In a Sunday investor note, Jefferies Equity Research analyst David Katz began by observing that foot traffic to American casinos is higher this year than last. Revenue is up as well, even though overall casino visitation is still lower in 2024 than it was in pre-COVID 2019.
Specifically, foot traffic is 7.5 percent higher than in 2023, yet six percent below 2019. Katz called this a positive for regional casino operators Boyd Gaming, Churchill Downs, Caesars Entertainment, Monarch Casino Resorts, and Penn Entertainment.
He warned that regional trends were “still choppy.” He noted that Ohio and Pennsylvania were up an above-average 12.3 percent and 13 percent, respectively. Also, Illinois is almost 20 percent higher this year than in 2023, but lagging 2019 by 2.7 percent.
“Our take is that the monthly performance reflects the ongoing normalization of traffic trends post-COVID, where volatility remains, as well as from competition in specific locations,” the analyst summarized.
“We expect trends to stabilize through 2024, as comparisons have been challenging through 2Q23 and 3Q23,” Katz wrote. “The Street also remains on guard for the impact of macro trends on earnings levels, including higher costs for insurance, utilities, and labor, that have challenged markets unevenly.”
One market well outside the average was Detroit, where casino patronage lags 2019 by 14 percent, but exceeds last year’s by 11 percent. Black Hawk, Colorado, is up in both categories, 14.4 percent above 2019 and 6.2 percent from 2023, reflecting new product from Monarch.
Katz said that his numbers reflected a sustained upward march in casino attendance throughout the first half of 2024, with June the best month yet. Noting that Penn has seven casinos in Illinois and Ohio, he cautioned that they’re “expected to be exposed to areas with competition.”
Other regional behemoths, Boyd and Caesars, are both predominantly exposed to provincial play. One purely provincial operator is Churchill Downs, which Katz noted would benefit from new casino product in both Kentucky and Virginia.
Katz wasn’t even worried about potential re-legalization of “skill games” in the Cavalier State. He called Virginia’s about-face “benign, which is positive.”
