Boyd Gaming - Q3 2020
October 26, 2020
Transcript
Operator (participant)
Good afternoon, and welcome to the Boyd Gaming Third Quarter 2020 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Josh Hirsberg, Executive Vice President, Chief Financial Officer, and Treasurer. Please go ahead.
Josh Hirsberg (EVP, CFO, and Treasurer)
Thank you, Gary. Good afternoon, everyone, and welcome to our third quarter conference call. Joining me on the call this afternoon is Keith Smith, our President and Chief Executive Officer. Our comments today will include statements that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today's date, and we undertake no obligation to update or revise the forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement. There are certain risks and uncertainties, including those disclosed in our filings with the SEC, that may impact our results. During our call today, we will make reference to non-GAAP financial measures.
For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K, furnished to the SEC today, and both of which are available in the investor section of our website at boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses. Today's call is also being webcast live at boydgaming.com and will be available for replay in the investor relations section of our website shortly after the completion of this call. So with that, I would now like to turn the call over to Keith Smith. Keith?
Keith Smith (President and CEO)
Thanks, Josh. Good afternoon, everyone. Thank you for joining us today. Our third quarter results clearly reflect the tremendous progress we have made since we began reopening our properties five months ago, and the strength of our operating teams across the country. Their ability to adapt to the significant changes brought about by the COVID pandemic has been a key factor in our success. As we discussed on our last call, when we started the reopening process in late May, it was clear we had to adapt our operating strategy to meet a much different environment. The world had changed, and we had to change with it. With limited capacity on our casino floors and reduced amenities for our guests, visitation to our properties was down significantly from a pre-COVID world.
We knew we needed to rebalance our operating and marketing costs to match this reality, and we had to find a way to control costs without compromising the great guest experience that our customers expect from us. At the same time, we needed to develop and implement entirely new safety and sanitation protocols throughout our business, aimed at ensuring a safe environment for our guests and team members. Successfully developing and executing this strategy over the course of just a few months was one of the greatest challenges we have ever faced. I'm extremely proud of how our operating teams have responded to this challenge, as well as the outstanding results they have produced. During our first full quarter since reopening, company-wide EBITDA is up nearly 12%, as operating margins increased more than 1,000 basis points to 36.6%.
This is the highest company-wide operating margin in our history. During the third quarter, 18 of our properties grew EBITDA at a double-digit pace. Eight of our properties achieved all-time record quarters for EBITDA, and 3 more set records for the third quarter, including Delta Downs, which incredibly lost 3 weeks of business due to damage from Hurricane Laura and still produced a record third quarter. While overall guest counts and revenues are down, our targeted marketing approach is driving strong play from top-tier customers. This targeted approach resulted in company-wide gaming revenues for the quarter that were down less than 8%, even with significant declines in our Downtown Las Vegas region. On a segment basis, in our Midwest and South segment, margins were up nearly 1,100 basis points to almost 40%, as we delivered the strongest quarterly EBITDA performance in this segment's history.
EBITDA rose nearly 17% during the quarter, despite the repeated closures of our Louisiana and Mississippi properties due to hurricanes. The results were even stronger in our Las Vegas Locals business, as EBITDA increased more than 23% to a new third quarter record. Overall, segment margins rose more than 1,600 basis points to an all-time high of 46%, as we achieved our best quarterly EBITDA performance in nearly 15 years. EBITDA growth was broad-based across the local segment. The one exception was the Orleans, which continues to be impacted by declines in convention business and destination travel to the Las Vegas market. However, our locals play at the Orleans remained strong and kept the Orleans results close to last year's record performance.
The impact of reduced visitation to Las Vegas has been more significant at our downtown properties, which have been particularly affected by a near-total shutdown in travel from Hawaii. But with an easing in travel restrictions now underway in Hawaii, we expect our downtown performance to improve in the future. It is important to keep in mind that today, the downtown segment represents only a modest portion of our current nationwide business. In 2019, Downtown Las Vegas accounted for just over 6% of our total property EBITDA, compared to 29% for our Locals business and 65% from our Midwest and South segment. Overall, our business has been remarkably stable since we reopened our properties.
With more than 90% of our business coming from customers who live within driving distance to our properties, we've been able to successfully execute a strategy built on visitation from our premium regional customers. As we look at the first three weeks of October, the positive operating trends from the third quarter have continued into this month. Well, there's no doubt that as conditions begin to normalize, there will be pressure to go back to the way things were, to return to normal. There will be pressure to add back operating and marketing costs to drive more people into our buildings and compete for casual play. There will be some situations where it may make sense to add back some level of marketing and overhead costs. Overall, today is our new normal.
We have established a more efficient and a more focused business model over these past several months, and we are determined to sustain higher margins going forward. While we are encouraged by strength in our most loyal customer segments, we also believe that there are ample opportunities available to us in the future as customers who have not yet felt confident enough to venture out grow comfortable in visiting our properties once again. Just as we are successfully implementing a new way of operating our traditional business, we are also expanding our digital presence. Through the convergence of digital technology and the traditional casino casino entertainment experience, we are creating new opportunities to engage our customers, both inside and outside of our properties. A good example is the continued expansion of our partnership with FanDuel.
In addition to our 5% equity ownership in FanDuel Group, we are increasingly leveraging our partnership with FanDuel to market our properties to millions of FanDuel sports bettors across the country. We are also partnering with FanDuel to offer a growing segment of our customers the ability to participate in our business from the comfort of home. During the third quarter, Boyd Gaming and FanDuel added mobile sports betting products in Illinois and Iowa. With these latest launches, we now offer mobile sports betting in five states, encompassing 30 million adults. And we are planning to further expand into the iGaming space with the launch of our own real money online casino product in the coming months. Consistent with this strategy of growing our digital presence, was the launch of our Stardust Social Casino in July, and a new digital initiative, B Connected Mobile, that we launched in September.
Connected Mobile will allow us to seamlessly integrate our growing digital portfolio with our traditional casino experience. Developed in partnership with Aristocrat Technologies, this mobile app will become the hub of our customer experience, offering guests frictionless access to our universe of online, social, and mobile gaming brands, including FanDuel, Stardust, and B Connected Sports, our Nevada-based sports betting app. In the future, we envision tying together all of our digital and traditional casino experiences into a single digital wallet within B Connected Mobile, fully transferable between our digital brands and our casino properties across the country. Through B Connected Mobile, we plan to give our customers the ability to use their smartphones to make wagers and cash out on slot machines and table games. They will be able to use their digital wallet to make mobile sports bets, to wager in online casinos, and to purchase credits in our Stardust Social Casino.
They will be able to use points or cash within their accounts to pay for restaurants, hotel rooms, entertainment, and other amenities at our properties. We are taking the first steps towards this convergence as we speak. A few days ago, with our partners at Aristocrat, we launched our cashless wallet technology at our Blue Chip property in Northern Indiana. During this test, Blue Chip customers can create a digital wallet linked to their B Connected card, then use their card to place wagers and cash out on slot machines. Based on the success of this initial launch and pending regulatory approvals, we plan to expand this digital wallet to additional amenities and additional Boyd Gaming properties across the country, and then integrate that wallet into B Connected Mobile to create a true all-digital experience. And lastly, we remain focused on our partnership with the Wilton Rancheria Tribe in Northern California.
We are putting the final pieces in place to allow the tribe to secure project financing in the next several months and move ahead with the project construction. This first-in-class resort will be strategically located on a major highway just south of Sacramento, and is ideally situated to capture a significant share of the lucrative Northern California gaming market when it opens its doors in the second half of 2022. We are honored to be the tribe's partners on this exciting project, which will allow the Wilton tribe to finally realize their long-standing goal of self-sufficiency. So in all, our team delivered an outstanding performance in the third quarter. As we look to the future, we believe an important part of our continued success is the health and well-being of the communities that we serve.
From the day they founded Boyd Gaming 45 years ago, Sam and Bill Boyd instilled in our company a commitment to sharing our success with others. By investing in our communities, we help create healthy communities. When our communities thrive, we thrive. We have remained firmly committed to this philosophy throughout these last 45 years, and we continue to advance this philosophy today, helping our communities respond to the challenges of 2020. Following the impact of Hurricane Laura in late August, we provided significant financial assistance to our hard-hit Louisiana team members. We assisted the broader Louisiana community as well, with donations to community relief organizations like the American Red Cross. Here in Nevada, we are actively providing support to our hometown as it deals with challenges created by the COVID pandemic.
To assist those who have been financially impacted by declines in travel to Las Vegas. We are expanding our long-term partnership with Three Square Food Bank, providing cash and in-kind contributions to support their mission of helping Southern Nevada residents in need. To assist local children with remote learning while our schools are closed, we are providing funding to the Boys and Girls Club of Southern Nevada to help provide remote learning facilities to low-income K through 12 students. As a company, we are proud of our ability to keep creating shareholder value despite new challenges. As we continue this long track record of growth, we will keep investing in our communities, strengthening the foundation for our future success. Thank you for your time today, I will now turn the call over to Josh. Josh?
Josh Hirsberg (EVP, CFO, and Treasurer)
Thanks, Keith. As we think about our business today, the one word that comes to mind is consistency. Since reopening our properties, our own ability to execute an operating strategy engineered to drive enhanced profitability, as well as our customers' behavior, has been amazingly consistent. Going forward, we expect to retain much of the efficiency that has been captured in our operational work performance since reopening. We are focused on serving our best customers in an environment of reduced operating expenses and highly targeted marketing. Now, turning to the quarter. Corporate expense and taxes were higher than we expected as a result of transitioning our properties from being closed to reopened. We expect fourth quarter corporate expense to be similar to third quarter levels.
These are not, however, good run rate levels for 2021 corporate expense, as these amounts include catch-up items for the periods we were closed. Capital spending during the quarter was $29 million, bringing year-to-date to approximately $105 million. We expect to spend about $25 million during the fourth quarter, excluding investments related to the repairs at Delta Downs, which are expected to be reimbursed from insurance proceeds. During the quarter, we used a portion of our cash balances to repay our fully drawn credit facility. As a result of completely reducing these borrowings, we had approximately $500 million of cash at the end of the quarter and more than $930 million of availability under our credit facility.
After quarter end, we extended our credit facility and Term Loan A maturities to align with our Term Loan B maturity in September 2023, and we increased our revolver commitments such that our undrawn availability now exceeds $1 billion. In all, our operating teams have done a tremendous job executing on the company's strategy since we reopened our properties. Their hard work resulted in the performance we delivered for the third quarter. Just as exciting, there is no sign of these results changing. October continues the trend of Q3, and while there are certainly risks and challenges that will present themselves, we are committed to sustaining our more efficient and profitable operating model into the future. Gary, that concludes our remarks, and we're now ready to take any questions from participants on the call.
Operator (participant)
We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question comes from Joe Greff with JPMorgan Chase & Co.. Please go ahead.
Joe Greff (Analyst)
Good afternoon, guys. Congrats on the results. Josh and Keith, can you just talk about the mix and the rate of recovery between the non-rated retail and the rated database players in the locals, the Midwest and South gaming regions? And then, where I'd like to go with this and sort of, you know, to really the crux of what I'm trying to get to is, to the extent that the recovery looking ahead, the recovery in the rated database player segment is stronger than that non-rated segment, to what extent is that a negative margin mix and reverses some of the margin gains? How do you think about that?
Keith Smith (President and CEO)
So a couple of couple of comments, Joe. I think as we look at, you know, the database, we continue to see, you know, strong play from our upper-tier customers, and from our higher worth customers. Those segments, in some cases, are actually, you know, growing year-over-year. Unrated play as a percentage of total play is actually up a little bit, and that's just because it declined less than our rated play overall. So they shifted a little bit, not significantly. I think as we look forward, as I said in my prepared remarks, we, we think there's still a, a good deal of upside as customers who have not yet come out and been comfortable coming out to visit us will come out in the future.
And so there, you know, there continues to be, I think, you know, positive, positive momentum in the business.
Josh Hirsberg (EVP, CFO, and Treasurer)
Yeah, the only thing I would add to that, Joe, is I think, Keith's comments certainly are accurate, and they reflect what has been really going on in the business since we reopened. As we said in our remarks, our business has been very consistent, and so, you know, the trends that we have seen since we have reopened, whether it's in the rated segment or the unrated segment, have really not changed. And both segments have been, you know, equally kind of strong and contributing in their proportionate share, I think is the point. We've not really seen any, you know, degradation in one segment or the other as we've passed through time, whether it's as a result of, you know, unemployment,...
benefits going away or other changes, that folks would have perhaps logically thought would have affected one segment over the other. I think largely in the rated segment, certainly these are customers that we know well and have seen before and are paying, playing at the levels that they have historically, and similarly from the perspective of the unrated segment.
Joe Greff (Analyst)
Great, excellent. And then just as a follow-up, you obviously couldn't tell by, by looking at the EBITDA results in the Midwest and South, but, can you quantify the hurricane impact in the 3Q?
Keith Smith (President and CEO)
Well, when you, when you look at Q3 last year, we also had some hurricane impact, and while we haven't quantified it, I'll just say it was... Hang on, Josh?
Josh Hirsberg (EVP, CFO, and Treasurer)
Yeah. Yeah. So, Keith's correct. We had hurricanes last year, and so that mitigated, you know, a comparable impact for this year. But, this year was obviously worse and impacted us more significantly. And, you know, we estimate kind of $3 million-$5 million kind of an impact.
Joe Greff (Analyst)
Thank you very much, guys.
Keith Smith (President and CEO)
Good.
Operator (participant)
The next question is from Carlo Santarelli with Deutsche Bank. Please go ahead.
Carlo Santarelli (Analyst)
Hey, guys. Thanks for taking my question. Josh and Keith, both of you mentioned kind of in your respective commentary that the higher end, higher net worth, higher worth customer within the database, you've seen a lot more frequency and spend or play from them. Is that something that over the longer term, you believe is sustainable? And what do you think is kind of driving, you know, the outperformance of that segment specifically?
Keith Smith (President and CEO)
So, you know, if you dial the clock back, this actually is a journey we've been on for a number of years as we relaunched our B Connected program a couple of years ago and started to focus on higher worth play. And then the COVID pandemic and the, you know, requirement we had to shut down the business entirely, you know, allowed us to completely refocus and maybe supercharge that effort. So we are, you know, really focused on this high-end play. We are able to, I think, speak to them differently as we reopen the business, speak to them more directly, provide maybe higher touches than we did in the past. I can't tell you that they're spending at a significantly higher level.
We just have more of the higher worth customers in the building and less of the lower worth customers in the building. I mean, if you were to look at averages, you know, the average spend is up, but largely driven by just fewer lower-end customers in the building.
Carlo Santarelli (Analyst)
That makes sense. Thank you. And then, I don't know if you guys would be willing to kind of take a shot at answering this, but if we ignore the downtown segment for a second, obviously, the locals margins up 1,600 basis points year-over-year, and the Midwest and South up a little over close to 1,100. Would you guys like... I think, Josh, you said most of the savings operationally, you would expect to keep. If we looked at those two growth rates in the margins and kind of assumed, you know, more than half of them on a go-forward basis, is that, in your eyes, at similar run rate levels to what we're looking at right now, reasonable?
I mean, could you, could you maintain 800 basis points and 500+ basis points in Midwest and South, EBITDA margins on a go-forward basis?
Josh Hirsberg (EVP, CFO, and Treasurer)
So, I think that it's more in those ranges of a ballpark than either at the upper end or the lower end. If you think about, you know, kind of the drivers of expense of our business, the biggest components are obviously labor and marketing. And the changes that we've made to those categories, in particular, in a large way, are largely permanent, in the way we think about those. Now, there's a certain aspect of marketing that will naturally come back, potentially based on consumer demands or competitive pressures, potentially, but that's nowhere near the order of magnitude of what we've removed from the business, in terms of marketing.
I think on a much smaller case, the same thing you could say about labor and many of the other categories where we've made, and I'm sure our peers in the industry are doing the same thing. You know, they've taken a fresh approach, and we've taken a fresh approach at looking our expenses across the board and largely taking made decisions that are permanently removing many of those costs.
Keith Smith (President and CEO)
Yeah, some labor will, you know, be added back into the business over time as we open additional amenities, as we deem appropriate. So there will be some incremental labor. But as Josh said, we view a lot of the changes that have taken place as permanent in nature.
Carlo Santarelli (Analyst)
Great. Thank you, guys.
Keith Smith (President and CEO)
Sure.
Operator (participant)
The next question is from David Katz with Jefferies. Please go ahead.
David Katz (Analyst)
Hi. Afternoon. My primary question, I think you just answered quite artfully, and thank you for that. What I also wanted to ask about is, you know, when we look across the space and your peers and the rollout of digital, and I know, Keith, you touched on this a bit.
... but, you know, at what point could we be in a position to pencil something in terms of that opportunity for you, right? Because we, you know, we have others that have kind of laid out, you know, are arguably different types of strategies than what you have, but you're a participant as well. What light can you shed for us?
Keith Smith (President and CEO)
So look, as, you know, as we look at this opportunity, and we started down this road a couple of years ago, and we signed our agreement with FanDuel, we approached it strategically a little bit different than others, whereas our focus was on creating cash flow and creating EBITDA, and not building large infrastructure and incurring large losses to compete in this business. And so we've executed, obviously, a number of deals with FanDuel across the country, whether it's in Pennsylvania or recently in Illinois and Iowa and Indiana and Mississippi, and hopefully, there'll be more as sports betting is approved across the nation.
I will tell you that today, or as we think about 2020, just kind of the recurring EBITDA coming out of the, that business today is in the $8million-$10 million range, and that includes Illinois that just launched in July, so it's not even a full year of Illinois. Now, that $8 million-$10 million doesn't account for one-time fees that we will receive as a result of selling additional skins in other states, doesn't account for, you know, the growth in other states, and doesn't account for, you know, the EBITDA that the cash flow will come out of our forthcoming online gaming application that we will launch here in the next couple of months. So it's $8 million-$10 million, and it's growing.
What's going to be 8-10 isn't really a full year or full run rate.
David Katz (Analyst)
Perfect. Thank you very much.
Operator (participant)
The next question is from Shaun Kelley with Bank of America. Please go ahead.
Shaun Kelley (Analyst)
Hi, good afternoon, everyone. Thanks for taking my question. Josh or Keith, you know, either one, maybe want to start with the locals margins again. You know, but I, I think one question we had was, you know, from the time you were open, it does look like your margins actually improved in, you know, Q3 over Q2. So I was wondering if we could dig into that a little deeper. What would drive that sequential change?
I mean, again, you're open for longer, you know, some costs would come back, you know, and admittedly, you're probably, you're probably light on some of the, the low margin stuff, but, but I'm just kind of curious on how we go from kind of 1,300 up 1,300 to up 1,600, if you could elaborate on that, because it's very impressive.
Keith Smith (President and CEO)
Well, other than saying that we've got a tremendous management team here in the Las Vegas Locals market that is just doing an, you know, outstanding job driving the business, that's really at the heart of it. But setting that aside, I think the other explanation is the Las Vegas Locals business, quite frankly, started soft or started slow when we reopened in June, whereas other businesses in the Midwest and South actually started very strong, almost with a bang. Here in Las Vegas, it started a little softly and has grown. And I think as it has grown, you know, we've obviously gotten better, and we've learned what works and what doesn't work. And, you know, again, the team's done a great job, but the only real explanation is it did start slow in June and early July and has gotten stronger.
Josh Hirsberg (EVP, CFO, and Treasurer)
And the only thing I would add to that, Sean, is, you know, kind of leading back up to the reopening period, there were a lot of questions around the, you know, what impact any weakness on the Strip would have on our customer. And we were, and some of our peers in the locals market were basically saying: Look, you know, this is a regional market like any other regional market, and if anything, we have kind of the backdrop of a very, fairly strong Las Vegas economy. And I think, you know, that's what's proven out here, though, a regional customer is a regional customer.
Great. And then, just as my follow-up, you know, Josh, you've been very clear on, I think, the driving buckets for, you know, kind of the, what's going to be sustainable out of the margin improvement, pointing to both, you know, labor on property and then, you know, the promotional or marketing side. Now that we've got a full quarter of data, could you just help us a little bit with you know, quantifying any of these aspects, either on the labor front, you know, maybe, just a generic property, how much we're down in FTE counts on a year-over-year basis, or, you know, on the promotional or marketing front, how much is like marketing spend down or promo dollars down?
Shaun Kelley (Analyst)
Again, just to really help us kind of dial in on what types of magnitudes of reduction have come out of the business.
Josh Hirsberg (EVP, CFO, and Treasurer)
Yeah, Sean, I'd really like to give you that information, but I think our competitors would like to hear the same thing from us at the same time. So I think each of the companies is approaching this in a similar way, but maybe unique to their own approach to the business. And so I think I want to withhold from answering that question.
Shaun Kelley (Analyst)
Entirely fair. Thank you both.
Josh Hirsberg (EVP, CFO, and Treasurer)
Sure.
Operator (participant)
The next question is from Felicia Hendrix with Barclays. Please go ahead.
Felicia Hendrix (Analyst)
Hi, guys. Good afternoon. So Josh and Keith, you know, especially today, we could see, you know, there's a lot of concerns in the market about, you know, kind of where we are in this COVID cycle. And so, you know, as we head into the colder months and, you know, the concerns kind of get greater about, you know, whatever you want to call it, second wave, third wave, do you see risks in the states that you operate in for reclosures? And then, Josh, you know, your liquidity runway right now is very strong, but if you could just remind us of your balance sheet capacity to raise more funds if you needed to, that would be great.
Keith Smith (President and CEO)
... Sure, Felicia, in terms of the risks of, you know, future closures, certainly, we, we don't control obviously that, and you can see, and probably have seen in the state of Illinois, where they have started to put more restrictions on, you know, a variety of businesses, including casinos, in certain locales or certain counties where the positivity rate has risen beyond a certain level. I think it was 8% in Illinois. So, you know, that certainly could be an impact, obviously, or a risk to the business. We certainly view that as a short-term risk, that, you know, obviously, would pass through, but you certainly can't ignore that risk. We don't, you know, see that in other states. We're not concerned. We're watching it in Illinois. The jurisdiction we're in, you know, as of now is fine.
We're not one of those jurisdictions that has to reduce their capacity to 25%, but we're certainly watching it. But certainly, any huge resurgence could be a risk to the business.
Josh Hirsberg (EVP, CFO, and Treasurer)
Felicia, to your second question, in my remarks, I mentioned we have over a billion dollars of undrawn capacity. We have cash at the end of Q3 of about $500 million or so. And, specifically, we have the ability, you know, even in this period of time, with covenant waivers through our amendment process, to raise another, I think it's $600 million-$700 million of secured debt that we're allowed to do. So, you know, we have more than ample capacity to last in excess of two years of complete closure. You know, and that's at a run rate, when we had kind of run through this the first time of about $65 million of closed run rate expenses.
And we had different levels that we could have chosen to pull the trigger on to reduce those expenses even further. So I would say conservatively, over two years of runway, if we had to completely close the business, every property again.
Felicia Hendrix (Analyst)
Okay, that's super helpful. And then, you know, Keith, when you kind of go look at your Las Vegas Locals market, and, you know, you made the comment, like with the Orleans, and you're not seeing the convention business, stuff like that, you know, what are you kind of anticipating in terms of... I mean, it could take a while to get back to normalized, but just to see some kind of, like, breath of life, you know, back into that part of the business. And then, you know, similarly, what would it take for you to open the properties that are closed now?
Keith Smith (President and CEO)
Sure. So I think as we think about the recovery or the ongoing recovery here in Las Vegas, you know, two words come to mind, long and slow. I think it's just going to be a slow recovery. I think there is some pent-up demand, some people wanting to come out. When the governor recently lifted the cap or, you know, of the ability to have meetings to 250 or 10% of certain spaces, the phone started ringing, and we had people interested in coming out and holding those events. So it shows that there is some demand for the product, but it's going to be a long, slow recovery.
As I said, the good news at the Orleans, or, yeah, the good news at the Orleans is we have a strong component of locals play there that kept it very, very close to last year's record results, and key last year was a record. With respect to the closed properties, so there's three of them, they're all here in Las Vegas, Main Street, Eastside Cannery, and Eldorado, we probably see reopening them in that order, but it will depend on, you know, how the business flows. We think that Hawaii and the downtown markets will probably come back quicker than the other two markets, either the Boulder Strip market. You know, we have good business at Sam's Town. We just don't have enough demand to open Eastside yet or the Eldorado.
As soon as the business demands it, but I'd expect, you know, sometime next year, we certainly get Main Street open.
Felicia Hendrix (Analyst)
Great. And just a quick, just as far as the properties that were open, how was your market share? Was that relatively steady or improved?
Keith Smith (President and CEO)
The market share, the market share in Las Vegas, I would say, was steady to up. We actually, depending on, what period of time you run the numbers for the last three months that they were reported, which would be, June, July, August, we actually were up.
Felicia Hendrix (Analyst)
Okay, great. Thank you so much.
Josh Hirsberg (EVP, CFO, and Treasurer)
Thank you, Felicia.
Operator (participant)
The next question is from Steve Wieczynski with Stifel. Please go ahead.
Steve Wieczynski (Analyst)
Yeah, good afternoon, guys. So I want to go back to your overall database, and on your last call, you talked about you had significant growth in that in your database during the second quarter. I just want to ask, was that growth similar in the third quarter, or did that slow, which I assume is probably the answer, but just trying to gauge here a little bit more about how those new to property or new to brand folks are, you know, are trending at this point.
Josh Hirsberg (EVP, CFO, and Treasurer)
Yeah. Steve, I don't think we were alluding to that our database was growing disproportionately, if you took that away or if that's what we said. I think in reality, our, you know, the customers we're seeing, we're seeing, you know, a rated customer that we obviously know and have seen before, hence, they're rated. And they're playing at levels that are similar to prior levels. The win per units are up just because we don't have the dilution of, you know, kind of some of the other players that are in the database. And as Keith mentioned, we have a significant portion of the older demographic within our database that is not coming out and playing right now just because they don't feel comfortable.
We are seeing more of a younger demographic, but I would not characterize those as necessarily a new customer in our database, because once again, because we know they're younger, we know their play, they're rated customers, and so we know them. And then lastly, the component that we've seen just as equally, strength from, that we spoke about earlier in the call, in the question and answer session, was the unrated segment has been healthy as well. And, you know, so I'm not sure if that helps answer your question, but that's how we're trying to frame it when we think about it from our perspective.
Steve Wieczynski (Analyst)
No, that's, that's super helpful. Thanks, Josh. And then, the second question, you talked about October has been very similar to the trends you witnessed, you know, through the third quarter. But I guess for the rest of the quarter, this might be a difficult question, but, how are you guys thinking, you know, around some of the upcoming events that are going to be coming up in the fourth quarter, whether that's the election, you know, the next week or so around the election and then maybe around the holidays this year, which, you know, some folks may stay closer to home, and I guess that ultimately could be a, you know, a benefit for you guys?
Keith Smith (President and CEO)
Yeah, I don't, I don't think our crystal ball is that clear that far out. I mean, we're benefiting from a regional business where, once again, largely people can drive to us. And so to the extent people stay closer to home, it just continues to benefit us. And if they decide to come to Las Vegas, then we'll receive that benefit, which is, you know, the benefit of having a diversified portfolio geographically. So look, what happens with the election and how that impacts people, does that impact spend patterns or them going out? You know, you can, you know, you can log on to the sportsbook and place a bet if you want, but I'm not going to make a prediction at this point.
Josh Hirsberg (EVP, CFO, and Treasurer)
I think one thing I was going to add to it, Steve, is I think that at least the way we think about who our customer is today, this is what they do. This is their pastime. This is what they view as their form of entertainment. And so I think that's why we have largely seen this customer perform, quite honestly, so consistently. You know, when we opened initially, they were the first ones to show up, and when we had to be sure we enforced social distancing and mask wearing, you know, they kind of played through that, and when the unemployment benefits went away, they played through that. Now, there's no guaranteeing that they can overcome every single hurdle that comes their way over the, in the future.
But I think in our mind, and based on our survey of our customers and the customer trends that we're seeing in our database, that's really what we can discern from who's in our building these days. And it's there, you know, to the extent they showed up on holidays last year, they'll probably show up again this year. That's the best we can go on for right now.
Steve Wieczynski (Analyst)
And Josh, can I ask one more real quick one? Have you seen any change in that 65-year-old and up customer, or has it been just pretty status quo?
Keith Smith (President and CEO)
I think there have been starting to be, you know, small improvements in that. Nothing I would call a significant trend at this point, but we have started to see some of them come back out and, you know, engage with us.
Steve Wieczynski (Analyst)
Okay, great. Thanks, guys, appreciate it.
Keith Smith (President and CEO)
Anything positive, it's not negative.
Steve Wieczynski (Analyst)
Okay, great. Thanks, guys.
Operator (participant)
The next question is from Barry Jonas with Truist Securities. Please go ahead.
Barry Jonas (Analyst)
Great, thanks. So I wanted to start with maybe approaching the risk question from a different angle. How do you think about risk to this model under the scenario that we have a working vaccine?
Keith Smith (President and CEO)
Well, so to the extent there's a working vaccine, if the implication or the, you know, the game theory is that then more people will come out and participate, you know, some of our customers who today aren't yet comfortable coming out, will come out and join us. And so there's upside to the business. So I think a vaccine is incrementally positive to our overall business. Is it possible that some of the customers that are with us today then, you know, spend a little bit of time somewhere else, spending their dollars somewhere else? Certainly. That is possible. As Josh said a few minutes ago, this tends to be their core form of entertainment, and so they're going to continue to play with us. I think there's a natural balancing effect.
And once again, once some of the customers that come out that aren't used to or haven't been playing with us, come back out, I think it's incrementally positive.
Barry Jonas (Analyst)
Sorry, I guess I meant more, well, also on the cost side, in terms of some of the amenities that have been removed.
Keith Smith (President and CEO)
Well, we're monitoring that as we go, and to the extent that we need to bring back amenities, you know, we'll carefully monitor that and bring them back and make sure that they are positive and not a drain on the EBITDA of this specific property, where we bring them back.
Barry Jonas (Analyst)
Great.
Josh Hirsberg (EVP, CFO, and Treasurer)
Yeah, Barry, I think that's the key, right? Where there are opportunities presented by customer demand, you know, our operations guys are taking advantage of that, but with the eye toward kind of doing it in a different business model or with different pricing or under different circumstances, to make sure that we're introducing amenities and other aspects of our business that may not be open today in the most optimal way possible. So, I don't think it's necessarily that, you know, we'll probably see some margin compression over time as a result of introducing new amenities. But the reality is that-
Keith Smith (President and CEO)
... we're approaching those historically lower margin businesses in a much different way with a much different customer.
Barry Jonas (Analyst)
Great, great. And then just one more for me. You know, I'm curious to get more color on your foray into cashless gaming. How do you think about maybe upside on the top line or else, on the cost side, to justify the investment?
Keith Smith (President and CEO)
So first of all, it's about, you know, safety and, and security and providing our guests yet another opportunity to have kind of a contactless opportunity to engage in our form of entertainment as they come out. So that's kind of first and foremost. Second, I think there are opportunities to reduce costs in the business with less cash in the building, and it is obviously a marketing feature, as our, you know, frankly, our higher worth guests don't need to, don't like to necessarily handle cash and insert, you know, bills into slot machines. They can do it now seamlessly and upload and download cash. I think it's a real, real marketing opportunity, a real competitive advantage for us. And in the few days, it's been live at Blue Chip, we've already had several hundred customers take advantage of it, and that's with no marketing.
We just kind of turned it on quietly. We're just kicking off the marketing this week, so I think there's a real opportunity for it.
Barry Jonas (Analyst)
Great. Thanks so much.
Operator (participant)
The next question is from Thomas Allen with Morgan Stanley. Please go ahead.
Thomas Allen (Analyst)
Thank you. 2020 EBITDA, do you think from
Keith Smith (President and CEO)
Thomas, you're breaking up.
Thomas Allen (Analyst)
You're gonna-
Keith Smith (President and CEO)
Thomas, you're breaking up.
Thomas Allen (Analyst)
Can you hear me now? Hello?
Keith Smith (President and CEO)
A little bit.
Thomas Allen (Analyst)
From sports betting, pick it up between market access and what you're seeing on the retail sportsbooks. And I think you've had your misses... Any interesting trends there as we've kind of gone two years in? Thanks.
Keith Smith (President and CEO)
Hey, Thomas, we, we really couldn't understand you. Gary, let's go to the next caller, and then we'll circle back and try Thomas again.
Operator (participant)
Okay, and the next question is from Jared Shojaian from Wolfe Research. Please go ahead.
Jared Shojaian (Analyst)
Hi, good afternoon, everyone. Thanks for taking my question. So I imagine the slot performance is meaningfully outperforming the tables right now. I know the data is not explicitly broken out that way, but I would also imagine that's probably affecting the mix on the margin side, just given the slots are significantly higher margin. Is that having a meaningful effect on the mix right now on your margins, or would you say no?
Keith Smith (President and CEO)
Not really. I mean, while we have fewer opportunities on the table game side, because capacity is limited there to, you know, four seats at a 21 table and fewer people at a craps table and a baccarat table, you know, average bets are increased on the table game side, and so we're yielding the table games business just as well as we're yielding the slot business. Clearly, 80% of our revenue as a company comes through slots, and so as they perform better, it obviously has a bigger impact on the overall margin of the business. There's no question, but table games is performing and is not dragging down, you know, the overall margin improvement.
Jared Shojaian (Analyst)
Got it. Thank you. And then just switching gears here, just given what we've seen with valuations and the sports and iGaming names, can you just talk about how you're thinking about your FanDuel stake over the longer term? Is that something you would ever consider monetizing, or do you believe there's strategic importance to holding on to it?
Keith Smith (President and CEO)
I think today we're very happy with, you know, that partnership, that, you know, equity ownership that we have. Obviously, it is worth a tremendous amount of value to the company. They've been a great partner. They've got great tech. They are, you know, a leader in the business, whether they're number one or number two in almost every state they operate in. So I think right now the partnership is great. You know, longer term, 3-5 years from now, where that goes, I couldn't really tell you. We're not, we're not focused on that. We're focused on the next several years. And, today it's a great partnership, and, you know, we're happy with the, happy with the ownership interest we have.
Jared Shojaian (Analyst)
All right. Thank you very much.
Operator (participant)
The next question is from Chad Beynon with Macquarie. Please go ahead.
Chad Beynon (Analyst)
Hi, good afternoon. Thanks for taking my question. Obviously extremely early, given that I think it opens in the next two or three days, Circa that is. But just in terms of what you're hearing with anyone who toured the property or I guess what the final product is and kind of who that caters to and how that marketing evolved, has anything really changed just in terms of how you view how Circa fits into the downtown market? I believe most believe that, you know, it is a different product, and it won't really take away from you and some of your competitors, but just wanted to get an update on that, if you have any views there.
Keith Smith (President and CEO)
Yeah, I would agree. I think it is a very much a differentiated product. It is a higher-end product than, than what is down there today, generally speaking, with maybe exception of the Nugget, which is also a high-end product. And I think it's going to draw a lot of visitors to the downtown area to visit it, to look at it. Obviously, we have a, a property a block away, and a property directly, two properties directly behind it. So we will take advantage of and be the beneficiary of all the foot traffic going in and around there. Remember, the lion's share of our downtown business is driven by Hawaiian customers, mainly out of, you know, the island of Hawaii. And so all, all the traffic that comes down to visit Circa will be incremental.
I think it is great for the downtown market. I think the investment overall is great, the product's going to be great, and just looking forward to having it open later this week.
Chad Beynon (Analyst)
Great. Thanks, Keith. And then, Josh, on the CapEx, I believe you said $25 million for the fourth quarter, and we're not expecting much in terms of slot CapEx in that budget. But how are you thinking about, I guess, the maintenance CapEx and the mix between gaming product and then other items around your properties going forward? Do you believe that there will be as big of a need or budget for updating gaming product?
Josh Hirsberg (EVP, CFO, and Treasurer)
Look, I think that folks are playing slot machines, and I think that we have to evaluate and make sure that we have the best slot product out on the floor at all times. And so our budgets will, you know, kind of reflect that. I don't think it means that it's any larger than it has been historically. But I'm not... I don't think we know enough at this point to say if it'll be lower or not. I think coming into next year, we would largely think, as of today, that it'll be about the same.
But the reality is, I think that when you had a floor that had much more capacity than you're utilizing today and getting the results that you're getting today, you know, you really have to rethink how the floor is laid out and how many slot machines you have out on the floor as a first step. And then secondly, develop, you know, how you're going to reinvest in slots going forward and other types of gaming technology. But it could be the same because you're just trying to make sure you have the same product, improved product with just fewer, you know, kind of overall units out there. And I think that's the process we're going through now to try to figure out and understand exactly how we want to reinvest in a quote unquote smaller footprint.
Chad Beynon (Analyst)
Thank you very much.
Josh Hirsberg (EVP, CFO, and Treasurer)
Yes, sir.
Operator (participant)
The next question is from John DeCree with Union Gaming. Please go ahead.
John DeCree (Analyst)
Hi, everyone. Thanks for taking my question.
Josh Hirsberg (EVP, CFO, and Treasurer)
Mm-hmm.
John DeCree (Analyst)
I think a good follow-up to your last comments, Josh, is a lot of markets are still operating with pretty significant capacity constraints. I was wondering if you could comment, sorry if I missed it, if you already have, about what you're seeing during peak periods. Do you feel capacity constrained at any point? And not sure we know when some of those capacity constraints might loosen, but could you benefit during certain times in having a little bit more capacity back?
Keith Smith (President and CEO)
So this is, this is Keith, John. I would say for the majority of our properties, today, during peak times, we're not really capacity constrained. We have a few properties that have lower machine counts, and therefore, I'm thinking of a Delta Downs with 1,600 units, and they're generally at 50%, you know, restriction. They could use a few more during peak periods, but for the most part, no, we're not bumping into ceilings with respect to capacity. So now, remember, we have significant reduced visitation throughout our buildings. So we haven't seen that, we haven't seen that problem through the opening phases.
John DeCree (Analyst)
Got it. That, that's helpful. If I could ask one more, kind of do a one-eighty here.
Keith Smith (President and CEO)
Yep.
John DeCree (Analyst)
In kind of assessing, I think, an earlier question about the potential risk of additional closures, like we're seeing some reaction in Illinois. If we saw reduced revenue going forward, for whatever reason, closures or the winter gets difficult, how much slack is in the system, realizing you've already cut a substantial amount of costs? I mean, if you saw a notable revenue decline, is there some flex, is there some variable costs outside of gaming taxes that you could tweak if it was a sustainable period of lower revenue than what you're seeing today?
Keith Smith (President and CEO)
Yeah, it's hard to... It's a hard question to answer in a very theoretical environment. It depends on how much and where, and, you know, is it slot-focused or game-focused, and, you know, which customers are not showing up? You know, is it the higher-end customers? Is it the unrated customers? So it's a fairly theoretical question, and, you know, there's probably six different ways to answer it, depending on where that revenue decline is coming from, you know, how much can we continue to reduce some of the non-gaming amenities that we have through our customer reduction? So, tough, tough question. I don't think I can provide a very intelligent answer to you.
Josh Hirsberg (EVP, CFO, and Treasurer)
The one thing I would add to, though, John, is like one thing that the crisis has given us insight into is there are very few fixed expenses in our business, and so we have a lot of flexibility to adapt. And to Keith's point, you know, kind of where you adapt depends on where you're seeing weakness or what's happening to your business from a revenue perspective. But, you know, the whole industry has shown an ability to adapt to going from a significant amount of revenue to very little revenue quite quickly. So I think everything in between becomes just kind of iterations of that.
John DeCree (Analyst)
Got it. That, that's helpful. Tough question. I think you guys answered it fairly well. Thank you.
Operator (participant)
The next question is from Joseph Stauff with Susquehanna. Please go ahead.
Joseph Stauff (Analyst)
Good afternoon. Just two follow-ups if I can, please. So Josh, I don't know if you can't answer this or whatever you can give us, but you know, what level of 2019 traffic or normalized traffic, however you wanna define it, would require, say, a more notable change in marketing spending?
Josh Hirsberg (EVP, CFO, and Treasurer)
Hmm. I don't think that we would think about it that way. I think, you know, the way we're kind of marketing to our customer today is based on kind of ensuring we have the loyalty of our, quite honestly, our best customers, and then making sure that we're reinvesting at the right levels for the different tiers of customers that we choose to market to and want in the building from a profitability perspective. I think to the extent that, you know, we have a range of outcomes today, obviously, customers that perhaps were previously getting reinvestment that aren't today because of their worth. And then you have guys who are worth more, who are getting slightly, potentially more investment than they were historically.
But I think the result is not so much driven by kind of trying to drive the... You know, historically, we did try to drive based on volume through the building, and I think that's what's different, at least in our approach, and I'm sensing it of our peers as well. We're not trying to just drive volume for volume's sake. We were able to see a lot better when the business was closed, perhaps better than we ever had, who was profitable and who wasn't profitable, and all the incremental costs that are associated with customers that may have been toward the lower end, that you thought had some modest profitability associated with them, that actually they weren't that profitable.
And so I, I'm not so sure it's really dependent on kind of a return of some level of volume of customer, quite honestly. I don't know if that helps, Joe.
Joseph Stauff (Analyst)
No, it does, certainly. I mean, it sounds as though it's very database driven at this point, and, you know, to the extent, you know, the world gets better, you know, vaccine, et cetera, whatever, then maybe at that point, there would be more increased marketing spending to go after the more casual customer. Is that fair?
Keith Smith (President and CEO)
I wouldn't read that into it. I think that this model that we've created, that is, you know, it's getting more efficient and more profitable than today, is driving increased EBITDA vis-à-vis last year, is a model we're comfortable with. And, you know, as this, you know, COVID pandemic fades, hopefully sooner than later, as a vaccine comes out and takes hold, hopefully sooner than later, and the business starts to return to normal, you know, I mentioned in my prepared comments, we're not prepared to return to normal. We're committed to sticking with, you know, this refined business model. So, you know, right now, the model is creating profits in excess of last year's profits, and we're pretty pleased with that.
Joseph Stauff (Analyst)
Understood. One follow-up, if I can. You know, just on the digital side, so it sounds as though you'll launch your real money proprietary offering, you know, sometime, I guess, in the first quarter, early next year, whenever that is. And, you're using FanDuel's tech stack, if I'm correct, and what are the economics of that? Do you... Is that where you pay them effectively a B2B fee for using that tech stack? How are those economics arranged?
Keith Smith (President and CEO)
Yeah, so you're right. We are using their tech stack, and we're actually asking them to run it for us because they have the expertise to do this, where we haven't gotten into that business yet. And so we will get a revenue share out of that arrangement that will continue to kind of. That $8 million-$10 million that I talked about for 2020, you know, will obviously continue to grow. We'd expect it to be much larger next year.
Joseph Stauff (Analyst)
Thanks very much.
Operator (participant)
We have time for one more question, and that question is from Thomas Allen with Morgan Stanley. Please go ahead.
Thomas Allen (Analyst)
Hey, good afternoon. So the $8 million-$10 million that you guys are generating this year on sports betting, can you help us just unpack that between the retail sportsbooks and the market access? And then, just as a follow-up to that question, you know, there are certain retail sportsbooks, like in Mississippi, that you opened more than two years ago, and then some newer sportsbooks. Can you just, like, help us think about what you're seeing those doing to kind of benefit the broader properties? And if there are different dynamics that you're seeing in more mature sportsbooks versus earlier stage sportsbooks, would be helpful. Thank you.
Keith Smith (President and CEO)
Sure, Thomas. I'll take the first one. The $8 million-$10 million number that Keith spoke about is purely revenue share coming from FanDuel. It, it doesn't include the retail component.
Josh Hirsberg (EVP, CFO, and Treasurer)
... The retail component is included in the individual, property level results. The online piece is separated out, and that's, that's what he was-- that's what Keith was alluding to, kind of the online and digital revenue share that we receive from FanDuel for their mobile sports, for their, online real money gaming site in Pennsylvania. You know, that's a, that's a business that's building throughout this, this year, right? So it's not the run rate of the business. So that's the first part of your question. Keith, you want to take the second part?
Keith Smith (President and CEO)
Sure. Look, in terms of kind of as the sportsbooks mature, what's really helpful to us is FanDuel being, you know, a leader in the market, whether they're one or two, depending on the states you're talking about. You know, in the breadth of kind of sports offerings or the menu type of bets that you can make, and having one of the broadest menus, some of the best odds, is what attracts players. I think over time, we've seen the business continue to grow, let's say, in Mississippi, and attract more customers.
As the customers become a little more sophisticated about sports betting overall in a place where maybe it hadn't existed previously, they realize the quality of the app that FanDuel has, the quality of the offering, the ease of use, as well as just the number of different types of bets that you can make. I think that has helped. And so as the customer becomes more sophisticated, we see an increasing number of customers coming to participate.
Thomas Allen (Analyst)
Okay, thank you.
Operator (participant)
This concludes our question-and-answer session. I would like to turn the conference back over to Josh Hirsberg for any closing remarks.
Josh Hirsberg (EVP, CFO, and Treasurer)
Thanks, Gary, and thanks to all of you for joining today. If you have any follow-up questions or would like to discuss further, please feel free to reach out to the company. Thank you very much. Have a good rest of your day.
Operator (participant)
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.