U.S. regional casino markets are poised for a competitive but constrained growth trajectory in 2025, while Macau’s gaming sector is expected to recover to pre-pandemic levels by 2026, according to a note from Jefferies Equity Research analyst David Katz. The report provides a nuanced outlook on the casino industry, highlighting key challenges and opportunities across major markets.
“Operating expectations for land-based casinos should remain mostly unchanged, but we believe there is potential for considerable change in ’25, in either leadership, ownership, or strategic forms,” Katz wrote.
Regional casinos in the U.S. face rising competition and economic uncertainty, which are likely to cap growth. Katz identified challenges stemming from new property openings in competitive markets like Chicago, Indiana, Omaha, and Shreveport/Bossier City. Marketing discipline cultivated post-COVID is also expected to come under pressure.
In Las Vegas, limited supply and strong demand are predicted to shape the market in the next two years, potentially proving a mixed bag for major operators. Katz noted that MGM Resorts International and Caesars Entertainment need to improve execution but remain attractive investments as they are “too inexpensive to ignore”.
Wynn Resorts earned praise for its strong execution and undervalued assets, while Boyd Gaming is projected to perform better in 2025, supported by favorable year-over-year comparisons and its Norfolk, Virginia, casino project. Station Casinos, on the other hand, may face growth headwinds due to construction disruptions.
A robust event calendar and growing group and convention business are expected to bolster Las Vegas operations, while the city’s aging population could serve as a catalyst for local casinos.
With no new resorts coming online and Tropicana Las Vegas and The Mirage closing in the Strip, the market dynamics could favor leaders Caesars and MGM. However, revenue will be either flat or grow minimally over the next two years, the analyst forecasts.
Meanwhile, Macau’s casino sector is forecast to recover to pre-COVID revenue levels by 2026, buoyed by China’s economic stimulus measures. However, growth is expected to slow significantly, from 22.5% this year to just 5% in 2025.
Las Vegas Sands is likely to benefit from its focus on suite products and mass-market offerings, potentially capturing market share from Wynn. However, Beijing’s push for non-gambling amenities has faced hurdles, with non-gaming revenue in Macau declining from $411 million in 2019 to $378 million in 2023.
Jefferies issued upgrades and adjustments to several casino stocks:
- Boyd Gaming: Upgraded from Hold to Buy, with a price target raised from $73 to $92.
- Las Vegas Sands: Upgraded from Hold to Buy, with a price target increased from $60 to $69.
- Station Casinos: Downgraded from Buy to Hold, with the price target reduced from $64 to $51.
Other price target adjustments included an increase for Golden Entertainment from $31 to $32, Monarch Casino & Resort from $72 to $88, and Penn Entertainment from $21 to $22.
Unchanged ratings included Churchill Downs ($172) and Bally’s Corp. ($17), while Caesars, MGM, and Wynn saw price targets lowered to $43, $50, and $105, respectively.
Katz highlighted the need for adaptability in the industry, citing potential changes in leadership, ownership, or strategy in 2025. Shareholder activism is expected to drive Penn Entertainment’s focus on land-based casinos and refine its online gaming strategy.