The outlook for the casino industry in 2025 is positive after a challenging 2024. Interest-rate cuts and changes at the Federal Trade Commission might open up greater opportunities for mergers and acquisitions.
These findings were part of the key takeaways for gaming at the end of the year Truist Securities’ Wicked Good 12th Annual GLLR Summit in Boston.
Company attendees included Accel Entertainment, Caesars Entertainment, Churchill Downs, DraftKings, Gaming & Leisure Properties, Golden Entertainment, International Gaming Technology, Light & Wonder, Penn Entertainment, and Wynn Resorts.
In a note to investors, Truist analyst Barry Jonas wrote that land-based trends appear “slightly more positive than recent investor pessimism would suggest,” with regionals bouncing off 2024 lows and Las Vegas flattish against tough comparisons.
“The outlook for land-based gaming was more encouraging after a more challenged 2024, a year in which many of our operators’ equities fell out of favor,” Jonas said “Regionals seem primed to inflect off this year’s lows, as operators are seeing some momentum in November and December. While some of this is calendar, operators also talked about a potentially healthier consumer post-election, lower gas prices, and generally better performance versus new competition (Wind Creek versus Chicagoland, Nebraska casinos versus Council Bluffs).”
Jonas said Caesars sounded “incrementally positive” since its earnings report in late October, and “we believe their 2025 regional commentary ‘slightly down to flat’ EBITDA could be closer to ‘flat to slightly up’ if their earnings call were today.”
Jonas is lowering the Caesars 2025 earnings regional EBITDA, however, to better reflect guidance and the sale of the LINQ Promenade, assuming EBITDA is up about 0.3% year-over-year.
“We note November to-date state-reported data is up +4% year-over-year with about 40% of results reported,” Jonas said.
In Las Vegas, operators see trends as more consistent versus continuing tough comparisons, Jonas said. After a few consecutive months of year-over-year gaming revenue declines (Aug. -4%, Sept. -2%, Oct, -3%), F1 contribution was net down year-over-year, though the balance of November sounded stronger.
“December commentary was favorable as was January, though February will comp against a very strong Super Bowl,” Jonas said. “Overall, management teams were confident in a return to growth in 2025, given a strong group/event calendar. We note commentary around the setup for land-based gaming in 2026 was more positive than 2025. In the regions, operators were positive on lapping new competition and limited new/improved supply. Meanwhile, Vegas will see the massive Con/Agg conference return and Caesars will benefit from the return of State Farm.”
Operators were more positive on mergers and acquisitions, with changes at the FTC and rate cuts potentially opening up opportunities to right-size portfolios and valuation, Jonas said.
“The velocity of discussion has improved since the Fed started down the path of rate cuts, and further, operators are positive on a more favorable FTC administration,” Jonas said. “After a theorized and actualized year of M&A in gaming tech to right-size valuations, we think 2025 has the potential to be the year of gaming operator M&A. That being said, valuation expectations and bid/ask spreads will be key determinants. Irrespective of new M&A, GLPI highlighted in meetings its meaningful built-in growth ahead next year.”
Digital continues to grow, with challengers hopeful, while the trends in interactive gaming continue to impress, Jonas said. DraftKings “continues to charge ahead” with 2025 expected to bring continued growth and an inflection in free cash flow. While Caesars remains frustrated with a lack of credit for digital in its valuation, management continues to evaluate ways to unlock value, including a spin-off of its digital segment.
Elsewhere in digital, Penn remains committed to investing and growing its entire interactive offering, as they near a standalone igaming app release in the first quarter to accompany ESPN Bet, Jonas wrote.
“We think standalone igaming could be an underappreciated opportunity, given Penn’s extensive land-based portfolio,” Jonas said. “We continue to see state tax revisions as the largest threat to Interactive gaming. Still, despite the real prospect of more tax increase bills next year, management teams thought the prospect for the bills succeeding was low.”
Tech representation was lighter after a year of M&A in the space, though leader Light & Wonder highlighted a “resoundingly successful response to the Dragon Train injunction against a backdrop of continued growth, despite a flattish land-based casino replacement environment, Jonas said.
“We think the focus will shift to a 2025 analyst day and what the next round of growth targets can look like after achieving 2025’s $1.4 billion EBITDA target,” Jonas said.
“IGT remains in more of a wait-and-see mode as we await the Italian Lotto RFP release in the coming weeks, though management highlighted overall stability in its portfolio while positive on the upcoming Mega Millions price increase.”
