A Desert Mirage?

Surprisingly few victory laps were taken after Las Vegas Strip gambling revenues spiked 5.5% in August, helped by tighter hold. Perhaps it was the simultaneous, inconvenient disclosure the visitation slumped 6.5% that same month which quelled exuberance. Sin City is in a world of hurt, unlike regional casinos, and it’s not easy to spin right now. To the numbers …

Strip casinos raked in $679 million, while Downtown ones jumped 8.5% to $63 million. Only miscellaneous Clark County, down a point, was revenue-negative in the Las Vegas Valley. Enjoying a hot streak in more ways than one, sun-baked Laughlin leapt 11% to $36 million. The Boulder Strip climbed 10% to $71 million, North Las Vegas was up 8.5% to $25 million and Mesquite hopped 9.5% to $16 million. Upstate, Reno gained 5% to $68.5 million, Sparks alit 8% to $18.5 million and Lake Tahoe was placid at $27 million. Economic bellwether Wendover jumped 13% to $25.5 million. So far, so good.

However, gaming analyst Jordan Bender pointed to a 51% surge in baccarat winnings, driven by 18.5% hold. “On a hold-adjusted basis, gaming revenue on the Strip would have declined 3% in the month,” he wrote. Bender noted flat slot winnings despite 2% higher coin-in and easy comparisons for the month. In other words, the house clobbered the whales, while everything else was flat. Bender warned, “We expect September data to show some of the softness with a more normal comp in our view.” Speaking of soft, don’t be deceived by a 68% upshot in August sports book win: Handle was flat year over year, although hold practically doubled.

The usual suspects were to blame, primarily weak international visitation, victim of the White House‘s psychotic jihad against tourism. Even so, “Domestic passenger volume growth is underperforming international passengers … We expect this trend to carry over into September and the well-understood uptick in the convention calendar should support visitation in the fourth quarter.” What’s saving the bacon, at least for now, of Boyd Gaming and Station Casinos is solid local business, beneficiary of a heretofore robust Las Vegas economy. However, both Boyd and Station lean heavily on incomes that are currently entering a downturn and a knock-on effect could be near at hand. When the national economy catches a cold, Vegas gets the flu, remember.

Wall Street is even walking back conventional wisdom (and industry spin) that the fourth quarter would make everyone forget three lackluster ones before it. Fretted veteran analyst Chad Beynon, “we worry softness from leisure and international customers will last through year-end, following three years of growth post-COVID. Conversely, trends in U.S. regionals remain strong and we expect this segment to continue outperforming Vegas for the remainder of the year.” Beynon expected Boyd and Station to be able to stay the course. But “we worry Strip softness will spill over into the Las Vegas locals market on a delayed timeline, given an overall softer local economy, which has already prompted higher promotional/marketing activity on both the Strip and locals market.” What did we say? You’ll notice a hitherto-rational promo environment has gone by the wayside locally—and regionally, too, from what we hear.

John DeCree of CB Richard Ellis echoed many of Beynon’s findings, thinking that recent tax cuts on tips and for senior citizens would offset the Strip’s debility, at least as far as the latter trickles down to locals casinos. But he, too, joined the chorus. “Visitation to Las Vegas remains subdued due to a confluence of headwinds, including geopolitical/immigration tensions impacting visitation from Canada, Mexico, and Southern California, as well as reduced capacity on Spirit Airlines,” DeCree penned.

He added that “Lower visitor volumes are having a clear impact on the Strip’s hotel business, with occupancy down 360 basis points in August, average daily room rates down 7.1%, and revenue per room down 11.1%.” His expectation was for continued depression of tourism, with Las Vegas leaning heavily on the 4Q25 convention calendar—but continuing to enjoy solid gambling volumes on the Strip. Amazingly, given all the “headwinds” cited by DeCree, both Caesars Entertainment and MGM Resorts International were predicted to accelerate their cash flows … but not because of any lift from Sin City.

Less-complicated news hailed from Massachusetts, where the Bay State’s three casinos eked out a 1.5% gain to reach $105 million for August. Encore Boston Harbor was flat at $65 million (must be all those big jackpots they’ve started publicizing), while Plainridge Park gained 3% to achieve $15 million and MGM Springfield hopped 5% to $25 million. In the sports betting realm, DraftKings far outdistanced FanDuel, $29.5 million to $14 million. Scrapping for leftovers were Fanatics ($5 million), BetMGM ($5 million), ESPN Bet ($1.5 million) and Caesars Sportsbook ($1 million). The latter is a permanent also-ran across the country (when not in last place), yet Wall Street continually praises its profitability. Caesars must keep its overhead awfully low.

One market where Covid-19 permanently harmed the casino business is Michigan. But it’s an ill wind indeed that doesn’t blow somebody some good, and both iGaming and OSB have burgeoned in the state. In August, OSB revenue rocketed 80% to $49 million on handle of $339 million, which was but a 21% escalation. As in Nevada, bettors did not wager smartly, judging from how the books cleaned house. iGaming win jumped 34% to $263 million. Chief beneficiaries of the latter were FanDuel ($71 million) and BetMGM ($66.5 million), while DraftKings gave them a run with $52.5 million. Participation trophies went to Caesars Palace Online ($18 million), Hollywood Casino ($7 million) and BetRivers, best of the rest with $20 million.

Sports betting was dominated by FanDuel ($18 million) and DraftKings ($15.5 million), no surprise. Bringing up the rear to varying degrees were BetMGM ($7 million), PointsBet ($4 million), ESPN Bet ($2 million) and Caesars Sportsbook ($1 million). As for the brick-and-mortar casinos, they were almost an afterthought on Wall Street. For the record, MGM Grand Detroit slumped 4% to $51.5 million, MotorCity gained 1.5% to $31 million and Hollywood Greektown plunged 13% to $23 million.

Ending on a positive note, gambling receipts in Louisiana jumped 11.5% in August. Adjusted for market expansion, that was still 6% up. The enlarged market, Shreveport/Bossier City, saw Louisiana Live still in third place but grossing $10.5 million. After what looked like crazy promotional activity, Horseshoe Bossier City tumbled 25% to $11.5 million while Margaritaville just retained primacy with $12.5 million (-13%). The newcomer continued to eat everyone’s lunches: Bally’s Shreveport ($7 million, -7%), Boomtown Bossier ($3 million, -13%), Sam’s Town ($3 million, -9%) and Louisiana Downs ($3 million, -7.5%). State-leading market Lake Charles must have also been seeing some heavy promos of its own, as Horseshoe Lake Charles soared 33%, albeit to a last-place $7.5 million. L’Auberge du Lac zoomed past Golden Nugget Lake Charles, $30 million to $27 million, soaking up 15.5% more business to the Nugget’s 5.5%. Delta Downs jumped 11% to $15.5 million.

Although it may have stumbled a bit out of the gate, Caesars New Orleans is galloping now, shooting up 36.5% to $26 million, while reinvented Treasure Chest jumped 13% to $14 million across the river. That didn’t leave new business for Boomtown New Orleans ($8 million, -4%) or Fair Grounds ($3 million, -3%). Up the Big Muddy in Baton Rouge, the final spasms of Belle of Baton Rouge yielded $700K (21.5%), while L’Auberge Baton Rouge dwarfed that with $13.5 million (3.5%). Newcomer Queen Casino leapt 22% to $8 million. Lastly, Boyd Gaming‘s two outliers didn’t lose any ground. Amelia Belle was flat with $3 million while Evangeline Downs was up 6.5% to a symmetrical $6.5 million.