Online sports betting has helped the casino industry survive the coronavirus pandemic, and Boyd Gaming (BYD -0.54%) may be among the top operators to capitalize on a reopened economy.

Because it doesn't rely upon the Las Vegas Strip for gambling revenue, has broad geographical diversity, and is expanding its partnership with the leading sportsbook in the country, Boyd could be the best bet in gambling for a post-coronavirus market.

Boyd Gaming's Sam's Town casino

Boyd Gaming's Sam's Town casino. Image source: Boyd Gaming.

Stripped to the bone

Casinos on the Strip are allowed to operate at 25% of their capacity as of this writing. But because they rely on tourist traffic, operators like Caesars Entertainment and MGM Resorts International are struggling harder than Boyd or Red Rock Resorts, which cater to local residents.

Data from the Las Vegas Convention and Visitors Authority showed just 17.8 million visitors to the city in 2020 (through November), a 54.5% decline from the same period in 2019. That's on pace for the lowest turnout in 32 years.

This development is hitting casino revenue hard. The Nevada Gaming Control Board said that since all casinos were allowed to reopen in June, revenue tumbled 25.8% through November, but on the Strip, revenue plunged 40.8% year over year.

The one bright spot was the state's sportsbooks, which saw record numbers in November, winning a net $61.8 million. It was the best one-month performance the sportsbooks have seen in the 50-year history of sports wagering in the state.

Think global, act local

The faster recovery with locals elevated Boyd Gaming's performance in the third quarter, so despite local gambling revenue declining 20% year over year, adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring/rent) reached record levels, jumping 23% to $78.9 million for that segment, and operating margin surged over 1,600 basis points to 46.1%.

That played out in Boyd's other markets as well, such as the Midwest and South segment where revenue also fell 15%, but adjusted EBITDAR increased almost 17% with operating margin rising 1,100 basis points to 39.4%. And that also accounts for closures due to two hurricanes.

Consumers staying closer to home plays to Boyd's strengths, and that dynamic is paying off for investors too as its stock is up over 70% in the past year and has more than doubled since the beginning of June when its casinos in most regions were reopened, albeit with capacity restrictions and other safety protocols in place. Not being locked into primarily a tourist destination has served the company well.

A sporting chance of success

What arguably holds the most potential for Boyd Gaming, though, is its sports betting business. With one of the biggest sportsbooks in Nevada, Boyd has taken the growing legalization of sports betting to heart. 

It has opened numerous sportsbooks at its casinos in states where permitted; partnered with MGM Resorts in 2018 to offer online and mobile gambling; and signed an agreement with International Game Technology (IGT -3.38%) at the same time and expanded it last year to use IGT's technology at Boyd's Nevada casinos, where it will also install IGT's self-service PlaySports kiosks.

Boyd and IGT have had a sports betting partnership since 2018 with the PlaySports platform also fueling Boyd Gaming-owned properties in Indiana, Iowa, Mississippi, and Pennsylvania.

The company has been able to vastly upgrade its existing sportsbook in Vegas, giving players extensive new betting options for each event, both in the U.S. and internationally, across all types of sporting events. Mobile and in-play sports betting have become more popular than ever during the pandemic, and Boyd's B Connected Sports app gives the casino operator an opportunity to attract players too.

Then, there's Boyd's investment in Flutter Entertainment's (FLUT -1.84%) FanDuel, the largest sportsbook in the country. Boyd owns 5% of the business, and they're partnering to add sportsbooks at various casinos.

Last August, for example, the partners opened the FanDuel Par-A-Dice Sportsbook in Illinois, adding it to the eight other retail sportsbooks at Boyd properties in five states. The two have also introduced mobile sports-betting apps in Indiana and Pennsylvania.

Good odds

Boyd Gaming remains a top name in the casino industry and the sports betting market. Its stock is not the same bargain it was six months ago, and the market has priced a lot of its leadership qualities into the shares. But there's good reason to think it can continue to grow into its valuation.

It has prime real estate off the Vegas Strip, is spread out over nine other states, and has a top-notch sports wagering operation using some of the best partners in the industry. As sports betting continues to set records and become legal in more states, look for an investment in Boyd Gaming to pay off big.