Boyd strikes deal with Cali tribe
Company continues expansion into new jurisdictions following acquisition of Peninsular Gaming in May " meanwhile Q2 figures fail to impress.
Boyd Gaming has revealed it has made its first move into California by partnering with the Wilton Rancheria tribe in the Golden State, on the back of worse-than-expected financials for the second quarter of 2012.
The operator of 17 casinos reported a loss across most of its US properties, while overall revenues rose by 7.1% to US$615.2m “ falling short of analyst expectations of $624m. However, net income in Q2 stood at $1m, compared to a net loss of $3m for the corresponding quarter last year.
The results were accompanied by the news that Boyd has struck a deal with Wilton Rancheria, a federally recognised tribe located 30 miles southeast of Sacramento, California. Further details of the deal are yet to be released.
It is the first time the company has made plans to operate in the state. Boyd Gaming already has operations in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey, meaning it could be well-placed to gain online gambling licenses if and when these states regulate.
The addition of a partner in California represents a vital in-road into the state where the online gambling market could be worth $5.5bn by year five of operations, according to H2 Gambling Capital.
Speaking on the deal with Wilton Rancheria, Keith Smith, CEO of Boyd Gaming, said it will take approximately 24 months to receive all the required approvals to proceed with the deal. “This project will provide us our first entry into California, further diversifying our geographic footprint and extending our brand to an attractive new market.”
Boyd joins bwin.party in partnering with a tribe to gain a foothold in California. In May Bwin.party signed a 10-year B2B deal with the United Auburn Indian Community (UAIC) to to offer online poker services in California “if suitable intrastate legislation is enacted in the state”. As federally recognised California Indian tribes that already operate a casino resort within the state, UAIC and Wilton Rancheria would be a qualified licence applicant under legislation proposed in the California State Senate and would secure and maintain the necessary licences to operate online poker services there.
Boyd has been preparing for the regulation of online gambling in the US and entered into a joint venture agreement with bwin.party last October which would see the two “jointly offer” online poker in the US, while it has also applied for an interactive gaming licence in Nevada.
Earlier this year Boyd also expanded into the Midwest and South regions by acquiring Peninsula Gaming for total consideration of US$1.45bn (£912m), adding properties in Kansas, Iowa and Louisiana to its portfolio. Smith said of that deal: “”¦it makes compelling sense to expand our footprint in the area of the country where the gaming industry is strongest, and that is precisely what the Peninsula acquisition does.”
Boyd’s Q2 results were below analysts’ predictions and caused shares to fall as much as 13% on the New York Stock Exchange on Tuesday. Results in Las Vegas in particular were disappointing, which Smith blamed on poor sportsbook figures and higher employee benefit expenses, while in Atlantic City poor results were attributed to increased competition, both in New Jersey and nearby jurisdictions.
“Our results for the second quarter clearly were not in line with our expectations or the guidance we provided on our last earnings call,” said Smith