Boyd Gaming Turns The Corner With Online Gambling In New Jersey

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Boyd Gaming hit a “key milestone” in July of 2014 as the company recorded its first break-even month operating regulated online gambling sites in New Jersey.

That’s per Boyd CEO Keith Smith in an earnings call covering Q2 2014.

Boyd operates online gambling via Borgata’s online poker and casino sites.

Company expects trend to continue through 2014

Smith asserted that online gambling “will continue to operate on a breakeven basis in the third and fourth quarters” of 2014, and noted that the company believes “there is opportunity for further growth online.”

While July didn’t impact the balance sheet, the other months of the second quarter did. Boyd posted a $1.8mm operating loss from online gambling during the quarter as a whole.

Borgata vs bwin revenue

Borgata’s online gambling sites are run in cooperation with partner, who provide the platform powering the games and operate separate brands that, in many ways, compete directly with Borgata.

For example: PartyPoker NJ and BorgataPoker share the same software and player pool, but run under distinct brands.

Smith offered some insight into the relative contribution of each brand by noting that, since launch in November, “Borgata has posted a standalone market share of 28.8% and combined with our partners at Party Poker, the Borgata network holds a 10 point lead on our nearest competitor.”

From my math, it appears Smith is referring directly to revenue when he references market share.

If you total online gambling revenue in NJ since launch, you get ~$71mm. Of that, Borgata / Party has accounted for 39% and Caesars / 888 for 29% – or a 10 point gap.

So, to figure out the relative contribution of Borgata vs, we just take their total revenue share (39%) and divide into Smith’s number for Borgata’s standalone revenue share (28.8%).

Based on that, Borgata appears to drive about 75% of the revenue in the Borgata / partnership.

Other interesting iGaming nuggets from the call

  • Cannibalization not a factor: Smith said “approximately 75% of the accounts that have been created” online are “customers who are not active players of Borgata.”
  • Cross-marketing works: According to Smith, Borgata is “seeing great initial response in actively marketing our land based product” to online customers. Smith did not provide specifics.
  • Seasonality to blame for slowdown: Smith noted that “online revenues have flattened out in recent months,” but chalked it up to the “seasonality of the business” and said that as “colder weather returns, we believe the trends should reverse increasing visitation and spending on our online gaming sites.”

View the full transcript at Seeking Alpha.

- Chris is the publisher of Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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