Boyd Gaming Divests FanDuel Stake to Strengthen Financial Position and Pursue Growth
- Boyd Gaming divests 5% stake in FanDuel for $1.755 billion to strengthen its financial position.
- Proceeds will primarily reduce debt, enhancing Boyd's ability to pursue growth opportunities.
- Revised market-access agreements with FanDuel are expected to boost Boyd's Online segment income significantly.
Boyd Gaming’s Strategic Move: Divesting Stake in FanDuel to Strengthen Financial Position
In a significant strategic development, Boyd Gaming Corporation announces its decision to divest its 5% equity interest in FanDuel Group to Flutter Entertainment for a substantial $1.755 billion in cash. This transaction, set to close in the third quarter of 2025 pending regulatory approvals, marks a pivotal moment for Boyd as it aims to strengthen its balance sheet and enhance its investment capabilities. CEO Keith Smith underscores the importance of this agreement, asserting that it unlocks significant unrealized value for Boyd shareholders while allowing the company to focus on its growth strategy.
The decision to sell the equity stake is not solely about immediate financial gain; Boyd plans to utilize the net proceeds primarily to reduce its debt. This move is expected to bolster the company’s financial foundation, enabling it to pursue new growth opportunities while also returning capital to shareholders. The deal coincides with the termination of existing market-access agreements between Boyd and FanDuel, paving the way for new agreements that extend through 2038. These agreements will provide Boyd with a fixed fee per state from FanDuel’s mobile sports-betting operations across several states, including Iowa, Indiana, Kansas, Louisiana, and Pennsylvania.
Looking ahead, Boyd anticipates that the revised market-access agreements will significantly contribute to its Online segment, projecting an operating income of $50 million to $55 million for the full year 2025, and an estimated $30 million in 2026. Smith expresses confidence in the long-standing partnership with FanDuel, which has emerged as a leader in the online sports betting industry, and is optimistic about the future collaboration. This strategic divestiture not only positions Boyd Gaming for enhanced financial stability but also sets the stage for leveraging new opportunities in the rapidly evolving gaming landscape.
In related news, Boyd Gaming has seen a rise in its short interest, with the short percent of float increasing by 6.34% since the last report. The current data indicates that 2.93 million shares are sold short, accounting for 4.53% of the total shares available for trading. This uptick in short selling reflects a cautious sentiment among investors regarding Boyd’s stock performance amidst broader market dynamics.
As Boyd Gaming navigates these developments, the implications of the equity sale and the rise in short interest underscore the complex interplay of challenges and opportunities facing the company. The upcoming months will be crucial in determining how these factors influence Boyd's market position and overall investor sentiment.