Insights for Casino Operators: Analyst Reveals Low Equity Pecking Order Among Gaming Industry Stocks

The casino operators along the Las Vegas Strip are currently experiencing significant revenue challenges. While some investors view these specific stocks as potential value plays, a recent assessment suggests that the broader gaming industry contains other more attractive sub-groups that warrant closer attention.

According to Macquarie analyst Chad Beynon, the heavyweights of Las Vegas such as Caesars Entertainment and MGM Resorts International are witnessing a challenging period. In his report, Beynon mentioned, “Amid a three-month streak where Las Vegas gross gaming revenue (GGR) tracked lower year-on-year, investors have reasons to be apprehensive about the stocks of Sin City operators.”

The Current Market View

MGM and Caesars dominate the Strip and, along with Wynn Resorts, account for 75% of Las Vegas’s GGR.
Wynn is the only one of these operators posting positive year-to-date returns, while Caesars and MGM have dropped by 21.90% and 10%, respectively.

The performance of these major players raises concerns about their revenue growth potential, especially given the less than encouraging performance indicators:

In Vegas, revenue for combined WYNN/MGM/CZR shows weak growth figures with trends of -5%, +1%, -1%, -7%, -3% growth over the past five quarters. Looking ahead, a decline of 0.4% for ’25 is expected for the combined entities.

Operators’ Responses and Industry Ranking

Executives are aware of the declining trends in gaming revenues but emphasize the resilience of non-gaming revenue streams, which include conventions, dining, and entertainment offerings.

Beynon has placed stocks related to Las Vegas fourth in a ranking of five gaming sub-groups. While they still hold an advantage over Macau concessionaires, they lag behind online betting ventures, gaming suppliers, and regional casino operators.

Market Conditions Affecting Performance

Declining international visitation and GGR.
Weak mergers and acquisitions activity, with no significant deals reported among Strip operators in 2025.
Low expectations for earnings before interest, taxes, depreciation, and amortization (EBITDA) for Las Vegas operators.

As Beynon points out, only 16% of the 25 gaming companies he monitors have received increased EBITDA estimates for 2025, which may contribute to the broader underperformance in this sector.

The Silver Lining: Off-Strip Performance

Interestingly, stocks for off-Strip casino operators have performed better, with Boyd Gaming and Red Rock Resorts posting gains of 2.50% and 9.04% respectively this year. However, Golden Entertainment, which is down 12.03% since the start of the year, is looking at asset sales to boost shareholder value.

Despite its struggles, Golden executives have indicated solid performance during the months of April and May, sparking hope for a stronger quarter compared to the same period last year. However, they remain cautious about future visibility.

With challenging times ahead for Las Vegas stocks, investors may need to reassess their strategies and look toward alternative gaming sub-groups.

Key Takeaways

Strip operators are facing tough times, with several potential challenges hampering their markets.
Investors should consider diversifying into other gaming sub-groups for better potential.
Transparency from operators regarding their revenue sources is crucial for restoring investor confidence.

As the landscape of the casino industry evolves, staying informed about market conditions and strategic decisions made by industry leaders is essential for any investor or enthusiast alike.