Las Vegas Strip casinos are having a tough time matching 2023 gaming revenue levels

Analysts think Las Vegas Strip casinos could see the recent soft gaming revenue trends continue in November and December. Casinos stocks have stumbled compared to the broad market over the last few months, partially due to GGR marks from Las Vegas that have come in below last year’s level to temper investor confidence.

Las Vegas Strip casinos reported a 3.1% decline in gaming revenue in October to $714.4 million, according to data from the Nevada Gaming Control Board. Table game revenue was soft during the month, with baccarat revenue down 23% year-over-year and roulette revenue off 36%. Sportsbooks on the Strip saw revenue decline 50% during the month on a narrow hold percentage of just 3%.

Las Vegas Strip casinos have now recorded four straight months of declining year-over-year gross gaming revenue.

On the positive side, Deutsche Bank Carlo Santarelli noted that no one is in a panic over the Strip decline, which he attributed mainly to a drop in baccarat hold and tough comparisons to the second half of 2023. “Looking ahead, the Strip faces tough comparisons in both November and December, months in which baccarat hold in 2023 was 19% and 22%, respectively,” warned Santarelli. “We expect year-over-year gaming-revenue declines in both months and we believe hold around F1 was as expected — less favorable than it was in 2023,” he added.

UBS analyst Robin Farley said the most of the Q4 results for the Strip operators will likely be determined by hold during F-1 and the year-end holidays. “In our recent meetings with WYNN and MGM both companies reminded investors that they are comping favorable hold in the prior year and other tough comps in Q4 (to be followed by tough Super Bowl comps in Q1.),” highlighted Farley.

Meanwhile, Truist Securities analyst Barry Jonas showed more caution and pointed to soft visitation data for Las Vegas in general and thinks the F1 room rate comparison to a year ago will be difficult to match when the November numbers roll in.

Other analysts have made more favorable comments, and think a pullback in consumer discretionary spending just ahead of the U.S. election could reverse and provide a notable tailwind into 2025. On a historical basis, the Strip numbers are still relatively strong, according to J.P. Morgan analyst Joseph Greff. He highlighted that Strip gaming revenue increased 29%, locals gaming revenue increased 27%, and statewide gaming increased 26%.

Sector watch: Caesars Entertainment (NASDAQ:CZR), MGM Resorts (NYSE:MGM), Boyd Gaming (NYSE:BYD), Wynn Resorts (WYNN), Full House Resorts (FLL), Bally’s Corporation (BALY), and Red Rock Resorts (NASDAQ:RRR).