Question of the Day - 09 June 2019

A source close to Boyd “can’t comment on rumors or speculation.”

We’d add that if a deal were in the works, the last thing either company would do is confirm it. Just look at what happened to a proposed Wynn Resorts buyout of Crown Resorts a couple months ago. It lasted only a few hours. When Crown leaked the news in an effort to juice its stock price (and indeed, its shares went up 20% in the wake of the disclosure), Wynn Resorts wasn't amused and quickly nixed the deal.

Also, we'd be surprised if a Boyd/Station deal were in the works, if only for the fact that the companies have been unfriendly competitors in the past. When Boyd was trying to build a casino on the northern Las Vegas Beltway (a project abandoned during the Great Recession), Station attempted to block it in the North Las Vegas City Council. Station, having already sunk a considerable sum of money into Aliante Station, also tried to convert a non-gaming parcel of land on Losee Road (purchased on the public vow that there would be no gambling thereupon). Station reversed field and attempted to have it rezoned for a casino, putting a pincer movement on Boyd. For once Station didn’t get what it wanted and the land was put up for sale. Ironically, Aliante Station was subsequently sold to a private-equity firm and later to none other than Boyd Gaming.

The most recent rumor concerning Station was that, having heavily invested in upgrading the Palms and Palace Station, it might sell at least some of its other casinos and invest in a major-league sports franchise. However, Station would seem to have scotched that notion by announcing that the old Rhodes Ranch project was finally being moved the front burner (it’s been in abeyance for 20 years) and Station development in Reno was also being prioritized.

The one respect in which a conflation of Boyd and Station might fly is in the Nevada approval process. True, a merger would give the prevailing company a near-monopoly on locals casinos in the Las Vegas area, raising antitrust concerns. However, the Nevada Gaming Control Board faced a similar issue when Harrah’s Entertainment took over Park Place Entertainment. Nevada regulators defined the “market” by combining locals and Strip casinos and found no excessive concentration of ownership.

Still, even with a potential resale of Harrah’s (now Caesars Entertainment) either to Golden Nugget or Eldorado Resorts, we assign a low probability to this locals mega-merger. But you never can tell. In Nevada, anything is possible.