Regional casinos received an October surprise in the form of 4.1 percent lower foot traffic. Patronage was even more deeply impacted compared to pre-COVID 2019, when it was 11.3 percent higher.

The numbers were released November 13 by Jefferies Equity Research analyst David Katz. He wrote that they would be of particular concern to regionally exposed casino companies Boyd Gaming, Churchill Downs, Caesars Entertainment, Monarch Casinos & Resorts, and Penn Entertainment.

Compared to 2019, Katz penned, the October declivity was even worse than September’s. He consoled operators with the thought that he expected trends to stabilize throughout the remainder of the year, despite challenging comparisons.

The good news may have ended there. “Additionally, [Wall] Street remains on guard for the impact of macro trends on earnings levels, including higher costs for insurance, utilities, and labor, that have challenged markets unevenly,” Katz chronicled.

Ohio was relatively lightly impacted, down one percent, while Pennsylvania saw 4.6 percent fewer gamblers. Atlantic City casinos enjoyed a 1.1 percent bump from 2023, but a nine percent drop-off from before the pandemic.

Illinois casino attendance sprang 10 percent from 2023, possibly aided by multiple new-casino openings, and lagged 2019 by 13 percent. Katz was sanguine. “Our take is that the monthly performance reflects the ongoing normalization of traffic trends post-COVID, where volatility remains, as well as from competition and renovations in specific locations.”

Detroit saw the greatest year-over-year advance, 30 percent, although it was seven percent off the pre-pandemic pace. Regarding Kentucky, Katz offered no specific data, citing a spate of recent openings. He added, “Comparisons are seasonally driven rather than reflective of fundamental shift.”

Similarly, he observed a 12 percent year-over-year increase in Black Hawk, Colorado’s casino patronage. But he noted that strong and new products from Monarch diluted insight into trends there.

Katz warned, “Despite strength from May to [August], the trend appears to be reversing as foot traffic in the past two months has declined YoY … To accurately measure the recovery cadence for casino foot traffic, we are utilizing foot traffic data from Placer to capture movement around destinations and regional casinos across the country.”

Turning to specific companies, Katz opined that Penn was exposed to high levels of competition, with seven casinos bunched in Illinois and Ohio. He also warned Caesars and Boyd, noting that they derived 50 percent (Caesars) and 56 percent (Boyd) of property-level cash flow from their regional operations.