Following a lukewarm September report of Nevada gross gaming revenue (GGR), several analysts believe Las Vegas Strip casino operators have limited opportunities to dramatically surprise to the upside in the fourth quarter.
In a recent research to clients, Macquarie analyst Chad Beynon stated the harder year-over-year comparisons imply Strip revenue for the current quarter is likely to equal Wall Street predictions rather than significantly surpass them. Strip operators reported $728 in revenue last month, a year-over-year drop aided by terrible baccarat luck and one fewer reporting day in September than in 2023.
“With Vegas consensus coming down ~2% over the last month, we now expect Vegas segments to meet consensus,” Beynon told me. “We remain positive on the non-gaming outlook in Vegas given strong group travel and events calendar, but we are becoming more cautious on slowing leisure travel demand, which could lead to a more competitive promotional environment and hurt Vegas margins.”
Comparisons, or “comps” for the current quarter and the first three months of 2025 may be difficult to beat because excitement for the Las Vegas Grand Prix isn’t as high as it was last year, and, as Beynon pointed out, Las Vegas hosted the Super Bowl in February 2024, but that event will be held in New Orleans in February 2025.
See also:
- The Las Vegas locals market and downtown drove Nevada revenue up 3.3% YoY in September.
- L&W drops lawsuit against Zeroo Gravity.
- Juegalo launches loyalty and gamification program with Gamanza Engage collaboration.
Caesars Shows the Risks of Tough Comps
Caesars Entertainment (NASDAQ: CZR) reported third-quarter earnings today after the closing of US markets, and the stock plummeted in after-hours trading after the operator said revenue decreased 4% to $2.87 billion.
This was a result of challenging year-over-year comparisons in both the operator’s Las Vegas and regional casino divisions. Caesars is the first of the casino businesses with Strip and major regional portfolios to report results for the most recent quarter, signaling that the issue of challenging comparisons will be closely watched this earnings season.
Caesars’ fourth- and first-quarter results may benefit from the recent Taylor Swift concerts in New Orleans and the upcoming Super Bowl. Caesars is rated “outperform” by Beynon, with a target price of $50.
In Nevada, Caesars undoubtedly benefited from September GGR gain in Reno, but this was offset by an 8% year-over-year reduction in Laughlin. The corporation is one of the largest operators in both areas.
Las Vegas locals remain strong.
While the Strip’s GGR growth was slow in September, revenue in the Las Vegas locals category increased by 15%. That might be attributed to new venues like Red Rock Resorts (NASDAQ: RRR) in Southwest Las Vegas, as well as an improved promotional climate at several smaller independent casinos.
Many clients of local gaming establishments are Strip casino employees, showing that, while revenue growth on the Strip is slow, it is not declining at an alarming pace.
“We view the Las Vegas locals results as a positive read-through for Red Rock and, to a lesser extent, Golden Entertainment (NASDAQ: GDEN),” Beynon told investors.
Join us on all our social channels and groups
Gameongazette is present on:
