Vegas Casino Shares Facing Examinations in 2025 by Local Investors
Published on: January 2, 2025, at 04:50h
Last Updated: January 2, 2025, at 04:50h
In the heart of Southwest Las Vegas, the Durango Casino & Resort, owned by Red Rock Resorts, opened its doors in December 2023. This new addition to the city's casino scene has stirred a ripple effect in the local market, affecting operators such as Boyd Gaming, Golden Entertainment, and Red Rock Resorts.
According to Deutsche Bank analyst Carlo Santarelli's report on the Las Vegas locals space in 2024, the Durango Casino & Resort has been a significant player, stoking elevated promotional activity among smaller independent casinos that target locals. The analyst estimates Durango's annual net revenue for 2024 to be approximately $340 million.
Assuming net revenue splits at Durango similar to the portfolio aggregate, the analyst implies annual net casino revenue of about $225 million and annual gross gaming revenue approximating $260 million. This revenue growth could potentially benefit shares of Boyd Gaming and Red Rock Resorts in 2025, as they strive to recover from the declines experienced in 2024.
However, Santarelli's report also raises concerns about the slowing workforce growth in the Las Vegas locals market. From 2014 to 2019, employment growth at Las Vegas locals properties moved nearly in lockstep with the 3% compound annual growth rate (CAGR) in revenue posted by those properties. Since 2019, top-line CAGR has swelled to 5.1% while job growth has risen just 0.9%.
The analyst notes that many employees of one operator take their gaming business to other venues operated by their employer or competitors. This trend, combined with the impact of Durango, has led to an increase in gaming revenue per member of the workforce by 4.2% over the last 12 months.
The analyst is concerned with the workforce-growth trends, relative to the gaming revenue growth trajectory, as it pertains to the 2025 outlook. The analyst believes Durango Casino & Resort is slated for significant expansion in 2025, which could potentially take more business from the aforementioned operators.
It's important to note that the Durango Casino & Resort and the Red Rock Casino Resort are both owned by Station Casinos, a company based in the Las Vegas suburb of Summerlin South, Nevada.
In conclusion, while the revenue growth at Durango Casino & Resort could be beneficial for some operators, the analyst's report raises concerns about the slowing workforce growth in the Las Vegas locals market. The challenging comparison in 2025 could pose a concern due to the slowing workforce growth and the impact of Durango.
