The Las Vegas local casino sector is forecasted to maintain its robustness and surpass the financial performance of Strip establishments, bolstered by significant reinvestments from major operators and tax reductions under President Donald Trump’s One Big Beautiful Bill Act, according to two analysts specializing in the gaming industry.
John DeCree, head of equity research at CBRE Group Inc., along with Kim Noland from Gimme Credit LLC stated in individual reports released on Tuesday that the local market is in a superior position compared to Strip-oriented operators due to beneficial demographics and enhanced capital investments, as highlighted by the Las Vegas Review-Journal.
“Although year-over-year comparisons for the local market may become increasingly complex by 2026, there are numerous drivers expected to spur moderate growth, including the tax benefits from the One Big Beautiful Bill Act and recent capital enhancements from leading operators like Boyd Gaming Corp. and Red Rock Resorts,” DeCree noted.
He emphasized that the local market is likely to derive greater advantages from this legislative change than the Strip. “From our analysis, the Las Vegas local market is anticipated to gain the most from the OBBB Act due to the significant number of tipped employees and retirees residing in Las Vegas, along with the city’s high propensity for gambling.”
Noland pointed out Red Rock Resorts as a pivotal force in driving growth within the local market, attributing its expansion strategy and the success of its Durango casino as key factors of its exceptional performance.
“This company operates seven prominent locations and 12 smaller venues, with recent profit gains largely attributed to its burgeoning Durango casino, as well as planned enhancements at Green Valley Ranch and Sunset Station, expected to wrap up this year,” Noland stated.
She indicated that Red Rock has outperformed competitors in the local market, notably Boyd Gaming. “Although Boyd Gaming, Red Rock’s principal competitor, boasts casinos nationwide and slightly better profit margins, it has recently fallen behind in the local market due to Durango’s remarkable success.”
“Red Rock has been pulling ahead of competitors partly because Durango has expanded the market since its opening, along with significant expansions by Red Rock.” she added.
DeCree mentioned that the local market has been historically more resilient than the Strip during economic slumps. “Since 1984, the Strip has experienced an annual decline in gross gaming revenue 11 times, while the locals market faced declines six times,” he remarked.
“Out of those six years, three were linked to the global financial crisis (2008-10), featuring a decrease of 21 percent from peak to trough compared to a 19 percent drop on the Strip,” DeCree explained. “One downturn was attributed to the COVID-19 pandemic (2020), resulting in a 23 percent decrease vs. 43 percent on the Strip.”
He also pointed out that during other recessionary periods, local casinos tended to perform better. “During recessions like the dot-com bubble, gross gaming revenue in locals casinos rose by 8 percent, contrasting with a 3 percent downturn on the Strip.”
DeCree stated that the locals market is increasingly diverging from the performance of the Strip. “Furthermore, the locals market has significantly decoupled from the Strip, supported by a more diverse economy and a favorable balance of supply and demand, evidenced by a substantial reduction of over 47 percent in gaming positions per 100,000 residents since 2007.”
Noland asserted that Trump’s tax reforms will further encourage spending among local patrons. “Tax regulations concerning tips, overtime, and senior deductions will keep aiding the company’s core customers in the local market,” she wrote.
DeCree also lowered the rating for Golden Entertainment Inc. due to its transition to a private entity.
“Our price target for Golden has been adjusted to $28 (per share, down from $32), reflecting the current exchange rate related to the stock component of the deal with Vici Properties Inc.,” he indicated.
While Golden’s Strat property might experience challenges, DeCree believes its local operations will benefit from prevailing trends. “Although The Strat may struggle with decreasing visitation and leisure demand on the Strip, we project that Golden’s local operations (Arizona Charlies) will thrive similarly to Boyd and Red Rock Resorts.”