While the storyline for Las Vegas is the decline in tourism and flat gaming revenues on the Strip after years of growth since the pandemic, the casinos that serve local residents continue to thrive.
Boyd Gaming and Red Rock Resorts, which dominate the locals’ gaming scene, were highlighted by John DeCree, director of equity research for CBRE, with Buy ratings and strong expectations going forward.
While Strip gaming revenue was down 6% in December, the neighborhood casinos saw a nearly 6% increase.
“We remain upbeat on the Las Vegas locals market for 2026 and 2027,” DeCree said in a note to investors. “Although comparisons get more difficult for the locals market in 2026, several catalysts on the horizon should fuel moderate growth, including tax cuts under the One Big Beautiful Bill Act and recent capital reinvestment from major operators, such as Boyd and Red Rock Resorts.”
DeCree said across their coverage universe, the locals market should benefit the most from the OBBB Act, given the concentration of tipped employees and the number of retirees living in Las Vegas, coupled with the city’s propensity to gamble.
“Despite the tax cut tailwinds, some investors are cautious that the softness on the Strip could bleed into the locals market,” DeCree said. “While we appreciate the concern, the locals market has a 40+ year track record of outperforming the Strip in economic recessions (save the Great Recession).”
Since 1984, annual gross gaming revenue on the Strip declined 11 times compared with six times for the locals market. Of those six years, three were related to the Great Recession (2008-10), decreasing 21% from peak-to-trough versus 19% on the Strip, DeCree said.
One was due to COVID (2020), down 23% versus 43% on the Strip. The other two (2013-14), locals gaming revenue declined less than 0.3% compared with a 2% decline on the Strip, DeCree said.
“In other recessionary periods like the dot-com bubble, locals GGR increased 8% despite a 3% decline on the Strip,” DeCree said. “Moreover, the locals market has decoupled significantly from the Strip, with a more diversified economy and a more favorable supply/demand balance, with the number of gaming positions per 100,000 residents down over 47% since 2007.”
DeCree said they are reiterating their Buy ratings on shares of Boyd and Red Rock and raising price targets to $105 from $101 on Boyd and $75 from $70 for Red Rock.
“We expect both Boyd and Red Rock shares to perform well in the first half of 2026, driven primarily by the OBBB Act, as well as return on investment on growth capex,” DeCree said. “However, heading into second half of 2026 and 2027, we prefer the shares of Red Rock, which should see cash flow accelerate as management fees from North Fork kick in once the property opens in the fourth quarter followed by returns on the mid-2027 opening of the $385 million Durango Phase 3 expansion (in Las Vegas). For Boyd, we expect the next major leg up in earnings power will be in late 2027 when its permanent casino in Virginia opens.”
DeCree downgraded shares of Golden Entertainment to Hold from Buy, pending the company’s real estate sale to VICI and management-led buyout.
“We are lowering our Golden price target to $28 (from $32) based on the current exchange ratio for the stock portion of the transaction with VICI,” DeCree said. “While The STRAT will likely remain challenged amid softer visitation and leisure demand on the Strip, we expect Golden’s locals business to benefit similarly to Boyd and Red Rock. Although Golden will be delisted after its transaction, we believe the company’s balance sheet will position it for growth. We wouldn’t be surprised if Golden became more front-footed with its growth strategy as a private company. Without the concern of a public valuation, Golden could be more nimble or aggressive in pursuing M&A and/or larger developments as a private company.”
