Do not count on Boyd Gaming (NYSE: BYD) teaming up with Bally’s (NYSE: BALY) or coming to the aid of that company on the Las Vegas Strip.
As per a report by Vital Vegas and Casino.org indicating Boyd is rumored to be a potential substitute for Bally’s in developing the Strip site formerly occupied by the Tropicana, an analyst mentions that while anything is possible, it’s improbable for Boyd to get involved.
“Although we expect BYD to contemplate any reasonable opportunity, we believe this project is outside the usual scale and risk tolerance for BYD, given the scale of LV Strip development ($3 billion-plus) and the challenges of ramping a single property on the Strip without an existing database,” observes David Katz of Jefferies.
As previously reported by Casino.org, neither Bally’s nor Boyd has commented on the speculation.
Here’s What Is Clear
There are some certainties regarding the Bally’s/Boyd rumor, notably that the former’s investors are worried about the regional casino operator’s financial stability and its ability to secure the capital required to finish its $4 billion integrated resort in the Bronx, NY.
Related to that, a recent regulatory filing where Bally’s raised “substantial doubt” about its ability to continue as a going concern fueled speculation about potential asset sales with much of the attention shifting to Las Vegas.
Regarding Boyd, it’s evident that the Suncoast operator is in a solid financial position and open to acquisitions, though not desperate for them.
The main factor that could hinder Boyd’s interest in collaborating with Bally’s on the Strip or acquiring the operating rights for the old Tropicana site is the widespread belief in the investment community that if Boyd does make a purchase, it is unlikely to acquire assets without real estate. Gaming and Leisure Properties (NASDAQ: GLPI) owns the Strip real estate on which Bally’s aims to build a casino hotel.
“We take the modest pressure from the market as in line with our view, which is that the project is low-likelihood for BYD as a prominent player,” adds Katz.
Bally’s, Boyd Share Some History
As two of the largest regional casino operators, Bally’s and Boyd are acquainted with each other as they operate in several of the same states.
Moreover, the companies have engaged in transactions together. Earlier this year, Boyd sold Sam’s Town Hotel & Casino in Shreveport, La. to Bally’s.
That deal, which was completed earlier this month, was a minor deal and not necessarily indicative of potential large-scale agreements between the two gaming companies.