth marked the strongest performance in over three years, with property-level margins consistently exceeding 40% since 2021.

Key financial highlights for Q2 2025 include:

• Online Revenue: Increased $43.1 million, driven by a $30.4 million rise in gaming tax reimbursements (which have no operating income impact) and a $10.7 million increase from Boyd Interactive's operations, boosted by the Resorts Digital Gaming acquisition.
• Gaming Revenue: Grew $20.6 million (3.2%), fueled by increases in slot handle (3.6%), slot win (3.5%), and table game hold (7.1%).
• Managed Business: Sky River Casino management fees rose by $2.5 million, contributing to the segment's strong performance.
• Operating Income: Increased $15.3 million (6.7%) for the quarter. However, for the six months ended June 30, 2025, operating income saw a slight decrease of $4.2 million (0.9%), primarily due to a $9.6 million increase in depreciation (from new facilities like Treasure Chest and hotel renovations) and a $21.8 million increase in asset impairment charges.
• Net Income: Rose $10.5 million for the quarter. Year-to-date, net income decreased $15.1 million, largely due to a $13.7 million increase in interest expense, reflecting a $568.9 million increase in the weighted average long-term debt balance.

The company's operational efficiency is evident in its stable expense management. Selling, general, and administrative expenses as a percentage of revenues favorably impacted by increased revenues, while master lease rent, maintenance, and utilities remained consistent. The effective tax rate for the first six months of 2025 was 24.3%, influenced by state taxes and non-deductible compensation.

Capital Allocation: A New Chapter of Flexibility

A pivotal moment for Boyd Gaming's financial flexibility occurred on July 10, 2025, with the definitive agreement to sell its 5% equity interest in FanDuel to Flutter Entertainment (FLTR) for $1.755 billion in cash. This transaction, expected to close in Q3 2025, unlocks significant value, yielding an estimated $1.4 billion in after-tax proceeds. Management explicitly stated this is "not a precursor to another transaction," but rather a strategic move to monetize an asset whose value was not fully reflected in Boyd's stock price.

The proceeds will initially be used to pay down debt, reducing the company's leverage from approximately 2.8x (3.2x lease-adjusted) to below 2x (estimated 1.8x pro forma). This deleveraging is expected to generate approximately $85 million in annualized interest expense savings. While the immediate leverage will be low, management anticipates a long-term target leverage range of around 2.5x, indicating a strategic intent to deploy capital into higher-returning investments.

Boyd Gaming's capital expenditure plans for 2025 reflect this aggressive reinvestment strategy, totaling an estimated $600 million to $650 million. This includes:

• Approximately $250 million for recurring maintenance capital.
• An additional $100 million for hotel room renovation projects at properties like IP, Valley Forge (completed in Q2 2025), and Orleans, part of a $200 million program expected to conclude by mid-2026.
• $100 million in annual recurring growth capital for strategic projects such as the Ameristar St. Charles convention center expansion (on track for late August 2025 completion, with over 90% of pre-bookings from new customers) and the Cadence Crossing Casino in Southern Nevada (opening mid-2026 to replace Jokers Wild and capitalize on a fast-growing community).
• $150 million to $200 million for the new $750 million Norfolk Casino resort development in Virginia. A modest transitional casino is on track to open in November 2025, with the full resort (featuring a 65,000 sq ft casino, 200-room hotel, and multiple F&B outlets) scheduled for late 2027. This project targets a 15-20% return on investment in an underserved market of 1.8 million residents.

The company remains committed to returning capital to shareholders. The quarterly share repurchase target has been increased from $100 million to $150 million, supplemented by a regular quarterly dividend of $0.18 per share. This translates to an expected annual run rate of capital returns totaling approximately $700 million, or about $9 per share. In Q2 2025 alone, Boyd repurchased $105 million in stock, and $433 million year-to-date, demonstrating its opportunistic approach to buybacks when market conditions are favorable.

Outlook and Risks

Management's outlook for the remainder of 2025 is grounded in the continuation of Q2 trends. Core customer play is expected to remain strong, and retail customer trends are anticipated to continue improving. The online segment is projected to generate $50-55 million in EBITDAR for full year 2025 under the new FanDuel agreements, followed by $30 million in 2026. The Managed business is expected to see further growth from the Sky River Casino expansion, with Phase 1 completing early 2026 and Phase 2 by mid-2027.

Despite this positive outlook, risks persist. The Las Vegas Strip has experienced softer demand trends, which could impact properties like the Orleans. The Suncoast renovation is entering its most disruptive phase, potentially affecting operations. The Tropicana I-15 interchange project continues to create access challenges for the Orleans. While management has taken steps to mitigate potential tariff impacts on capital projects, cost increases remain a possibility. However, the company's significantly strengthened balance sheet provides a robust buffer against these uncertainties.

Conclusion

Boyd Gaming stands at a pivotal juncture, having successfully monetized a valuable non-core asset to unlock substantial capital. This strategic move is not a deviation but an acceleration of its long-standing, disciplined approach to value creation. By reducing leverage to industry-leading levels and committing to a robust capital expenditure program focused on high-return growth projects like the Norfolk Casino and property enhancements, Boyd is actively shaping its future.

The company's diversified portfolio, underpinned by resilient core customer engagement and a disciplined operational model, consistently delivers strong margins and free cash flow. Its regional online gaming strategy, while not chasing national scale, provides a complementary digital moat. Despite facing competitive pressures and broader economic uncertainties, Boyd Gaming's proactive investments, combined with its increased commitment to shareholder returns, position it for sustained long-term growth and enhanced shareholder value. The story of Boyd Gaming is one of strategic evolution, disciplined execution, and a clear path to leveraging financial strength for future prosperity.