As earnings season begins, projections for the online sports betting industry show potential growth, especially for Macau and regional casinos, despite anticipated declines on the Las Vegas Strip.
Macau and Regional Casinos Poised for Growth
Bank of America analyst Shaun Kelley expects Macau and regional casinos to perform well, with estimates exceeding Wall Street’s projections by 2% for Macau and 1% for regional venues. Conversely, Las Vegas is predicted to face challenges, with estimations falling 1% short of expectations, largely due to a decline in revenue per room.
Kelley highlighted that recent data suggests year-over-year regional casino growth, with Boyd’s Midwest & South segment seeing significant upswing. Caesars also shows a positive trend, increasing 5% in revenue year over year. However, concerns remain regarding weakness in specific areas like Tahoe and Mississippi.
Optimism Surrounding Macau’s Recovery
Positive sentiment surrounds Macau’s potential for recovery in the second half of the year, driven by revenue acceleration in recent months. Revised predictions now suggest a 5% year-over-year gaming revenue growth in Macau, aligning with current trends.
Kelley noted the strong hold of online sports betting data in June, positioning companies like DraftKings for promising growth. Second-quarter earnings are expected between $250 million and $300 million, albeit with $90 million in additional headwinds due to Missouri launch costs and tax implications.
Earnings season will proceed with Monarch Casino & Resort releasing the first reports. Following closely, Las Vegas Sands, Churchill Downs, and Boyd Gaming will address investors shortly afterward. Boyd, in particular, will discuss its recent decision to sell its 5% FanDuel stake for $1.75 billion, alongside insights into the Las Vegas neighborhood casino market.
Boyd, one of the few brick-and-mortar gaming stocks with a stable valuation, received a $205 million premium for its reduced market access fees. Upcoming earnings reports span from July 24 to August 7, with various casino operators and betting companies scheduled to release their figures.
Bank of America has updated its price targets for several major casinos, reflecting optimism towards Macau. Las Vegas Sands has a new target of $52.50, while Wynn Resorts stands at $125. Kelley projects MGM Resorts International and Caesars Entertainment at $40 and $35, respectively, with Boyd Gaming evaluated at $95.
Overall, the anticipation for growth in Macau and regional casinos remains strong, driven by low promotional spending and a focus on high-value VIP patrons. Investors and analysts alike are keenly watching for further developments this earnings season, particularly the impact of online sports betting and revenue management strategies.
