Business as usual at Boyd; Pinnacle looks to expand

* Top brass at Boyd Gaming met with J.P. Morgan analyst Joseph Greff and reported a relatively unruffled start to 2017, although the delayed mailing of income-tax refunds (about three weeks later than usual) was retarding results a bit. Still, “the regional gaming consumer continues to seem healthy and react positively to the stable economic environment, with little/muted reaction to political issues.” Boyd “expects more of the same.” The closest thing to a cause for alarm was ramped up promotional warfare in the Lake Charles market. For those seeking a rationalization of Boyd’s decision to double down on North Las Vegas with both Aliante Casino and Cannery Casino Resorts, Boyd execs said Aliante and Cannery drew from different demographic bases in the area. Additional acquisitions weren’t ruled out, although it didn’t sound as though Boyd had anything on the stove at the moment.

* Boyd’s regional rival, Penn National Gaming, was “cautiously optimistic, following a subtle post-election bump in activity which seems to be continuing.” Like Boyd, it was in a promotional war, in
Penn’s case at Hollywood Jamul. Despite the latter’s flubbed opening, Penn maintains that “Feedback from guests has been positive, though it believes it still has opportunity to gain wallet share from its customers who are still frequenting other tribal competitors more often than anticipated.” Across the country, in Charles Town, things are better than expected post-MGM National Harbor, although Penn is in a wait-and-see mode at this moment.  It’s much the same at Tropicana Las Vegas, where Penn has revealed no news plans but thinks it can get an above-average 10X purchase price return on investment.

* At Pinnacle Entertainment, management is seeing a better brand of casino customer, thanks to wage growth, “something that has not really happened much over the past several years.” For instance, the Denver economy has redounded to the benefit of Pinnacle’s casino in Black Hawk. Another bastion of strength continues to be Baton Rouge, with operational profit remaining exceptionally high despite the novelty factor long having worn off.

Contra Boyd, Pinnacle said it wasn’t upping its Lake Charles promotional activities and “not seeing any changes from Golden Nugget.” Also, unlike Boyd, Pinnacle is quite vocal about being in acquisition mode, “the company is spending a fair amount of time evaluating acquisitions … acknowledging these are complicated and will likely take some time. That said, the company is hopeful something could happen this year.”

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