Jefferies: Don’t Bet on Boyd Teaming Up with Bally’s on Strip Casino

Don’t bet on Boyd Gaming (NYSE: BYD) partnering with Bally’s (NYSE: BALY) or coming to that company’s rescue on the Las Vegas Strip.

Following a post by Vital Vegas and Casino.org reporting indicating that Boyd is rumored to be a potential replacement for Bally’s in developing the Strip site that was previously home of the Tropicana, an analyst says anything is possible, though it’s not probable Boyd gets involved.

As Casino.org previously reported, neither Bally’s nor Boyd has commented on the speculation.

Here’s What Is Clear

There are some certainties relating to the Bally’s/Boyd rumor, not the least of which is the former’s investors are concerned about the regional casino operator’s financial health and its ability to procure the capital needed to complete its $4 billion integrated resort in the Bronx, NY.

Related to that, a recent regulatory filing in which Bally’s raised “substantial doubt” about its ability to continue as a going concern stoked speculation about potential asset sales with much of that attention turning to Las Vegas.

Regarding Boyd, it’s clear the Suncoast operator is in a strong financial position and that it’s open to  acquisitions, though not desperate for them.

The factor that could dampen Boyd’s appetite for working with Bally’s on the Strip or an outright purchase of the operating rights for the old Tropicana site is widespread belief in the investment community that if Boyd goes shopping, the gaming company is unlikely to buy assets that don’t include real estate. Gaming and Leisure Properties (NASDAQ: GLPI) owns the Strip real estate on which Bally’s is aiming 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 familiar with each other as they compete in several of the same states.

Additionally, the companies have done deals together. Earlier this year, Boyd sold Sam’s Town Hotel & Casino in Shreveport, La. to Bally’s.

That transaction, which was finalized earlier this month, was a bolt-on deal and not indicative of possible large-scale deals between the two gaming outfits.