Though investors are concerned that the most recent gaming revenue report showing a year-over-year decline could continue through the end of the year, Las Vegas casino operators cite strong non-gaming spend.

That’s the takeaway from Bank of America Securities’ 14th annual Gaming, Lodging & Leisure conference.

BoA analyst Brian Kelley said that trends “are still healthy” and that not all operators are expecting the same impact that MGM Resorts International called out for the fourth quarter. During the company’s second-quarter earnings call, MGM CEO Bill Hornbuckle cited softness of room rates for the fourth quarter, including for the Formula 1 race in November.

The concern from investors emanates from a report during the last week of August that showed Las Vegas Strip gaming revenue during July fell 15% year over year, driven by baccarat declining 66%.

“The headline decline in gross gaming revenue drove negative stock reactions, but we think the results primarily reflect timing shifts,” Kelley said. “Our Las Vegas room-rate survey shows July rates down 4% and August rates up 33%, so we would expect a similar cadence from gaming trends. That said, given the tough baccarat comps in the back half of the year, more year-over-year gaming declines could be ahead, specifically in September and December where baccarat hold was greater than 20%.”

As for regional properties, Kelley said consumers are still resilient, though there are some pockets of competition in states like Indiana, Nebraska and Louisiana. Caesars and Penn remain optimistic about the ability of upcoming project openings to more than offset competitive headwinds.

Based on conversations with Caesars management, Kelley said their tone sounded positive. Given that Caesars reported less of a Formula One tailwind last year, that makes for a less challenging comp than peers.

“For third quarter, Caesars will be supported by average daily room rates up year over year, with occupancy running at 97.5% and partially offset by lapping high hold last year,” Kelley said. “We do expect the Super Bowl to be a challenging comp across the market in the first quarter of 2025.”

As for regionals. Kelley said Caesars is seeing stable consumer trends outside of new supply in south Chicago, Indiana, and Nebraska. In 2025, the New Orleans renovation, slated for completion in October, and the opening of Danville Virginia by end of the year will more than offset competitive pressure in the rest of the regional portfolio.

Caesar’s online sports betting is expected to grow in line with the market on a net-revenue basis, but the operator remains promotionally disciplined, Kelley said. Recent product upgrades have been focused mainly on improving app performance, such as download and bet times, cashout breadth, and the number of in-game and parlay offerings. Caesars chose that direction, rather than specific new-product rollouts.

In igaming, Caesars continues to win share with casino-first customers, though flow throughs could be limited by high tax rates and higher withdrawal activity, Kelley said.

In B of A’s discussions with Penn Entertainment, Kelly talked about ESPN Bet rolling out their latest app update for football season two weeks ago, featuring an enhanced UI/UX, including dark mode, a more intuitive layout for bets and parlays, and a much wider and deeper parlay and player prop offering, including their new “parlay lounge” with popular pre-populated bets. ESPN Bet has also added enhanced back end and marketing features, including the ability to offer profit boosts, critical to driving parlay mix.

“Management seemed pleased with the results, including recent improvements in hold, and the parlay mix in college football week one helped by the new parlay lounge,” Kelley said. “From here, ESPN Bet feels good about their ability to grow parlay mix to or even above market averages given the casual nature of their customer base.”

Kelley said Penn is expecting to launch an account linking with ESPN and ESPN bet in November. He added it’s their sense there will be link outs to the ESPN Bet app from the ESPN media app homepage and scoreboard, as well as the fantasy app. Account linking should unlock more automated and personalized bets and offerings.

As for Penn’s regional customers, they remain stable, outside of pockets of increased competition.

“For Penn specifically, it’s our sense there could be some challenges in the south segment, given increased competition in Baton Rouge and some construction disruption at Lake Charles,” Kelley said.

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