Boyd Gaming: Regional Casino Business Model & Competition

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I've noticed that, generally, casinos in Atlantic City have faced issues, including Trump's casinos. There have been problems with casinos in Louisiana at one point. You mentioned Mount Airy having trouble, and it seems the Palms was a financial drain. Foxwoods apparently lost a lot of business. What are the common factors that can cause casinos to go in the wrong direction? What should I focus on when things go wrong, or what typically causes these issues?

Great question. The first thing to consider, especially with smaller companies or standalone properties, is debt. Once we move past the debt issue, the second biggest concern is competition. For example, the Boxwoods were the only casino in Connecticut for years. It's peculiar that they allowed the Mohegans to enter, especially given the historical context where the Mohegans helped the Europeans against the Pequots about 350 years ago. The biggest issue often arises when other states close to the border legalize gambling. Properties in Louisiana, for instance, would be at risk if Texas ever legalized gambling.

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I've noticed that, generally, casinos in Atlantic City have faced issues, including Trump's casinos. There have been problems with casinos in Louisiana at one point. You mentioned Mount Airy having trouble, and it seems the Palms was a financial drain. Foxwoods apparently lost a lot of business. What are the common factors that can cause casinos to go in the wrong direction? What should I focus on when things go wrong, or what typically causes these issues?

There's a tendency to chase the same group of high-end players who have become spoiled. These players care about the best deals and are in 20 different casinos across various markets, shopping for deals. Another thing to watch out for is places that suddenly do big expansions, especially those not on the gaming floor. If they have a capacity issue and high utilization, and they start building more hotel rooms and concert venues, it's concerning. Concerts are almost always money losers, no matter what they claim. When they start spending on ancillary parts, that's when I get worried.

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In the first scenario, if you're the only casino in the middle of Colorado, people will come to you without problems. If there's another casino next door, it becomes more complicated. You don't have to promote as long as your competitor doesn't, but if they do, you might feel the need to match. It's not obvious to me, as I think about the future of these casinos, what the strategy should be.

I think you'd be amazed by how much they are location-based, even when they're just 10 minutes away.

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