Wall Street Bets: Churchill Downs, Las Vegas Strip room rates and revenue, Iowa legislation

Monday, February 3, 2025 9:28 AM
Photo:  CDC Gaming
  • Rege Behe, CDC Gaming

Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.

Churchill Downs prospects

“Inbound focus on Churchill Downs remains active the past several weeks, given the weakness (-7.5% year-to-date, Standard & Poor’s +2.9%),” wrote analyst David Katz of Jefferies Feb. 2. “The debate is over growth versus deleveraging going forward, with general confidence in management’s decisions as opposed to harvesting the capital projects of the past 2-3 years and reducing leverage to the target <4X. Our view is that near term capital decisions are unlikely to defer the deleveraging in the near term, with near term results from the Rose (Virginia) and the forthcoming Kentucky Derby likely positive catalysts.”

 

Las Vegas Strip room rates

J. P. Morgan analyst Joseph Greff on February 3 wrote about Las Vegas Strip room rates for the week of February 23-March 1.

“For the survey period, relative to the comparable period 2024, midweek rates are -7% and weekend rates are -16% (-10% overall),” Greff wrote. “By company: MGM rates are -16% for the midweek and -18% for the weekend (-16% overall); Caesars’ rates are -9% for the midweek and -15% for the weekend (-11% overall); Wynn Resorts rates are +3% for the midweek and -36% for the weekend (-8% overall); Venetian/Palazzo rates are +11% for the midweek and -20% for the weekend (-1% overall).

Relative to the full 1Q24E, our midweek rates are +2% and weekend rates are -21% (-6% overall). By company: MGM rates are -10% for the weekday and -29% for the weekend (-16% overall); Caesars’ rates are +13% for the weekday and -14% for the weekend (+2% overall); Wynn Resorts rates are +12% for the weekday and -18% for the weekend (+2% overall); Venetian/Palazzo rates are +21% for the weekday and -11% for the weekend (+9% overall).”

December revenue on Las Vegas Strip

Truist Securities analyst Barry Jonas January 30 looked at revenue in December on the Las Vegas Strip.

“December Strip GGR fell -3% year-over-year, (Q4: -3%), largely due to the negative calendar impact and low table hold. Normalized/ex-baccarat casino win was mixed -8%/flat year-over-year respectively (Q4: -2%/flat). December visitation was flat year-over-year with Strip revenue per available room up +6%. Despite a sixth consecutive month of GGR declines, we still think Vegas is fundamentally sound with room rates trending up while company commentary is positive outside of well-known tough comps. Local performance was strong in December, up +14% (Q4: +5%); slot accounting likely influenced results.

Iowa legislation

Katz February 2 also looked at Iowa legislation regarding casino licenses. “On January 30, the Iowa House of Representatives passed a bill suspending the issuance of new casino licenses for the next five years,” Katz wrote, “specifically preventing the proposed $275 million Cedar Rapids casino from being built. Furthermore, the bill would prevent the awarding of new licenses if the projected AGR for an existing casino would drop more than 10%. This development would alleviate pressure on companies currently operating in the state, specifically Caesars (financial year 2024 AGR -4.6% year-over-year in Iowa) which has struggled across its regional portfolio.”

 

Rege Behe is lead contributor to CDC Gaming. He can be reached at rbehe@cdcgaming.com. Please follow @RegeBehe_exPTR on Twitter.