Following a tepid September reading of Nevada gross gaming revenue (GGR), some analysts believe there’s limited potential for Las Vegas Strip casino operators to significantly exceed expectations in the fourth quarter.
In a new report to clients, Macquarie analyst Chad Beynon noted that tougher year-over-year comparisons indicate Strip revenue for the current quarter is likely to meet Wall Street estimates, but not exceed them materially. Last month, Strip operators recorded revenue of $728 million, reflecting a year-over-year decline due to unfavorable baccarat results and September having one less reporting day compared to 2023.TRUSTED PARTNER ✅ Beynon observed that with Vegas consensus coming down approximately 2% over the last month, expectations have shifted towards the Vegas segments merely meeting the consensus. He remains optimistic on the non-gaming outlook in Vegas given the strong group travel and events calendar but is cautious about slowing leisure travel demand. This decline could lead to a more competitive promotional environment, potentially affecting Vegas margins.
Comparisons, or “comps,” for the current quarter and the first quarter of 2025 could be challenging to surpass. Enthusiasm for the Las Vegas Grand Prix isn’t matching last year’s levels. Additionally, while Las Vegas hosted the Super Bowl in February 2024, the upcoming event in February 2025 is set for New Orleans.
Caesars Entertainment presented its third-quarter results after the close of US markets, and the stock faltered in after-hours trading as the operator reported a 4% revenue drop to $2.87 billion. This decline reflects the difficult year-over-year comps in both the company’s Las Vegas and regional casino segments. As the first gaming company with Strip and large regional portfolios to report results for the most recent quarter, Caesars’ performance indicates the theme of tough comparisons is one to watch this earnings season.
Specifically, Caesars’ fourth- and first-quarter numbers could benefit from New Orleans hosting several Taylor Swift concerts recently and the upcoming Super Bowl. Beynon maintains an “outperform” rating on Caesars with a $50 price target.
In Nevada, while Caesars likely benefited from September GGR growth in Reno, this was offset by an 8% year-over-year drop in Laughlin. The company is one of the largest operators in both markets.
Despite the sluggish GGR growth on the Strip in September, the Las Vegas locals segment remained robust, with revenue in that niche growing 15%. This growth could be attributed to new venues like Red Rock Resorts in Southwest Las Vegas and an enhanced promotional environment among some smaller independent casinos.
Many patrons of local gaming venues are employees of Strip casinos, indicating that while revenue growth on the Strip is muted, it isn’t declining at an alarming rate. Beynon views the local results as a positive indicator for Red Rock and, to a lesser extent, Golden Entertainment.
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