Analyst Cautious on Decelerating Trends for Remainder of 2024

An expert analyst disclosed details regarding the current state of gaming and betting markets in the US and Macau, highlighting a decrease in customer spending is expected throughout the second half of the year.

The expert analysis came from J.P. Morgan analyst, Joseph Greff, who was recently quoted by CDC Gaming and commented on important recent developments in the gambling sector. He also shared a prediction regarding H2 of 2024.

In a note to investors, Greff cited “decelerating trends as consumer spending and macro economy slow.” According to the expert, the aforementioned factors, in combination with other developments that affect the gaming and betting markets resulted in lower expectations for the rest of the year.

Macroeconomic and Geopolitical Concerns Impact Macau

Greff explained that a “negative sentiment” is observed for the gaming vertical in the US where expectations are low but the impact on Macau is expected to be worse. This prediction comes in the context of geopolitical and macroeconomic concerns between Macau and China.

On the bright side, Greff explained that EBITDAR for the Las Vegas Strip during the second quarter “largely beat consensus estimates on better non-gaming spend, as table games drop and slot handle were flat to down year over year.” Still, J.P. Morgan’s analyst explained that the expectations for Las Vegas Strip operators have come down due to expected consumer slowdowns and soft sales for the upcoming F1 race, as hinted by MGM Resorts.

The expert spoke about several leading operators. In addition to MGM Resorts, Greff mentioned Caesars and Red Rock Resorts. “We like MGM and Caesars for their Las Vegas Strip exposure and undemanding valuations, with MGM sporting an attractive and unpriced growth pipeline, while Caesars has underappreciated free-cash-flow generation and ability to de-lever, with iCasino profitability inflection and asset monetization continuing,” he explained.

Focusing on Red Rock, Greff pointed to the operator’s stable growth. He acknowledged the positive momentum the company gained with its Durango Casino and Resort, as well as “favorable Las Vegas locals market dynamics, and recent insider share purchases.”