A Wall Street analyst said an ongoing decline in tourism continues to be a concern for Las Vegas in 2026 and casinos that cater to local residents are a better stock investment right now.
David Katz with Jefferies Equities Research said the Las Vegas Strip “remains peakish” and that he prefers locals casinos for tailwinds.
“The record convention calendar is well established, with the Las Vegas Convention Center alone expecting 200,000 more attendees year-over-year, but we believe tourism presents a pressure point to EBITDA growth,” Katz said. “Our updated estimates reflect these trends in 2026 and into 2027. We are more positive on Las Vegas locals, where economic trends in the region remain strong and capital projects by Red Rock Resorts and forthcoming Boyd Gaming should benefit from a strong market set-up.”
Red Rock is launching an expansion of the Durango Casino in January and preparing for other casino projects across the valley. “Red Rock Resorts’ capital project pipeline growth through the next few years is clear and the economic tailwinds in the Las Vegas valley remain compelling,” Katz said.
Katz said regional gaming is still competitive and choppy, with few pockets of growth available.
“Overall, regional market performance should be bifurcated as firms seek to combat the proliferation of external competition through increased capital investment,” Katz said. “The capital investments of Churchill Downs and Boyd should increase value over time, while the appropriate investments by Penn Entertainment in its properties are offset by less productive digital investment. To this end, the Street’s patience for limited-productivity digital gaming investments by land-based operators has worn thin with Caesars and Penn, which we expect to continue evolving in 2026-27.”
Katz is focused on Churchill Downs, which he said laps an easy Kentucky Derby comparison and should benefit from the graduate ramp of The Rose and Henrico properties. He added the introduction of ETGs in Kentucky likely provides a near-term lift to statewide gaming revenue.
Katz outlined growth opportunities in Macau, Singapore, and the United Arab Emirates and focused on Wynn Resorts and Las Vegas Sands. He expects that the Macau government’s 2026 gaming revenue growth forecast of 3.5% will ultimately prove conservative on strength in Chinese consumers from the capital and property markets. He added that flow-through to EBITDA and earnings should accelerate.
“Meanwhile, the upgrades to Marina Bay Sands in Singapore should set a new earnings level approaching $3 billion of EBITDA (52% of total) for Las Vegas Sands and the forthcoming opening of Wynn Al Marjan Island (in the United Arab Emirates) in 2027 should continue to draw interest to Wynn shares and add $24 a share in value. Wynn should benefit from continued growth in Macau while its premium focus makes it a relative winner on the Las Vegas Strip. Still, share performance will likely depend on the growing optimism for Al Marjan island, which we view as the next frontier for gaming growth.”
Brightstart Lottery should continue to redefine its business model and earnings power post its spin of gaming, rebid of the Italy lotto contract, and expanded pursuit of digital opportunities, Katz said. As the Street endeavors to understand the more competitive landscape for lottery contracts, both traditional and digital, he said they expect pressure on multiples to continue.
