For Wall Street, gaming “remains out of favor,” according to Truist Securities analyst Barry Jonas. But he described the green shoots he sees in an April 21 investor note.
The problems mainly afflict Las Vegas, where business growth remained stubbornly elusive. Also, Vegas locals-oriented casinos were facing challenges that Jonas described as near-term idiosyncrasies.
However, if players were staying close to home, that change redounded to the benefit of regional casinos. These, Jonas reported, “have the best setup” going into first-quarter earnings calls. He particularly liked Churchill Downs and Monarch Casinos & Resorts.
As for online gambling, it “remained challenged,” caught between the growth of online sports betting (OSB) and that of prediction markets. For all stocks, macroeconomic concerns and “oil drama” clouded the picture.
Not even the massive CON/AGG exposition, with its 140,000 attendees, was enough to lift Las Vegas Strip cash flow, according to Jonas. Occupancies and tourism to Sin City bottomed out in the first quarter and revenue per available room was up five percent.
Still, “We don’t think it was enough to offset overall softness in the leisure segment with the well-known challenges at the low end, softer international visitation and value-perception issues,” Jonas opined.
He lauded both Caesars Entertainment and MGM Resorts International for value-oriented, all-inclusive, hotel packages at their lower-end casinos, thereby partly addressing value concerns. “Still, it remains to be seen what sort of upside this will yield. We continue to monitor [second-quarter] trends closely, as the Strip begins to benefit from easier comparisons and a strong event/group calendar,” Jonas cautioned.
The analyst described Vegas Strip hotel rates as soft in January, firming up in February, and improving in March, when they rose 10 percent year over year. April rates sank nine percent, but were more than made up by a May surge of 14 percent and a 10 percent jump in June.
The room-rate rebound was pacing to have a better effect on Caesars than MGM. During a State Farm Insurance convention, Caesars’s rates catapulted 43 percent, while MGM’s rose only two percent.
That said, Jonas continued, movement in shares of Caesars was not driven by company performance, but by takeover speculation. “We see any such deal as complex, given the elevated leverage of parties involved,” he expanded, adding, “companies across the space could use creative M&A as the solution to lagging stock prices.”
Jonas also warned that “any Caesars deal would take time to consummate and have a sharp focus by regulators with painful memories of Harrah’s last take-private transaction.” The latter eventually led to a corporate bankruptcy and reorganization.
Locals casinos, by contrast, were steady, but experiencing a slowdown in business. While Jonas modeled some adverse revenue impact on Station Casinos in the near term, he highlighted that it was occasioned by revenue-driving renovations to multiple Station resorts (Sunset Station, Green Valley Ranch, Durango Resort).
Boyd Gaming was described as facing destination-centric challenges, especially at The Orleans. Jonas felt that locals business itself was steady and would be further buttressed by new Cadence Crossing, as well as by outlying regional revenues.
Regarding those regional casinos, they were said to be on firm ground, despite uncertainties in the United States economy and from overseas. On a same-store basis, gross gambling revenues were up five percent in January, three percent in February, and flat in March, which had one less weekend day than in 2025.
Although tax refunds were up 11 percent in the first quarter, casinos did not report seeing a flow-through to the bottom line. “While higher gas prices historically haven’t impacted gaming all that much, at some point it could cut into discretionary budgets for all our coverage,” Jonas speculated. “Overall, we think continued trade-down activity amongst consumers is largely driving the regional strength,” at the expense of Las Vegas.
Given their regional spread, Jonas particularly liked Penn Entertainment and Boyd. “We also continue to appreciate operators with best-in-class assets,” he added, turning to Monarch and Churchill Downs. The latter was also seeing “investor excitement building” for the Kentucky Derby, which was projected to provide a cash flow lift of anywhere from $15 million to $20 million.
Caesars, comparatively, faced a $10 million cash-flow dent from not having a Super Bowl in New Orleans. Otherwise, trends were said to be solid, with boosts coming from a bowling tournament in Reno and the finish of $200 million Caesars Republic on Lake Tahoe, both set for the second quarter.
The toughest regional comparison was faced by MGM, which suffered adverse weather at MGM National Harbor. Jonas predicted a slight revenue dip from MGM’s regional casinos.
Caesars’s and MGM’s real-estate partner, Vici Properties, was one of two real estate investment trusts (Gaming & Leisure Properties being the other) that “have been able to execute despite the unstable macro environment and interest rates not being a real tailwind.” Both pulled off major acquisitions during the first quarter.
A takeover of Caesars (or management-led buyout) was said to have ramifications for Vici. However, Jonas did not think one would impair Vici’s rental income.
Slot makers were said to have been in disfavor on the stock market, due to worries about the effect of artificial intelligence (AI). Jonas was more sanguine, saying that it was more of an instance of “the market likely not appreciating how hard it is to replicate the ‘special sauce’ that goes into slot machine development — not to mention the regulatory barriers to entry.”
Jonas stayed Buy-rated on both DraftKings and FanDuel parent Flutter Entertainment. He acknowledged “a litany of question marks around general prediction market uncertainty, including potential investment size, ROI expectations, and ongoing legislative processes.”
Even so, Jonas reiterated faith in the two companies’ leadership and technological primacy. He concluded, “They work to beat potentially conservative guidance as near-term expectations seemingly have bottomed.”
