Las Vegas casinos are about to report their fourth-quarter earnings, but if you’re hoping for a big surprise, you might want to lower your expectations. Analysts say the numbers are looking a bit flat, with major casino operators like MGM Resorts, Caesars Entertainment, and Wynn Resorts seeing slight declines in revenue forecasts.
Why Are Earnings Expected to Be Weak?
The big issue? Growth has slowed. Macquarie analyst Chad Beynon points out that earnings estimates for top Las Vegas Strip casino operators have been slipping over the past month. Here’s a quick look at the downward trend:
- MGM Resorts: Earnings forecast down 2%
- Caesars Entertainment: Down 1%
- Wynn Resorts: The biggest drop at 8%
One reason for this? The excitement from the Las Vegas Grand Prix in 2023 didn’t carry over into 2024, meaning there wasn’t the same boost in revenue. Plus, December 2024 had two fewer weekends than the previous year, which means fewer tourists packing the casinos.
Is There Any Good News?
Actually, yes. Investors have likely already priced in these weaker earnings, meaning stock prices may not take a big hit when the reports come out. And while gross gaming revenue (GGR) on the Strip was down 3% year-over-year (YoY) in Q4, that’s actually an improvement from the 7% YoY decline in Q3.
But not everything is looking up. A key financial measure for hotels, Revenue per Available Room (RevPAR), dropped 8% in Q4, showing that Las Vegas hotels had a harder time filling rooms at higher rates.
How Are Individual Casino Companies Affected?
Each of the big three operators—MGM, Caesars, and Wynn—relies on the Las Vegas Strip differently:
- MGM Resorts: 47% of its revenue comes from the Strip
- Caesars Entertainment: Slightly less at 45%
- Wynn Resorts: Only 23%, since it has a strong presence in Macau
That means MGM and Caesars will feel the impact of lower Strip earnings the most, while Wynn has a bit of a cushion thanks to its overseas business.
The Las Vegas Locals Market Is Holding Steady
It’s not all bad news in Vegas. The locals’ casino market, which includes places catering to residents rather than tourists, is expected to post stable earnings. Key players in this segment include:
- Boyd Gaming (BYD)
- Golden Entertainment (GDEN)
- Red Rock Resorts (RRR)
One notable factor is Red Rock’s Durango casino, which opened in December 2023. This should help its numbers in Q4. However, Boyd Gaming is expected to perform best outside of Las Vegas, thanks to strong results from its Midwest and Southern operations.
Golden Entertainment, which owns The Strat, is also making headlines. There’s talk that the company might sell off some of its real estate assets in 2025, which could provide a financial boost. Investors will be paying close attention to any announcements on this front.
What’s Next for Las Vegas Casinos?
Looking ahead to 2025, the same challenges could stick around. Fewer big events, higher travel costs, and slower spending from consumers might keep earnings from skyrocketing. But Las Vegas is known for its ability to bounce back, so the long-term outlook isn’t all doom and gloom.
For now, though, casino investors shouldn’t expect big jackpots when the earnings reports start rolling in.
