BOYD GAMING CORP (BYD)

Item 2.         Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

Boyd Gaming Corporation (and together with its subsidiaries, the "Company," "Boyd," "Boyd Gaming," "we" or "us") was incorporated in the state of Nevada in 1988 and has been operating since 1975. The Company's common stock is traded on the New York Stock Exchange under the symbol "BYD".

We are a geographically diversified operator of 27 gaming entertainment properties. Headquartered in Las Vegas, Nevada, we have gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, Pennsylvania and Virginia. In addition, we own and operate Boyd Interactive, a business-to-business and business-to-consumer online casino gaming business. We also manage the Sky River Casino located in California under a management agreement with Wilton Rancheria. We have the following four reportable segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest & South; and (iv) Online, (collectively "Reportable Segments"). The Las Vegas Locals, Downtown Las Vegas and Midwest & South segments include the operating results of our gaming entertainment properties. The table below lists the Reportable Segment classification of each of our gaming entertainment properties that were aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure. The Online segment includes the operating results of our online gaming business ("Boyd Interactive") and online market access fees through our agreements with third parties throughout the United States. To reconcile Reportable Segments information to the condensed consolidated information, the Company has aggregated nonreportable operating segments into a Managed & Other category. The Managed & Other category includes management fees earned under our management contract with Wilton Rancheria for the management of Sky River Casino in northern California and the operating results of Lattner Entertainment Group Illinois, LLC, our Illinois distributed gaming operator ("Lattner").

(1) Property has been closed since March 18, 2020. During the first quarter of 2026, the property was imploded and sitework to clear and restore the land is underway.

(2) Cadence Crossing opened on March 25, 2026 and replaced the Jokers Wild casino. Demolition activities at Jokers Wild began during the first quarter of 2026.

(3) Sam's Town Hotel and Gambling Hall Tunica ("Sam's Town Tunica"), which was located in Tunica, Mississippi was permanently closed on November 9, 2025. Property results for Sam's Town Tunica for the three and six months ended June 30, 2025 were included in the Midwest & South segment.

(4) Property is subject to a master lease agreement with a real estate investment trust.

(5) The Company entered into an agreement to sell the property in February 2026. The sale is expected to take place in the third quarter of 2026.

(6) Transitional casino opened on November 7, 2025 and is a variable interest entity consolidated in our financial statements. The full casino resort is expected to open in late 2027.

We also own a travel agency located in Hawaii. As our Downtown Las Vegas properties focus their marketing efforts on gaming customers from Hawaii, financial results for our travel agency are included in our Downtown Las Vegas segment.

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Most of our gaming entertainment properties also include a hotel, restaurants, bars, a sportsbook, retail and other amenities. Our main business emphasis is on slot revenues, which are highly dependent upon the number of visits and spending levels of customers at our properties.

Our gaming entertainment properties have historically generated significant operating cash flow, with the majority of our revenue being cash-based. While we do provide casino credit and the ability to transfer digital funds from a player's cashless "BoydPay" wallet, subject to certain gaming regulations and jurisdictions, most of our customers wager with cash and pay for non-gaming services with cash or by credit card.

Our industry is capital intensive, and we rely heavily on the ability of our operations to generate operating cash flow to fund maintenance capital expenditures, pay income taxes, repay debt financing and associated interest costs, repurchase our debt or equity securities, pay dividends, and provide excess cash for future development and to help fund acquisitions.

Our Strategy

Our strategy is to increase shareholder value by pursuing strategic initiatives that improve and grow our business.

Growing Revenues and Operating Efficiently

We are committed to growing revenues and building loyalty among core customers through targeted marketing investments with a focus on maximizing gaming revenues while operating as efficiently as possible.

Balance Sheet Strength

We are committed to maintaining a strong balance sheet and finding opportunities to diversify and increase our cash flow. We are also committed to a balanced capital allocation approach with our cash flows, with a current emphasis on investing in our business and returning capital to shareholders.

Evaluating Acquisition and Growth Opportunities

Our evaluations of potential investments and growth opportunities are strategic, deliberate, and disciplined. Our goal is to identify and pursue opportunities that grow our business, are available at the right price and deliver a solid return for shareholders. These investments can take the form of expanding and enhancing offerings and amenities at existing properties, developing new properties, expanding and enhancing online sports wagering and online casino offerings as they are legalized in and around the states we operate today, and asset acquisitions.

Maintaining Our Brand

The ability of our Team Members to deliver superior "Boyd Style" customer service helps distinguish our Company and our brands from our competitors. Our Team Members are an important reason that our customers continue to choose our properties over the competition across the country. In addition, we have established nationwide branding through our "Boyd Rewards" loyalty program. Our players use their Boyd Rewards cards to earn and redeem points at all of our gaming entertainment properties and online casino gaming offerings. Boyd Rewards, among other benefits, rewards players for their loyalty by entitling them to qualify for promotions and monetary discounts, earn rewards toward gaming and nongaming activities and receive benefits such as vacations and luxury gifts.

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Our Key Performance Indicators

We use several key performance measures to evaluate the operations of our gaming entertainment properties. These key performance measures include the following:

RESULTS OF OPERATIONS

Overview

Total Revenues

Total revenues for the three months ended June 30, 2026 increased by $0.4 million compared to the prior year comparable period, primarily due to (i) an increase in gaming revenues of $11.8 million, or 1.8%, driven by an increase in slot win of 2.4% and slot handle of 1.6%; (ii) an increase in management fee revenue of $4.7 million related to our management of Sky River Casino; (iii) an increase in Boyd Interactive revenues of $6.5 million, driven by the acquisition of Design Works Studios, LLC ("Design Works") on April 1, 2026, as discussed in Note 1, Summary of Significant Accounting Policies, and organic growth from existing operations; partially offset by (iv) a decrease in online reimbursements revenue of $7.6 million, which relates to reimbursements of gaming taxes and other expenses paid on behalf of our online partners; and (v) a decrease in revenue from market access agreements of $13.9 million, resulting from the termination of certain agreements starting in the third quarter of 2025 in connection with the FanDuel Equity Sale (as defined below) and in some instances, entry into new agreements at lower rates than those terminated.

Total revenues for the six months ended June 30, 2026 increased by $6.2 million, or 0.3%, compared to the prior year comparable period, primarily due to (i) an increase in gaming revenues of $

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ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information included in this Annual Report on Form 10-K. For the year ended December 31, 2023, and changes from the year ended December 31, 2023 to the year ended December 31, 2024, management’s discussion and analysis pertaining to our financial condition, changes in our financial condition, and the results of our operations have been omitted from this MD&A and may be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations as included in our Annual Report on Form 10-K for the year ended December 31, 2024. In 2025, the Company separated out online reimbursements revenue from online revenue and online reimbursements expense from online expense and recast its consolidated statements of operations to reflect these changes, as discussed further in Note 1, Summary of Significant Accounting Policies - Recasted Consolidated Statements of Operations. Given this recast, the Company has provided changes for the year ended December 31, 2023 to the year ended December 31, 2024 for the revenue sources, including online revenue and online reimbursements revenue, that were impacted by the recast. The disaggregation of online reimbursements revenue from online revenue and online reimbursements expense from online expense did not impact the Company's total revenues, net income or earnings per share as previously reported for 2024 and 2023. In addition to the historical information, certain statements in this discussion are forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements.

Our primary areas of focus are: (i) growing revenues and building loyalty among our core customers; (ii) ensuring our existing operations are managed as efficiently as possible; (iii) maintaining the strength of our balance sheet, including our leverage ratios, and finding opportunities to diversify and increase cash flow; (iv) returning capital to shareholders through share repurchases and dividends; (v) investing in our existing operations to enhance our offerings and remain positioned for growth; and (vi) successfully pursuing our growth strategy, which is built on identifying development opportunities in our existing portfolio and acquiring assets that we believe are a strategic fit and provide an appropriate return to our shareholders.

EXECUTIVE OVERVIEW

Boyd Gaming Corporation (the "Company," "Boyd Gaming," "we" or "us") is a multi-jurisdictional gaming company that has been in operation since 1975.

As of December 31, 2025, we had 27 gaming entertainment properties. Headquartered in Las Vegas, Nevada, we have geographically diversified gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, Pennsylvania and Virginia. In addition, we own and operate Boyd Interactive, a B2B and B2C online casino gaming business. We also manage the Sky River Casino located in California under a management agreement with Wilton Rancheria. We have the following four reportable segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest & South; and (iv) Online, (collectively "Reportable Segments"). The Las Vegas Locals, Downtown Las Vegas and Midwest & South segments include the operating results of our gaming entertainment properties. The Online segment includes the operating results of our online gaming business, including the acquisition on September 1, 2024 of Boyd Digital (collectively, "Boyd Interactive"), and online market access fees from our agreements with third parties throughout the United States. To reconcile Reportable Segments information to the consolidated information, the Company has aggregated nonreportable operating segments into a Managed & Other category. The Managed & Other category includes management fees earned under our management contract with Wilton Rancheria for the management of Sky River Casino in northern California and the operating results of Lattner, our Illinois distributed gaming operator.

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The table below lists the Reportable Segment classification of each of our gaming entertainment properties that were aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure.

(1) Property has been closed since March 18, 2020. The Company began demolition of the property during the fourth quarter of 2025.

(2) Property is subject to a master lease agreement with a real estate investment trust.

(3) Property permanently closed on November 9, 2025.

(4) Property opened on November 7, 2025 and is a variable interest entity consolidated in our financial statements.

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We also own a travel agency located in Hawaii. Financial results for our travel agency are included in our Downtown Las Vegas segment, as our Downtown Las Vegas properties focus their marketing efforts on gaming customers from Hawaii.

Most of our gaming entertainment properties also include a hotel, restaurants, bars, a sportsbook, retail and other amenities. Our main business emphasis is on slot revenues, which are highly dependent upon the number of visits and spending levels of customers at our properties.

Our gaming entertainment properties have historically generated significant operating cash flow, with the majority of our revenue being cash-based. While we do provide casino credit and the ability to transfer digital funds from a player's cashless "BoydPay" wallet, subject to certain gaming regulations and jurisdictions, most of our customers wager with cash and pay for non-gaming services with cash or by credit card.

Until July 31, 2025, we also held a five percent equity ownership interest in FanDuel Group Parent, LLC ("FanDuel"), the nation's leading sports-betting operator. On July 10, 2025, we entered into a definitive agreement with FanDuel and TSE Holdings Ltd., to sell our equity interest, terminate certain market access agreements and enter into certain new market access agreements. The sale of our five percent equity interest in FanDuel closed on July 31, 2025 ("FanDuel Equity Sale"), and the Company received aggregate cash proceeds of $1,758.0 million. See also Note 1, Summary of Significant Accounting Policies - Collaborative Arrangements - FanDuel.

Our industry is capital intensive, and we rely heavily on the ability of our operations to generate operating cash flow to fund maintenance capital expenditures, pay income taxes, repay debt financing and associated interest costs, repurchase our debt or equity securities, pay dividends, and provide excess cash for future development and to help fund acquisitions.

Our Strategy

Our strategy is to increase shareholder value by pursuing strategic initiatives that improve and grow our business.

Growing Revenues and Operating Efficiently

We are committed to growing revenues and building loyalty among core customers through targeted marketing investments with a focus on maximizing gaming revenues while operating as efficiently as possible.

Balance Sheet Strength

We are committed to maintaining a strong balance sheet and finding opportunities to diversify and increase our cash flow. We are also committed to a balanced capital allocation approach with our cash flows, with a current emphasis on investing in our business and returning capital to shareholders. The aggregate cash proceeds from the FanDuel Equity Sale during the third quarter of 2025 were used primarily to repay outstanding borrowings under our Credit Facility.

Evaluating Acquisition and Growth Opportunities

Our evaluations of potential investments and growth opportunities are strategic, deliberate, and disciplined. Our goal is to identify and pursue opportunities that grow our business, are available at the right price and deliver a solid return for shareholders. These investments can take the form of expanding and enhancing offerings and amenities at existing properties, developing new properties, expanding and enhancing online sports wagering and online casino offerings as they are legalized in and around the states we operate today, and asset acquisitions.

Maintaining our Brand

The ability of our Team Members to deliver great "Boyd Style" customer service helps distinguish our Company and our brands from our competitors. Our Team Members are an important reason that our customers continue to choose our properties over the competition across the country. In addition, we have established nationwide branding through our "Boyd Rewards" loyalty program. Our players use their Boyd Rewards cards to earn and redeem points at all of our gaming entertainment properties and online casino gaming offerings. Boyd Rewards, among other benefits, rewards players for their loyalty by entitling them to qualify for promotions and monetary discounts, earn rewards toward gaming and nongaming activities and receive benefits such as vacations and luxury gifts.

Our Key Performance Indicators

We use several key performance measures to evaluate the operations of our gaming entertainment properties. These key performance measures include the following:

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