“We see little to get excited about” regarding third-quarter earnings by gaming companies, wrote J.P. Morgan analyst Daniel Politzer in an October 20 investor note. The same day, Truist Securities analyst Barry Jonas also expressed subdued, if somewhat more upbeat, expectations for the quarter.
While the gaming sector usually has diverse earnings propellants, Politzer continued, “Right now, conditions are tough across the board.” Although valuations for regional-casino stocks were depressed 16 percent from late 2025, he felt they were stable and still the best bet.
But while Politzer thought Wall Street was on the money where regional-facing stocks were concerned, he saw difficulty for those heavy on Las Vegas, Macau, or the internet. He noted that these had declined 22 percent since June 2026, although “we think a lot of this negativity is already embedded in shares.”
Jonas was very much in agreement, saying that gaming was “particularly out of favor” among consumer-facing stocks. He liked regional gaming, Las Vegas locals, and online sectors, while acknowledging that prediction markets posed difficulty for the latter.
Macroeconomic hurdles were foreseen for both Las Vegas and Macau, according to Jonas. He felt a fourth-quarter rebound for Vegas was not out of the question, were room rates to stabilize.
Stability in the outskirts
Regional casinos were perceived by Jonas as the beneficiary of changed consumer spending, as customers traded down from Las Vegas to offset high inflation and elevated gas prices. September was looking good, he said, on course for casino revenue to be seven percent higher than in 2025.
“Beyond trade-down, customer trends remain healthy, suggesting solid core fundamentals,” Jonas added, noting that Penn Entertainment and Boyd Gaming both stood to benefit immediately from the unplugging of thousands of non-casino slot machines in Pennsylvania.
The Truist analyst predicted a one percent outperformance by Penn of Wall Street cash-flow expectations, thanks to the early innings of Hollywood Aurora and Hollywood Joliet, both in Illinois. He expected Monarch Casinos & Resorts to meet expectations, but for Boyd to come up short, “mostly related to challenges outside the regional portfolio.”
The vulnerability of some Churchill Downs slot parlors in Virginia to new Petersburg-based competition made for a projected two percent downside on that stock. Although no transactions have been announced, Jonas expected Churchill Downs to brief investors on the progress of its massive property divestiture, announced earlier in 2026. He thought Native American interest would be “sizable,” with Boyd and Monarch also well-positioned to snap up assets.
Jonas also expected more talk of taking gaming companies private or engaging in mergers or takeovers. He was somewhat more optimistic than Politzer, suggesting that Station Casinos, Penn, and Genius Sports all had chances of exceeding Wall Street’s expectations.
Near-term, Politzer favored Churchill Downs and Genius. Longer-term, he looked to Wynn Resorts and Station. In particular, he liked Station’s nine percent cash-flow growth and monetization of capex improvements. He also felt Wynn had bottomed out, has best-in-class assets in its portfolio, and no valuation ascribed to Wynn Al Marjan in the United Arab Emirates.
Regarding Churchill Downs, Politzer felt investor sentiment would improve if the company moved any of its for-sale assets or revised its strategy. He otherwise projected $264 million in third-quarter cash flow, similar to Wall Street consensus. He liked Genius for the upsides it presented in acquisition of customers, whether for event contracts or online sports wagers.
Cloudy in Macau
“Bad to worse” was Politzer’s summation of the industry’s outlook on Macau, where revenue slipped four percent during the third quarter. Business in the Chinese enclave was languishing at 85 percent of pre-pandemic levels. Politzer lowballed Wynn’s Macanese cash flow at $255 million, 10 percent down from The Street’s $282 million.
Overall, the culprits for Macau’s underperformance were flat high-roller play and a five percent decline in mass-market and slot play. The protectorate had not come back from a World Cup swoon, Politzer noted, and China’s central government has been going after trust-fund money and wealth stashed outside the country.
Macanese gambling revenues have been down for four straight months, as Jonas observed, and the future was said to be unclear. Golden Week in early October was expected to give casinos a lift, but “Macau faces some product-related issues, as certain properties were built to cater to base mass gaming.” Given their mid- to high-end positioning in Macau, both MGM and Wynn were thought to be insulated, however.
For Las Vegas Sands, Politzer warned that “there’s also some question on Singapore re: fallout from China clamping down on offshore tax collections,” depressing cash flow to an expected $680 million against Wall Street’s $693 million consensus. Sands’s Macanese cash flow, meanwhile, was down six percent to $529 million.
Mixed signals from Sin City
In Las Vegas, the situation was “not pretty,” per Politzer. An autumnal comeback has evidently yet to manifest, as evinced by a seven percent declivity in revenue per available room. Politzer characterized July as decent, August down, and September “worse than forecast.” He blamed consumer fatigue and rising airline prices, up seven percent overall, five percent higher when Spirit Airlines was factored into the equation.
Jonas saw the quarter for Sin City as one of modest improvement (two percent) in gambling winnings. But that was offset by “a turn for the worse” late in the quarter, both in gambling and revenue per available room, the latter plunging as much as 16 percent in August.
While some of the downturn was shrugged off at Global Gaming Expo as “normalized summer seasonality,” commentators also blamed macroeconomics, weaker drive-in visitation, and depressed Canadian tourism. On the upside, convention and group business for the balance of 2026 was said to be outpacing late 2025.
Compared to Wall Street’s consensus, Politzer’s forecasts for the Las Vegas Strip were bleak. He expected Caesars Entertainment to miss forecasts by nine percent, while MGM Resorts International and Wynn were anticipated to come up six percent short. The analyst forecast cash flow of $354 million for Caesars, $566 million for MGM, and $176 million for Wynn, against a tough 2025 comparison for the latter.
For his part, Jonas predicted that MGM would miss Wall Street forecasts by 10 percent, but Wynn by only four percent. He raised the possibility of improved trends for Caesars, thanks to easier year-over-year comparisons, even if Wall Street’s focus was on its privatization by Fertitta Entertainment.
“So while we expect a tough Q3, we think the stocks somewhat reflect that … but we wouldn’t be shocked if MGM and WYNN’s tone on the Strip during the earnings calls are better than perhaps expected,” Jonas predicted. He noted that room rates were trending modestly better, up seven percent in October and one percent in both November and December.
By contrast, Las Vegas locals-oriented casinos benefited from “no discernible slowdown” (Politzer) in spending. Indeed, they were four percent up from 2025, despite a flat August. “While fundamentals appear stable, it’s tough to get much upside to Street estimates; our forecasts are mostly within 1% of Consensus,” Politzer wrote, adding that it was a precarious outlook: Low consumer confidence and high fuel prices had to be taken into account.
Station, Jonas reported, “continues to navigate ongoing disruption at its properties, while seeing minimal impact on its customer from the challenging macro.” Boyd was not so fortunate, feeling a tourism downturn at The Orleans and challenged Hawaiian visitation downtown. The analyst predicted Station would beat The Street by one percent, but Boyd would come up two percent shy of forecasts.
Jonas (and investors) fretted about the potential election of Attorney General Aaron Ford as governor of Nevada. Most of the gaming industry had lined up behind incumbent Joe Lombardo, but the race is considered anyone’s game.
“It’s unclear if a Democratic win would mean any noticeable and immediate changes for gaming companies in the state,” Jonas elaborated. “But the challenger is closer with organized labor and progressive Democratic constituents, driving some questions/uncertainty for now with investors.”
Digital divisions
Also looking up was digital gambling, up nine percent in terms of revenue, driven by a 13 percent spike in igaming. Inside the numbers, it did not look so good for online sports betting (OSB), with a 32 percent surge in July, followed by a seven percent drop-off in August and a flat September.
“The bad news is that we think sport outcomes flipped from favorable (post World Cup) to modestly unfavorable, with NFL September a drag,” reported Politzer. He added that there were worries related to the incursion of event contracts and that igaming play was slowing down. He pointed to the third quarter’s 13 percent leap, compared to 19 percent in the first quarter and 16 percent in the second.
Politzer was in agreement with Wall Street as far as FanDuel parent Flutter Entertainment, but saw as much as a $50 million upside from its market-making activities. Rush Street Interactive was predicted to have $55 million in cash flow, against Wall Street’s $56 million projection.
Prediction markets were, Jonas opined, feared among the legacy gaming industry, both for present inroads and the possibility that they might ignore Commodity & Futures Trading Commission directives and offer igaming products. He noted that DraftKings stock was depressed 43 percent since the beginning of 2026 and Flutter had taken a 64 percent pummeling.
Should prediction markets prevail in court, Jonas reported, legacy operators planned to compete with them on their terms. However, “At a minimum, operators believe they could gain a healthy non-OSB state database even if PM were outlawed (though bad-actor clauses for some new state launches are a lingering risk, in our view).”
The Truist analyst said that both DraftKings and FanDuel are proceeding with event-contract platforms of their own, albeit with differing 2026 strategies. Unlike Politzer, Jonas was optimistic about OSB, reporting a “solid” first fortnight to the NFL season.
REITs, slots looking up
Unlike Politzer, Jonas turned his gaze to real estate investment trusts (REITs) and slot manufacturers. With regard to the former, he believed that they were logical financing partners for merger-and-acquisition activity. But he cautioned that tribal entities could be buyers during the current cycle, particularly for Churchill Downs’s castoffs, leaving REITs without dance partners.
Jonas was still upbeat on the REIT segment, due to its steady cash flows. He expected Gaming & Leisure Properties to concentrate on its development pipeline, while Vici Properties might revisit its Caesars Entertainment leases in the wake of Tilman Fertitta’s takeover. Vici was, Jonas penned, “still committed to finding a solution that will work for both sides.”
The analyst expressed a more-upbeat view of GLPI’s Bally’s Chicago, having toured the project site. “We left thinking the project could potentially be a success once ramped, with plans in place to address congestion/traffic (though we’ll have a better sense post opening),” Jonas wrote. He noted, however, the Bally’s decision to postpone amenities was ironic, as that was the casino’s best chance to differentiate itself from nearby slot routes.
In the manufacturing sector, Jonas focused on Light & Wonder, in a negative-24 percent trough since the beginning of 2026, “despite manufacturers highlighting solid customer demand on the back of healthy GGR trends.” Given Light & Wonder’s difficulties with its social-casino business, the analyst expected it to come in two percent below Wall Street forecasts.
“Longer term, we continue to view [artificial intelligence] concerns as overdone, given the high barriers to entry from both a regulatory and development perspective,” Jonas added.
Slot-route provider Accel Entertainment received a favorable outlook, with Illinois business driving a six percent improvement in revenues. Even so, Jonas remained Hold-rated, citing continued uncertainty around slot routes in Chicago and skill games in Pennsylvania, where they were recently banned.
Price-cutting
Politzer lowered a number of price targets on gaming stocks. Boyd came down to $85 per share from $93. Churchill Downs dropped from $123 to $118, while Station dipped from $72 per share to $71.
Other terrestrial casino operators affected included Sands (from $60 to $54), MGM (from $53 to $42) and Penn (from $27 to $24). Wynn plunged $19 per share to $119 apiece.
Digital operators getting a price-target downgrade included DraftKings (from $33 to $30 a share), Flutter (from $114 to $110), Rush Street (from $30 to $22), and Sportradar (from $15 to $13 a share). Unchanged price targets were enjoyed by Caesars ($31) and Genius ($8).
Like Politzer, Jonas didn’t raise any price targets. He lowered Boyd from $110 per share to $100, MGM from $55 to $45, Churchill Downs from $145 to $140, Wynn from $125 to $110, and Accel from $14 to $13. Light & Wonder slipped from AU$150 per share to AU$145. He held steady on Monarch ($144 per share), Penn ($25), Station ($75), Caesars ($31) and Bally’s($10).
Digitally, Jonas dropped Flutter from $120 per share to $100. He kept unchanged ratings on Sportradar ($16) and Genius ($10). Both REITs took a beating, with Vici lowered from $38 per share to $32 and GLPI from $60 to $55. All aforementioned stocks were Buy-rated by Jonas except Accel, Bally’s, and Caesars.
