Though locally known and loved, casinos like this struggle as Americans are less willing to part with their hard earned income following the financial crisis of 2008. Photo: Boyd Gaming Corp.

Even though revenue for the Las Vegas strip was up 3.19% in April of this year, Nevada's statewide gaming revenue was down 0.27% for the month. All over the U.S., gaming revenue still continues to struggle to reach a healthy position following the 2008 financial crisis. For a company like Boyd Gaming Corp. (BYD -15.60%) with all of its casino operations in the U.S., this is a significant trend in light of its recent poor earnings. Competitors like Las Vegas Sands (LVS -0.31%) and Wynn Resorts (WYNN -0.52%) have had tough times recently in the U.S. as well; however, these companies reported incredible overall revenues in the quarter thanks to their greater global diversification.


The locations of Boyd Gaming's casinos around the U.S. Photo: Boyd Gaming Corp.

With a poor first-quarter earnings release, there doesn't seem to be much worth investing in at Boyd Gaming Corp. However, investors should not overlook one potential highlight. Boyd is the only gaming company with a large physical presence that is also successfully building its online gambling presence. What really makes this appealing is the way in which Boyd is connecting the two.

Boyd reported lackluster earnings, so how can others post record gains?
The company reported first-quarter revenue down nearly 4% and EBITDA down over 11.6% year-over-year. While the company has reported rising net revenue for the past three years straight, the company can not seem to stop the net losses when all is said and done. These first-quarter results don't seem to be helping that cause.

The main reason, which affects all of the major U.S. casino companies, is that the U.S. gaming economy itself is still struggling to regain its 2007 peak. Las Vegas Sands and Wynn Resorts also posted pretty lackluster results for their U.S. operations; Las Vegas Sands posted a 7% decline in first-quarter revenue for its Las Vegas operations year-over-year, and Wynn Resorts posted a 1.5% decrease in revenue for Las Vegas for the same time-frame. However, the companies both reported incredibly profitable quarters with record-setting revenues. The difference: Asian operations.

Everyone else is winning in Asia, and Boyd has been left behind
Despite their poor results for Las Vegas, Las Vegas Sands and Wynn Resorts posted incredible first-quarter results with total company revenues up 21.4% and nearly 10%, respectively, during the first quarter of 2014. These companies were able to post these kinds of numbers because of the bets they have made on Asia, particularly Macau. 

        
88% and 75% of these companies' revenues were driven by Asian operations, of which Boyd has none.

So while other companies are busy reaping huge rewards from their bets in Asia, Boyd is struggling right along with the U.S. economy. The company doesn't seem too worried, however, with Boyd Gaming CEO Keith Smith claiming that "The refinements we have made to our operations are paying clear dividends in all segments of our business, and we expect additional benefits as the economy recovers."

Personally, I am not willing to sit idly by and wait along with Boyd for the miraculous recovery of U.S. gaming. However, one highlight of this company has my attention. Online gaming, particularly as it relates to one of Boyd Gaming's physical locations in New Jersey, is setting the company apart.

The one interesting highlight: Online gaming
The company's New Jersey casino and hotel, The Borgata, is now much more than just a physical casino. The company has been busy building its online presence and now offers live online gambling. Along with its partnership with PartyPoker, Boyd Gaming Corp. is by far the market leader in online gambling in the state. Additionally, the company has used in-house and online championships to spur more casino visitors and online visitors to play.


Photo: The Borgata

The Boyd Gaming CEO said, "We continue to successfully leverage online gaming as a way to expand our customer base. So far, we have created more than 55,000 online accounts." Speaking on how the casino company is using its physical and online presences together, he said, "The [World Poker Tour] Championship made a very successful debut at Borgata in April – doubling the number of entrants from last year -- and we also saw strong play in the New Jersey Championship of Online Poker."

During the month of April, Borgata and PartyPoker together accounted for $4.1 million in online gaming revenue, which accounted for 36% of the online gambling market share of New Jersey. Not including PartyPoker, Borgata Online still accounted for the bulk of that with $3.1 million in revenue.

This revenue hasn't done much for the company's bottom line because of its costs of launching these operations. However, if the online gambling segment can continue to do well with lowered front-end costs, then it could become a cash generator for the company. New Jersey is a special case in which the local government has been lenient on online gambling, as not all states allow such operations. However, the trend is that more and more states are legalizing and supporting them. If the company can foster the right relationships, it could replicate its operations at Borgata in other parts of the country, potentially creating a new business model for Boyd Gaming. 

Foolish conclusion: A bet on a new gaming market
Regulation is a significant hurdle that Boyd Gaming will need to get through to make online gambling a viable profit generator in other states around the U.S. However, based on how well the company has implemented online gaming with its New Jersey-based Borgata casino, it's realistic that the company will be able to replicate these operations in other areas around the country. A leading market share in online gambling around the U.S., as Boyd has in New Jersey, could be the driver that finally turns those net losses into gains.