Following the departure of Carlo Santarelli, Deutsche Bank’s portfolio of gaming coverage passed to analyst Steven Pizzella. His new remit included Brightstar Lottery, Boyd Gaming, Caesars Entertainment, DraftKings, Golden Entertainment, Gaming & Leisure Properties, Light & Wonder, Las Vegas Sands, MGM Resorts International, Penn Entertainment, Station Casinos, Vici Properties, and Wynn Resorts, among others.
In his maiden investor note dated July 14, Pizzella described the gaming industry as “balanced over the next twelve months, as areas of positive momentum and stability are curbed by numerous legislative, geopolitical, and economic risks causing rising uncertainty.”
Pizzella saw continued smoothness and possibly even a lift for regional casinos, as they benefit from their drive-to market positioning. In May, Deutsche Bank research showed, regional properties were up 4.1 percent after dipping one percent across the preceding four months.
The analyst also perceived firmness in the Las Vegas locals sector. He felt it’s underpinned by stiff barriers to entry for would-be competitors by population growth and recent legislative gains.
Another positive indicator was the trend upward in online sports betting. Deutsche Bank found a 15 percent acceleration in March, “though comparisons remain tough over the next three months.”
After two years of upsurges in labor costs, Pizzella also saw those moderating. And in Macau, revenue leapt 19 percent in June, although the analyst wanted more time to see if the growth was driven by isolated events or not.
Consumer volatility, on the other hand, was a perceived menace. Non-convention visitation to Las Vegas dropped 8.3 percent from 2024 and lower-end customers were seen as particularly vulnerable.
Unstable international politics were another concern “that could change in an instant, with potential rising tensions in China and limited longer term oriented investor interest in Macau,” Pizzella wrote. He was also worried about tariffs’ ability to hinder the return on investment from large capital projects, as well as on an inflation of consumer prices.
United States gross domestic product was forecast to slow down in the latter half of this year, Pizzella noted. “Longer term digital trends … remain relatively solid, though [they] carry risks from rising taxes, regulation, and incremental competition,” including ones from futures markets and sweepstakes.
“Given the risks and uncertainty, we prefer to play the group via idiosyncratic free cash flow inflections at undemanding valuations,” Pizzella wrote, citing Caesars Entertainment as an exemplar. He also liked stocks tethered to the Las Vegas locals market, specifically Station Casinos. Digitally, Sportradar and Genius Sports came in for praise, deemed “long-term secular winners.”
Pizzella viewed Caesars in particular as a long-term play, highlighting a stock that’s 30 percent off its high and despite well-publicized difficulties in the Vegas market. The addition of new casinos in Nebraska and Virginia, as well as the upgrade of Caesars New Orleans, “at a minimum should obfuscate any underlying weakness in regional trends.”
Otherwise, regional casinos were perceived to be a source of stability, as were Caesars’s digital operations, which Pizzella thought are undervalued. He also gave positive takes on Caesars’a 2026 group-business calendar and its continuing monetization of non-core assets. Another undervalued asset, from his point of view, is the renewed Caesars Windsor management contract, which begins next year.
“At current levels, while there may be some volatility around near-term quarters, we believe the risk-reward skews favorably long term, such that if the aforementioned positives play out, given current valuation, upside potential is meaningful.” Pizzella concluded.
He then turned to Station Casinos, which he liked for its strong 2025 and 2026 forecasts, as well as “a well-articulated and manicured organic project pipeline, largely isolated from competitive new supply.” Recent cuts in taxes on tips were also expected to redound largely to Station’s benefit, as tipped workers were believed to gamble at those casinos.
A “healthy” underlying jobs market was an additional reason for optimism, as was a “reasonable valuation” on the company. Pizzella added that Station has even more potential through its bank of raw Las Vegas land and its tribal-casino management accords.
“We see the sports betting data providers as long-term secular winners,” Pizzella continued. “While there may be volatility over short periods of time, we believe they are long-term winners, and our preference on how to play the digital segment.”
The analyst cited recurring revenue streams that comprise 60 percent to 70 percent of Sportradar’s Genius’s income base. He also liked that “major data rights [are] locked in for the medium to long term on average, giving visibility into their cost basis.”
