Gaming companies are again moving to expand their reach in the regional gaming market, scooping up properties at a discount from competitors. Just over a week after Penn National
Earlier this week, Boyd said it's buying Peninsula Gaming for $1.45 billion, a price estimated to be 7 times EBITDA when you project out Kansas Star's first-quarter results for a full year. This is on par with what Penn paid for its recent purchase, once you account for tax advantages.
The Midwest market has been the target of the latest moves and drove Boyd's results in 2011. This acquisition will give the company two more casinos in Iowa, one in Kansas, and two in Louisiana. After generating $26.8 million in EBITDA during the first quarter, the Kansas property looks like the crown jewel of the portfolio.
Confidence in America
Boyd and Penn don't have exposure to Asia like some of their larger competitors do, but they are making big bets on the future of America. I haven't been a fan of regional gaming, with Ameristar Casinos
Boyd was able to get $1.2 billion in financing for the acquisition, and with rates as low as they are, this should immediately add to earnings. This isn't a reason to run out and buy shares, because I still like Penn's moves better, but it is a good step for Boyd Gaming.
Not all companies are created equal
I see the winners in the future of regional gaming as being the companies buying in at an attractive price instead of holding on to old assets. MGM Resorts
For more companies that are rocking domestically check out our report, "The Future is Made in America."