Weakness in Las Vegas will continue through the third quarter, but the fourth quarter “could be better,” wrote Truist Securities analyst Barry Jonas. He predicted a comeback for Sin City in 2026, in an October 21 investor note.
Prediction-market fears, meanwhile, have extended to the business-to-business sector, Jonas reported. But he saw a hidden opportunity for B2B firms to cater to the interlopers. “In the current environment, we don’t expect many earnings surprises, but continue to favor companies with best-in-class assets.” He cited Monarch Casinos, Churchill Downs, and Station Casinos.
Jonas also liked real estate investment trusts (REITs) and digital B2B firms, lauding their safety, earnings growth, and cash flow.
Returning to the subject of Las Vegas, Jonas expects the third quarter to look much like the second one, possibly worse in the case of Caesars Entertainment. However, “We’re starting to see the light at the end of the tunnel as we move past the well-known soft summer — likely driven by a combination of low end weakness, softer international visitation, and more normal summer seasonality.”
Jonas visited the casino capital for the Global Gaming Expo. There, he found operators looking forward to an improved 2026, “albeit flattish” in the fourth quarter of 2025.
Indeed, the outlook might be described as exuberant. Jonas wrote, “Operators were in agreement for a ‘record year for group business.’” Las Vegas Convention & Visitors Authority CEO Steven Hill predicted “exceptionally strong” tourism through the end of 2026.
Added Jonas, “Most operators believe that ‘The Vegas is expensive’ narrative is somewhat overdone, but we think Strip operators at a minimum will be more cognizant of delivering value to all ranges of customers.”
Truist research discovered October room rates to be five percent off 2024’s, but saw a three percent year-over-year improvement in November, when the Las Vegas Grand Prix will occur. Tourism-driven room rates, however, are down 10 percent in December, but “we’re only tracking the leisure channel while operators have highlighted group business as the primary driver of an inflection.”
The International Builders Show defected to Orlando in 2025, but is slated to return to the Las Vegas Strip for 2027-39. Jonas also expected rate growth to be sparked by the return of the ConAgg Expo in January of next year.
Jonas kept Buy ratings on both Caesars and MGM Resorts, in part due to “undemanding” share prices. He also pointed to “positive contributions from their respective Digital businesses.”
Before leaving the topic of Sin City, Jonas observed that locals casinos were up two percent in the fourth quarter to date. Station was cited as an outperformer, possibly even further energized with its North Fork Rancheria project in California and projected Vegas additions coming into the market.
“We continue to favor Boyd with positive regional trends adding to locals health amidst a best-in-class balance sheet,” Jonas continued. But, he noted, Golden Entertainment hadn’t done well of late, with upbeat local dynamics undercut by the softness of the Strip and of Golden’s key tavern business. Still, he didn’t fear the Strip’s weakness would infect the locals market.
Regional gambling, meanwhile, continued to trend upward. “Overall, we think potential trade-down benefits offer support for most regional operators,” Jonas wrote. “Regional companies/segments will be a bright spot overall this quarter. We continue to favor companies with assets that are best in class and/or have a significant competitive moat.”
Churchill Downs was signaled out for possible 2026 growth, due to the performance of its HHR parlors. Monarch was also praised for outpacing the overall markets (Reno, Black Hawk) in which it operates. Boyd’s relocation of Treasure Chest in Louisiana was lauded as a “home run” by Jonas.
Penn Entertainment, meanwhile, was said to be looking for a 15 percent or so return on investment from new Hollywood Joliet. Recent promotions by Caesars aside, the company told Jonas it expected flattish cash flow, “as their promo strategy is more disciplined/targeted and we think starting to tail off.” Promotional warfare was not seen manifesting itself.
“At the same time, we wonder if an improving capital market environment could lead to more M&A as companies start pondering if selling off less desirable properties could be multiple additive and alternative uses of capital,” the analyst mused.
He added, “We wonder if the recent sale of MGM Northfield Park operations … is a sign of more to come as operators look to deconsolidate, delever and reallocate resources, while newer parties may see opportunities for ROI investing in under-the-radar properties.”
Should such deleveraging occur, Jonas thought REITs stood to benefit. He observed that the fortunes of Vici Properties and Gaming & Leisure Properties tended to move in tandem, although the latter underperformed in 2025 and was due to catch up.
GLPI management has been hinting, Jonas said, at further tribal-financing deals up its sleeve. Even so, its stock has slumped three percent, while Vici’s has appreciated 11 percent.
Jonas felt that the uncertainty surrounding Bally’s Corp. — and its heavy reliance on GLPI — was dimming the REIT’s prospects. “That said, BALY continues to take (small) steps in improving its profile as a credible tenant namely the closing of the Intralot transaction (beneficial from a collateral perspective), while its growth pipeline for GLPI is meaningful,” Jonas summarized.
As for Vici, its activity was concentrated in loans, Jonas said, “as volatility in rates adds complexity to real estate transactions.” One area of investor concern was the massive Caesars lease portfolio but “the current lease is active for another 10 years and both partners are actively looking for a win/win solution.” One possible drawback for Vici was MGM’s retrenchment in New York City, removing a growth project.
