How do local casinos work? Analysts watch Station, Boyd for signs

As the first quarter mobile season reaches its peak, members of the gaming industry are looking to several operators in Southern Nevada to get their take on the local Las Vegas gaming market.

Wall Street analysts were surprised by the financial results announced during Boyd Gaming’s first quarter earnings call on April 25.

The company reported a decline in revenue, net income and adjusted earnings compared to the same quarter in 2023. Executives attributed the results to winter weather conditions affecting its US regional business, to reduce the traffic of Hawaiian customers to the city of Las Vegas and the competition of new casinos. property, Durango, and additional promotional activity from Off-Strip resorts Rio and Palms.

“Overall, market sentiment has been cautious,” CBRE analyst John Decree said. “Boyd’s earnings line last week impressed investors in a small way that the local market may not be fully recovered from broader economic pressures.”

Prominent local players

Boyd’s parent company and Red Rock Resorts’ Station Casinos, both in Las Vegas, are two prominent players with local portfolios. Other businesses in the market include privately owned properties such as the Rampart and Palms casinos and tavern-style casinos such as the PT brand operated by publicly traded Golden Entertainment.

Analysts have identified several factors that may contribute to the decline of the market: high operating costs resulting from increased earnings, the decline of low-end players and new supply in the market in the form of Durango. In addition, the market faced a difficult comparison from the beginning of 2023, when many casinos had an increase related to the epidemic related to consumer spending.

“Currently, we think that the LV Locals market may be where it was expected to go in 2022, when the GGR (gross sports revenue) is negative, and declining a slowdown in GGR is likely in the near- to medium-term environment,” Deutsche Bank analyst Carlo Santarelli wrote in a research note after Boyd’s earnings call.

There is still room for growth

Despite those reasons, market sentiment from businesses is not all doom and gloom. Real estate investment firm VICI Properties, the largest real estate owner on the Strip, used its earnings call Thursday to signal its interest in other Vegas markets, suggesting that businesses still see the long-term vision of the area well.

“Where we see the growth opportunity is in the Las Vegas regional market and the Las Vegas city market,” VICI President and COO John Payne said on the call. “So you can see VICI continuing to grow in the Las Vegas market, and it might be on the Strip, but it might be in these other areas.”

Decree said industry watchers will seek insight into consumer spending levels and Red Rock Resorts’ development plans during its earnings call on Tuesday afternoon. Many people suspect that the reduction of the market will not bring lower profits compared to the pre-pandemic levels, to prevent economic collapse, due to the increase in the population of the area and the mixture that is still increase in high income earners.

“I think the city and the market are different than they were (in 2019). We still have a little softness in the lower parts of the consumer’s savings, but the main issue is the increase in costs. “caused by the recession and rising wages,” he said.

McKenna Ross is a member of Report for America, a national service program that places journalists in local newsrooms. Contact him at mross@reviewjournal.com. Follow up @mckenna_ross_ to X.