Indy Gaming: Boyd’s tribal partner planning Northern California casino expansion
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A year after opening a Northern California casino, Boyd Gaming said its tribal gaming partner wants to expand the development to include non-gaming amenities, such as a hotel, convention space and additional restaurant options.
This time, the Wilton Rancheria Tribe won’t need Boyd’s financial assistance.
Boyd Gaming CEO Keith Smith said last week the $500 million Sky River Casino near Sacramento has been operating at capacity since day one. The casino’s success allowed the tribe to pay off Boyd’s construction loan for the project last month.
“The tribe will be able to obtain a more normal way of financing the expansion,” Smith said.
Boyd received $17 million in management fees from Sky River in the quarter that ended Sept. 30, more than 60 percent of the company’s overall management fees, which includes revenue from its ownership in an Illinois-based slot machine route business, managing the games at bars, taverns, restaurants and other locations around the state.
The Northern California casino is one of three that opened in the Sacramento area in the last three years and is viewed as direct competition to casinos in the Reno-Sparks area and South Lake Tahoe.
Analysts said last month the new properties may have contributed to reduced earnings by the Atlantis in Reno.
Caesars Entertainment operates Harrah's Northern California in the town of Ione, which is owned by the Buena Vista Rancheria of Me-Wuk Indians. Hard Rock Hotel and Casino Sacramento at Fire Mountain is operated by Hard Rock Entertainment for the Estom Yumeka Maidu Indians of the Enterprise Rancheria. Both properties opened in 2019.
Sky River sits on a 36-acre site along Highway 99 near the city of Elk Grove. The property has 100,000 square feet of gaming space that includes 2,000 slot machines and 80 table games. The bulk of the 17 food and beverage venues are part of a large dining hall.
“We have the ability to expand the casino because of the demand from customers, plus there is a need for additional meeting space in the Sacramento area,” Smith said.
He added that a proposed hotel hasn’t been designed yet and Boyd would manage the location under its agreement with the tribe, which has six years remaining under the contract.
“While these plans are still preliminary, the Tribe and our company are optimistic about the potential of an expansion project given Sky River's performance to date,” Smith said.
Boyd, which operates 28 non-tribal casinos in 10 states, does not have a casino in Northern Nevada. Smith said it’s too early to say how many of Sky River customers have ventured to Boyd’s 10 properties in Southern Nevada.
In the third quarter, Boyd’s overall revenue grew 3 percent from a year ago to $903.2 million. But the largest segment increase, 72.5 percent, came from the more than $90.3 million produced via online operations.
Smith said 90 percent of the online total came from the company’s share in its 5 percent ownership stake in FanDuel, which battles DraftKings as one of the nation’s top two sports betting operators. FanDuel is not connected with Boyd’s sports betting in Nevada but manages the business for Boyd’s casinos in eight of its nine states. Missouri, where Boyd has two casinos, has not legalized sports betting.
Smith said the expected launch this month of ESPN into the competitive sports betting landscape, through a partnership with Penn Entertainment, will be “interesting to watch.”
Boyd has online gaming casinos in two states — Pennsylvania and New Jersey. Smith said the rollout of online casinos in new states has been slow because “we're at the mercy of state legislators to decide if they want to approve this.”
He’s hopeful it will gain traction over time.
“Others had a view that this would be like sports betting and explode across the country,” Smith said of the activity that expanded to 35 states and Washington, D.C. in just five years. “It's been slower to roll out for a variety of reasons. I think it will pick up steam in the future.”
No update on the potential sale of IGT’s gaming and digital businesses
International Game Technology (IGT) CEO Vincent Sadusky said the market is always open “for assets that are high quality” when asked Tuesday about a potential sale of the company’s slot machine division and digital gaming operations.
But there was not much news to report following an announcement in June that IGT was “evaluating strategic alternatives” for the two businesses.
IGT, which is headquartered in Italy but maintains a small corporate office in Las Vegas and a manufacturing facility in Reno, may be looking to focus on its worldwide lottery division and cut loose the gaming operations, which include its sports betting platform.
IGT generates more than 64 percent of its revenue from its worldwide lottery business. In 2015, lottery giant GTECH acquired casino-centric IGT in a $6.4 billion buyout with the combined company taking on the IGT name.
“There's not a lot of high-quality assets in the marketplace and the capital markets are open,” Sadusky said in response to an analyst question on IGT’s third-quarter conference call.
Sadusky said IGT has strong feelings toward the value of the slot machine business.
“We'll go through the process and make a determination ultimately as to what we think is the best alternative for our sole goal, which is to maximize shareholder value,” he said.
News, notes and quotes
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