Differences in Perspectives about Las Vegas by Caesars and Red Rock Resorts, Both on and off the Main Thoroughfare
In the bustling city of Las Vegas, two major players in the gaming industry, Caesars Entertainment and Red Rock Resorts, have been making headlines recently. While Caesars has been grappling with challenges, Red Rock Resorts has been thriving, outperforming its rival in the competitive Las Vegas market.
According to analysts, Red Rock Resorts is expected to continue its strong performance, with improvements anticipated in the final three months of 2022 and the first half of 2026, due to an increase in convention bookings [1]. This optimism is reflected in Red Rock's share price, which is up nearly 30% for the year [10].
On the other hand, Caesars Entertainment has been facing a tougher time. The company missed consensus estimates, leading analysts to lower their price targets for the stock [5]. Caesars' CEO noted that the second quarter started strong but declined from May onward, highlighting the lack of major entertainment headliners like Adele and Garth Brooks, which negatively affected non-casino business segments [2][3]. As a result, Caesars has experienced a decline in net revenue and net income [2].
In stark contrast, Red Rock Resorts reported the highest revenue and adjusted earnings in its 49-year history during the same period [9]. The company's targeted expansion into the locals market, particularly through high-performing properties such as the Durango casino, has insulated it from the broader market softness affecting Caesars [1][2][4].
The Durango casino, which opened in December 2023, has added over 108,000 new customers to Red Rock’s foothold in the Las Vegas locals market, contributing to an 8.2% increase in revenue for Q2 2025 to $526.3 million [6]. This growth was supported by an increase in visitation, higher spend per visit, and a growing customer base [6].
Meanwhile, Caesars Entertainment closed down 2.0% on Wednesday and is down 17% for the year [5]. Analyst Barry Jonas with Truist Securities remains buy-rated on Caesars Entertainment despite missing estimates for Las Vegas by 1% [7]. However, Jonas lowered adjusted earnings estimates by 2% through 2027 and lowered the price target by $1 to $37 per share [7].
John DeCree with CBRE described the second quarter as "noisy, characterized by a sharp slowdown in leisure demand in Las Vegas, numerous one-time headwinds in regionals, and momentum in digital" [8]. David Katz with Jefferies Equity Research expects digital to be the most productive segment, potentially reaching the $500 million target [11]. Katz also expects capital returns to be balanced by debt paydowns and buybacks through the back half of the year [11].
In the latest earnings calls, both Caesars Entertainment and Red Rock Resorts shared their financial reports. Caesars saw a 3.7% year-over-year decline in net revenue in the same period to $1.054 billion and a nearly 21% drop in net income to $212 million [2]. In contrast, Red Rock Resorts reported an 8.2% increase in revenue and a surge in net profit [6].
The Las Vegas Convention and Visitors Authority released visitation numbers showing a 11% decline in June [3]. Despite this, Caesars management expects no improvement in tourism during the third quarter of 2022 [12]. However, analyst Politzer considers Caesars Entertainment a value stock that will generate more than $3 billion in net cash flow in 2027 [4].
In summary, while Caesars Entertainment is facing challenges due to the absence of big-name entertainment acts and a decline in tourism, Red Rock Resorts has been able to capitalise on its strong performance in the locals’ market, particularly driven by its newer Durango property, and overall growth across all business areas. This has insulated Red Rock from the broader market softness affecting Caesars.
- Amidst the struggles of Caesars Entertainment, Red Rock Resorts' expansion into the locals market, such as the successful Durango casino, has allowed the company to generate revenue and profits not typically seen, placing it ahead in the competitive finance scene of Las Vegas' business and casino-and-gambling industry.
- Despite Caesars Entertainment's woes, analysts forecast a positive outlook for Red Rock Resorts, with continued strong performance anticipated in the final three months of 2022 and the first half of 2026, fueled by increased convention bookings and robust growth across all business segments.
