Flutter Entertainment, the owner of the Irish bookmaker and casino provider Paddy Power, has announced that its American partner is aiming to borrow $600 million to advance its corporate plans in the USA as they reopen 9 of their local casinos on June 4th.
The loan deal would be granted to Boyd Gaming, which is the casino arm of Flutter Entertainment’s US subsidiary, along with Fanduel which runs the sports betting operations in the country.
The plan was originally for Boyd Gaming to apply for $500 million in a bond issue. But this week saw the group raising the figure as it aims to reopen businesses after months of lockdown in the US. The news comes after Boyd Gaming’s stocks tumbled by 7% two weeks ago when the Las Vegas-based casino operator sold $500 million in senior notes.
Improvements on the balance sheet
The plan to inject $600 million of additional funds into Boyd Gaming will have a positive impact on the brand’s balance sheet. The gaming industry has been hit by the coronavirus crisis, and loan deal is just one of the many measures taken by casino brands to raise cash.
Boyd Gaming is pivotal to Flutter Entertainment’s ambitions to retain its current position as the world’s biggest online gambling company. The brand was formed through the merger of Paddy Power and Betfair in 2016, and it has since acquired The Stars Group. Judging by trusted UK casinos lists, the Paddy Power casino site has proven to be a popular operator in Europe. And the same thing goes for Flutter’s sportsbooks assets.
Expansion of legal gambling in the US
Flutter Entertainment will be hoping that its American ventures can benefit from the ongoing deregulation of online gambling in many US states.
Boyd Gaming currently owns 29 gaming properties across 10 US states. These gaming establishments would prove to be a valuable toehold for Fanduel – the fantasy sports operator acquired by Paddy Power in May 2018.
Many of the plans to permit legal sports betting in the US depend on operators having a physical location from which to provide a digital betting platform. Fanduel and Boyd Gaming teamed up in 2018, and it was hoped that the move would allow the companies to take advantage of a federal court decision to allow US citizens to bet on sports online.
As of May 2020, there were 20 US states that permitted legalised sports betting. However, it is widely expected that many more states such as Washington, Tennessee, North Carolina and Virginia will be joining the fray this year.
The current size of the US online gambling market was $53.7 billion in 2019. But if the trends towards deregulation across states continue, it is thought that the US gambling industry could be worth $102.97 billion by 2025. All of which makes Boyd Gaming’s decision to apply for $600 million in loan funds a critically important move.
Effects of the pandemic
Like many other industries, the casino industry has been hard hit by the coronavirus crisis. Boyd Gaming saw its credit mark lowered from B1 to B2 by the Moody’s Investors Service in March. This was due to the negative outlook caused by the brand having to close its casino premises after recommendations from federal and state governments.
Boyd Gaming had to furlough its staff across the US this spring, although there are hopes that the brand will be able to reopen its premises in some states such as Louisiana and Mississippi at the end of the month.
The reopening of workplaces poses many challenges across all industries. But with $600 million in extra funds being designated for ‘general corporate purposes’, it is hoped that Boyd Gaming and Flutter Entertainment will be able to ride out the storm.