On May 20 and 21, Jefferies Equity Research analysts toured casinos in Virginia. Their finding were summarized by David Katz in a May 22 investor note.
Katz characterized Virginia as a “dynamic and complex gaming market, where considerable capital is being deployed and further evolution is expected.” He felt that legacy operators Churchill Downs and Rivers Portsmouth were facing accelerating competition and that execution was key to making a return on investment.
Katz also opined that igaming in the Cavalier State was a question of when, not if. He added that Churchill Downs and Boyd Gaming were his top picks in the market. However, he moved his price target on Churchill Downs down from $139 per share to $138.
Calling U.S. casino growth “scarce,” Katz offered that it was a matter of how capital is deployed. The analyst pointed to New York and Illinois as the only other states where new casinos are going up.
Katz noted that Boyd’s $750 million Norfolk casino and Cordish Gaming’s $1.4 billion Live Virginia were those companies’ biggest outlays to date. That came atop $3 billion in Churchill Downs infrastructure and over $1.7 billion spent by Caesars Entertainment, Rush Street Gaming, and Hard Rock International on their respective Virginia casinos.
Although Churchill Downs was entrenched in Richmond with numerous historical racing machines at its command, Katz observed that Live Virginia posed “a credible risk.” He anticipated that Churchill Downs would “respond by increasing its focus on core customers while leveraging operational expertise and first‑mover advantage.”
On Chesapeake Bay, Rivers Portsmouth’s business was threatened by new development from Boyd. Katz believed Rivers would play up its non-gaming amenities and its coming, $65 million, hotel tower, slated for early 2027, in response.
Katz described the Virginia market as still evolving, with growth to be had. He observed that another casino, igaming, and legalizing gray-market slot machines had all surfaced before the legislature, though none eventually went anywhere.
Further complicating expansion were “public comments from the governor indicating opposition to advancing new gaming legislation, absent the formation of a unified gaming commission.” Katz continued, “We view this as sound logic given the performance of other states” with fragmented regulation like the status quo in Virginia.
As for igaming, Katz felt that it was still multiple years away. “Prior legislative sessions and voting outcomes should not be viewed as reliable momentum indicators, given evolving political and social dynamics at the state level.”
The analyst explained his lowered price target on Churchill Downs by pointing to the Richmond and Hampton Roads areas, where the company faces oncoming competition. Still, he felt Churchill Downs had “a solid opportunity to execute in the face of competition … in fundamentally growing cities.”
Katz also projected a 13 percent return on investment for Boyd when its Norfolk permanent casino opens. Rivers Portsmouth, he remarked, had been operating as though nearby competition was inevitable. By contrast, Hard Rock Bristol and Caesars Virginia (in Danville) were relatively isolated. Their performance, he said, would be driven by execution.
It was more complicated, Katz continued, for the many Rosie’s slot parlors operated by Churchill Downs. He said it was evident that the ones in Richmond would be impacted by Live Virginia in Petersburg. Likewise, the Rosie’s in Hampton Roads would stand to lose customers to casinos in Norfolk and Portsmouth.
Katz added that Rosie’s “are intended to be convenience-driven and designed for more frequent shorter-stay visitation. They do not offer the same breadth and depth of amenities as full casinos and do not cost as much.” Even so, he believed there was room for Churchill Downs, Boyd, Cordish, and Rush Street all to prosper.
The analyst also opined that Cordish might likely flip-flop on igaming, should Virginia legalize it. He continued that internet casinos were supported politically by Caesars, Rush Street, and Boyd, all engaged in it in other markets.
Caesars, for its part, “has been executing gradually improved results” online, as had Hard Rock Digital. Rush Street’s, he noted would a natural jumping-point for its online sibling, Rush Street Interactive.
