On the surface, the Las Vegas locals’ gaming market appears solid. Year to date, gross gaming revenue (GGR) is up 6%, which has prompted sell-side analysts to wax bullish on Boyd Gaming (NYSE: BYD) and Red Rock Resorts (NASDAQ: RRR), but at least one analyst says forecasts may be too rosy.
Deutsche Bank’s Carlo Santarelli departs from his colleagues’ positivity on stocks tethered to the Las Vegas locals segment. In a recent note to clients, he pointed out that nearly all of that 6% topline growth is attributable to Red Rock’s Durango Casino & Resort in Southwest Las Vegas, which opened in December 2023. Strip out that property, and Las Vegas locals GGR is actually down 3% in 2024, he said.
Santarelli added that Durgano has cannibalized Red Rock Resort in Summerlin and some of the operator’s other casinos, which “has offset the favorable margin profile of Durango.”