A Wall Street analyst isn’t expecting a bounce back in leisure and foreign visitors to Las Vegas by the end of the year and worries softness on the Strip will spill over into the locals market.
Chad Beynon, a senior Gaming, Lodging & Theatres analyst at Macquarie, released a note to investors Monday, saying regional properties will continue to outperform those in Las Vegas.
Based on third-quarter market trends, Beynon thinks third-quarter earnings remain to the downside for Strip segments of Caesars Entertainment, MGM Resorts International, and Wynn Resorts, based on current consensus estimates.
“While we believe the long-term Vegas thesis remains intact, we worry softness from leisure and international customers will last through year-end, following three years of growth post-COVID,” Beynon said. “Conversely, trends in U.S. regionals remain strong and we expect this segment to continue outperforming Vegas for the remainder of the year.”
The Las Vegas Strip generated monthly revenue of $679 million in August, a nearly 6% year-over-year increase, owing mostly to an easy baccarat hold comp (18% versus 10% last August), which drove 13% year-over-year table growth, Beynon said.
As expected, the third quarter is an easy gaming-revenue comp in Vegas, given low baccarat hold last year, driving table growth to a 12% year-over-year increase after the first two months in the third quarter. Slot handle grew 2% in August, bringing third quarter handle trends to 3% year-over-year.
In August, Las Vegas locals casino revenue was up 3%, while downtown was up 8%,
“Based on third-quarter data, we expect Boyd Gaming’s retail segments to outperform, mostly driven by its Midwest and South segments, while Red Rock Resorts should meet consensus estimates,” Beynon said. “Following a strong second-quarter earnings season, we worry Strip softness will spill over into the Las Vegas locals market on a delayed timeline, given an overall softer local economy, which has already prompted higher promotional/marketing activity on both the Strip and locals market.”
In his note to investors Monday, John DeCree, director of equity research at CBRE, was more optimistic about the locals casinos. He said they’re holding firm, with gaming revenue growing five of the past six months.
“We continue to expect stability to moderate growth in the locals market,” DeCree said. “While we appreciate concerns of impact from lower visitation to the Strip, we remain comfortable with the health of the local consumers. Heading into 2026, we see potential upside to locals gaming revenue from recent tax cuts enacted under the (federal tax cut and spending bill), namely for tipped and overtime workers and seniors. We continue to recommend the shares of Red Rock Resorts (Buy, $65) and Boyd (Buy, $100).”
Las Vegas monthly trends for gaming revenue and visitation, which continues to decline year-over-year, were in line with expectations, DeCree said.
“Visitation to Las Vegas remains subdued due to a confluence of headwinds, including geopolitical/immigration tensions impacting visitation from Canada, Mexico, and Southern California, as well as reduced capacity on Spirit Airlines,” DeCree said. “Visitation to Vegas declined 6.7% year-over-year in August, also impacted by an 8% decline in convention attendance. Lower visitor volumes are having a clear impact on the Strip’s hotel business, with occupancy down 360 basis points in August, average daily room rates down 7.1%, and revenue per room down 11.1%. August marked the third consecutive month of double-digit declines in RevPAR.”
Despite lower visitor volumes, gaming on the Strip remains resilient, DeCree said. Even though it was driven by a 51% increase in baccarat revenue because of hold, gaming volumes excluding baccarat were up in August. The slot handle was up as well.
“Overall, the continued strength in mass-market gaming volumes remains encouraging, particularly considering the lower visitor volumes. We look forward to the fourth quarter and first quarter of 2026 for stability in visitation as the convention season kicks into higher gear. However, we expect the headwinds impacting leisure visitation to remain in the near term.”
Strip estimates are likely to come down, but are already priced into valuations, DeCree said. CBRE recently lowered its Strip estimates for Caesars and MGM, and although they expect consensus to follow suit, DeCree believes the current valuations already reflect this.
“We prefer the shares of Caesars (Buy, $45), which, despite the headwinds in Vegas, should see free cash-flow acceleration in 2026 driven by lower interest expense (from reduced rates and debt paydown), reduced capex, ramping profitability of Caesars Digital, regional tailwinds, and a reduced (federal) tax burden,” DeCree said. “MGM (Buy, $48) could also see cash flow accelerate in 2026 with better regional gaming trends and a possible increase in dividends from MGM China and even BetMGM as it ramps EBITDA. However, it is more difficult to forecast the timing and magnitude of these dividends, which will depend on the dividend policy at both entities.”
