The Las Vegas locals gaming market is on track for modest growth in 2025, buoyed by new developments and tempered by economic challenges, according to Deutsche Bank’s year-end analysis. The report paints a mixed picture, with growth opportunities tempered by operational headwinds, including rising costs and softer same-store revenue trends.
Durango Casino: A Double-Edged Sword
Durango Casino & Resort, which opened in late 2023, has been a standout performer, becoming a key driver of market activity. Deutsche Bank projects the property to generate $160 million in EBITDAR in 2024, alongside an estimated $260 million in gross gaming revenue. However, the casino’s success has created ripples in the market.
- Same-store gaming revenue has declined by 3% year-to-date through October.
- Market-wide EBITDAR for 2024 is expected to drop by high single digits compared to 2023.
The cannibalization effect, where new properties pull revenue from existing ones, is contributing to this slowdown. Analyst Carlo Santarelli emphasized that while Durango has outperformed expectations, its broader impact is a cautionary tale for market dynamics.
Post-Pandemic Growth and Workforce Trends
Since 2019, the locals market has experienced robust recovery, with gaming revenue growing at an impressive 5.1% compound annual growth rate (CAGR). This outpaces workforce growth, which has been sluggish at just 0.9% CAGR.
Interestingly, gaming revenue per worker rose by 4.2% over the last 12 months. Santarelli attributes much of this to Durango’s success but warns of potential challenges in 2025 due to slowing workforce growth and tougher year-over-year comparisons.
Operators’ Strategic Moves for Growth
Major operators in the locals market, including Boyd Gaming and Red Rock Resorts, are focusing on capital investments to sustain and grow revenue streams.
Boyd Gaming
- Renovations at The Orleans and Suncoast are aimed at boosting non-gaming revenue.
- Suncoast’s overhaul includes a new food hall and expanded meeting spaces.
Red Rock Resorts
- Undertaking a $53 million renovation at Sunset Station, causing a $5.4 million EBITDA impact.
- A $150 million room remodel at Green Valley Ranch is expected to disrupt $11.5 million in EBITDA but yield benefits in 2026.
Golden Entertainment
Golden Entertainment, meanwhile, is struggling to keep pace. The operator’s stock performance lagged in 2024, and its market share has declined compared to peers.
Managing Costs in a Challenging Environment
Operators are taking a cautious approach to expense growth after the sharp increases seen in 2022. Labor, insurance, and energy costs remain persistent challenges. Santarelli praised the operators’ ability to control costs while adapting to a softer revenue environment.
“Margins are likely to hold steady with modest revenue growth in 2025,” he said, adding that profitability will depend heavily on revenue performance.
Mixed Non-Gaming Revenue Outlook
The non-gaming revenue picture for 2025 is a mixed bag:
- Boyd Gaming’s renovations could boost revenue in the near term.
- Red Rock Resorts’ disruptions from renovations might weigh on performance, with benefits likely materializing in 2026.
These investments highlight a longer-term vision but present short-term hurdles.
The Path Ahead
Deutsche Bank described the locals market as “frothy,” reflecting a level of growth that surpasses historical norms. However, the report stresses the importance of sustainable growth. Santarelli concluded that a healthy gaming revenue cadence in 2025 would be crucial for operators like Boyd and Red Rock to outperform.
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