Those darned consumers.
They just keep spending.
It doesn’t matter how much gloom is predicted. It doesn’t matter how many headlines blare news of tech company job cuts. It doesn’t matter how many reports show debt rising as savings fall. It doesn’t matter how scary Fed Chairman Jay Powell paints the future of interest rates.
Joe and Jane just keep spending, and especially on travel and entertainment.
That resilience showed in January gaming revenues. After a somewhat bumpy end to 2022, customers hit the slots and tables to start the New Year in jurisdiction after jurisdiction.
For casinos, the good start is just part of the story.
Conventions are back. Even if consumer spending slows, even if corporate travel budgets are squeezed, enough group business is booked to lock in growth this year for Las Vegas. International travel is back big as the pent-up demand released by Americans last year will be repeated by international customers this year. The Las Vegas events calendar for the coming 12 months is monster good.
And if consumer spending doesn’t slow? If 2023 turns out to be Goldilocks, not a central banks-induced recession…well, get ready for a good year for gamers throughout the U.S., in the Far East and especially in Las Vegas.
That is not a prediction. We expect higher interest rates to slow the economy and for consumers to cut back on discretionary spending perhaps in the second half of the year. But the outlook for 2023 appears more sanguine for gamers than was the case even recently.
Who’d A Thunk It?
Get into your time machine and go back to the days before cell phones and gambling—gambling everywhere.
In the U.S., small groups of mostly guys who couldn’t get enough sports got together once a week or so and pretended to be team owners, drafting and trading players and competing against each other on fantasy teams based on how their real-world players did. It was a harmless, little pass-time.
In Ireland, three bookmakers pooled their 40 betting shops into a company named PaddyPower (one of them was David Power and all were Irish, hence the name). To grab publicity, they ran silly contests, like taking bets on when polar bears would go extinct.
In time, technology turned fantasy sports into a big business akin to straight out gambling. One of what became known as daily fantasy sports operators was FanDuel. It grew into a major player and, when the prohibition on sports betting ended in the U.S., it was primed to become the country’s largest sports betting company.
Across the pond, David Power and his mates enjoyed equal success becoming Flutter, a London-listed gambling giant. Seeing further opportunity as legal U.S. sports betting proliferated, they bought FanDuel.
The next step in this evolution may be for Flutter to list its stock in the U.S. to facilitate tapping into the world’s biggest capital markets to fund even further growth.
If that happens, don’t be surprised to see the U.S. listing under the FanDuel name.
And Boyd?
So where does that leave Boyd, which owns 5 percent of FanDuel?
Boyd has clearly benefited from its relationship with FanDuel. The value of its stake grows as FanDuel’s value grows. They also have benefitted mutually by Boyd opening to FanDuel its markets and access, at least indirectly, to its huge player base, and by Boyd having FanDuel’s expertise in online sports betting.
But a Flutter listing in the U.S. could lead to a parting of the ways. For one, sale of the 5 percent stake would be a nice payday for Boyd. It also could clarify their competitive relationship in markets where Boyd’s emerging in-house iGaming business bumps up against Flutter.
Other relationships no doubt will be explored, such as continuing or modifying the Boyd-FanDuel alliance and/or retaining the 5 percent stake.
The point is that a Flutter U.S. listing can open opportunities for Boyd.
It’s worth noting that, in a world where iGaming companies lose money fighting for market share, digital contributed $40 million in EBITDAR to Boyd last year.
