Jefferies Casts Doubt on Boyd-Bally’s Partnership for Las Vegas Strip Casino

Don’t bet on Boyd Gaming (NYSE: BYD) partnering with Bally’s (NYSE: BALY) on its proposed $3 billion-plus resort at the former Tropicana site on the Las Vegas Strip.

Following reports by Vital Vegas and Casino.org linking Boyd Gaming to Bally’s former Tropicana site, Wall Street analysts view a deal as highly unlikely despite the rumor mill.

As Casino.org previously reported, neither Bally’s nor Boyd has commented on the speculation.

Here’s What Is Clear

While speculation lingers, several financial realities frame the Bally’s-Boyd rumors. Chief among them is growing investor anxiety over Bally’s balance sheet and its ability to fund a planned $4 billion integrated resort in the Bronx.

Those concerns were amplified by a recent SEC filing in which Bally’s raised “substantial doubt” about its ability to continue as a going concern, fueling rumors of potential asset sales—with attention quickly turning to Las Vegas.

Boyd, on the other hand, boasts a rock-solid balance sheet and an appetite for opportunistic acquisitions. However, the gaming giant is in no rush to buy.

The biggest hurdle to a deal for the Tropicana site is Boyd’s well-known strategy: Wall Street widely agrees that Boyd rarely buys casino operations without owning the underlying real estate. Because Gaming and Leisure Properties (NASDAQ: GLPI) owns the land under the former Tropicana, a Bally’s partnership or takeover remains a tough sell for Boyd.

“We take the modest pressure from the market as in line with our view, which is that the project is low-likelihood for BYD as a prominent player,” adds Katz.

Bally’s, Boyd Share Some History

As two of the largest regional casino operators, Bally’s and Boyd are familiar with each other as they compete in several of the same states.

Additionally, the companies have done deals together. Earlier this year, Boyd sold Sam’s Town Hotel & Casino in Shreveport, La. to Bally’s.

That transaction, which was finalized earlier this month, was a bolt-on deal and not indicative of possible large-scale deals between the two gaming outfits.