“Gaming stocks are carrying a lot of baggage and negativity right now,” wrote J.P. Morgan analyst Daniel Politzer in a January 23 investor note. Ergo, he favored only two, going into fourth-quarter earnings calls: Las Vegas Sands and DraftKings.
Digital gambling was the area in which Politzer thought companies were likeliest to beat their earnings projections. However, those same “stocks are dogged by investor concerns on handle growth, prediction markets, and regulatory/tax risk (legislatures are in session).”
Even Macau-facing stocks were seen to be subdued. Concerns highlighted by Politzer included operator expenditures, as the Chinese gaming industry diversifies, and gambling revenues in the second half of 2025.
On the Las Vegas Strip, Politzer perceived muted expectations. Worries included how much lower estimates would fall and when cash flows would improve.
“To us, regionals have the cleanest setup from here (and could be a stimulus beneficiary),” the analyst wrote. But even here, he felt that due to headwinds in the form of poor January weather and earnings, they wouldn’t beat forecasts.
Returning to Sands, Politzer predicted Macanese cash flow of $626 million in fourth quarter 2025, as predicted, and a six percent beat in Singapore, totaling $723 million. Improvements in Macau, Politzer thought, were a matter of willpower, whereas Singapore would “raise the roof” of upcoming cash-flow expectations.
In Macau, the analyst noted, gambling revenue growth was 15 percent in the last quarter, reaching 92 percent of 2019 volume. However, VIP and other high-end play was accelerating much faster than that of mass-market customers at 45 percent, while mass-market play was stuck in the mid-single digits.
Given these factors, comparisons in the latter half of 2026 would be difficult, Politzer warned. “January is off to a good start, but we likely won’t learn much,” he continued, since Chinese New Year falls in mid-February. He predicted Macanese cash flows of $292 million for MGM China and $281 million for Wynn Resorts, less than half of Sands’.
DraftKings enjoyed Politzer’s favor as well, on account of his belief that it would deliver cash flow of $300 million, 20 percent higher than foreseen by Wall Street. By contrast, he thought Wynn (which was beset by “choppy hold” in Macau) and Penn Entertainment would undershoot their earnings forecasts.
As far as the Las Vegas Strip was concerned, Politzer felt Wall Street was confronted with the question, “Is the stepdown in leisure demand structural or cyclical?” Even if it were cyclical, he added, that creates uncertainty about when the next “up” cycle will begin.
He did not see relief arriving until the easy comparisons of 2026’s third quarter. The first quarter was likely to be down six percent for MGM Resorts International and one percent off for Caesars Entertainment (and flat for Wynn). The second quarter would see a leveling off, he predicted. Growth, Politzer penned, would arrive in the fourth quarter of 2026 and be on the order of two or three percent.
Regionally, Politzer saw a slight slowdown in growth, averaging three percent in 2025’s fourth quarter. He attributed this to reduced promotional activity and possibly to adverse weather. He said Boyd Gaming and Caesars would experience a “slight regional upside,” but that Penn would miss its targets slightly.
The market’s mood was said to be mercurial about digital gambling, “reflecting concerns re: slowing/declining handle growth, prediction markets, and tax/regulatory newsflow.” The advent of sports betting in Missouri would, Politzer said, contribute to nine percent handle growth over the quarter. That was, however, a slowdown as handle had grown 15 percent in October and 10 percent in November, contracting three percent in December.
DraftKings was, Politzer forecast, on pace for 11 percent handle growth, while FanDuel was likely to do less than half that, partly due to heavy promotions. “On a more positive note, hold was mostly normal,” he added, rebounding from a very unfortunate fourth quarter of 2024 for sportsbooks.
In conclusion, Politzer tweaked some of his price targets. He subtracted a dollar each from Caesars (to $37 per share) and DraftKings (to $41 apiece) and two dollars from Wynn ($143 each). He added $1 per share to Churchill Downs (to $131), Sands ($71), and Station Casinos (now $20). Sportradar sustained a heavy cut, down $5 to $30.
