Put simply, 2020 sucked for the gaming industry. With COVID-19 forcing lengthy shutdowns of commercial activity everywhere, casinos took a major hit that is still being felt today. The good news, though, is that things are returning to a quasi-normal state in most areas, and Las Vegas, the US gambling capital, is on the road to recovery. According to the latest input from industry analysts, that road will be mostly straight and narrow heading into 2022.
Las Vegas Rebound Continues
Several industry analysts are optimistic about Las Vegas and its efforts to rebound from the COVID-19 pandemic. As casino operators begin to provide financial updates and show continued improvements, analysts are becoming more supportive of the city’s recovery. Morgan Stanley investors asserted yesterday in a note to investors that gaming data is “remarkably strong for Las Vegas, with Strip volumes up 26% versus 2019 and Las Vegas locals up 12%.” It added that channel checks “suggest activity levels for September were not as strong as July/August, but still above 2019 levels, which translates to the third quarter running ahead of our prior forecasts.”
July and August produced better results than even those seen before the pandemic. July reported a 14% gain in July 2019, and August was 3% better than two years earlier. As a result, Morgan Stanley’s Thomas Allen emphasized that the company would increase its Vegas forecast for the last quarter of this year, as well as initial 2022 forecasts. He adds that the relaxation of international travel laws, coming as of November 8, will further help the fourth-quarter results.
Part of the improvement can be attributed to the increase in sports betting activity in the US, which is helping most US operators see gains. Jefferies Equity Analyst David Katz highlights the 50% improvement in stock prices seen by companies such as MGM Resorts International and Caesars Entertainment, and adds that Jefferies expects “outperformance from names that have multiple ways to grow beyond recovery.”
Asian Recovery More Tenuous
While Vegas is bouncing back from the COVID-19 fiasco, other global gaming hubs aren’t so lucky. Macau was impacted just as much as Las Vegas last year, if not more, but is having more difficulty recovering. Not even Golden Week was enough to give the city boost. Ongoing struggles with COVID-19 have kept border restrictions in place, which is making it difficult for Macau to regain traction. Allen said of the Asian gaming situation, “With Asian governments clearly continuing to take the more cautious approach toward COVID restrictions, we lower our near-term forecasts.”
Las Vegas Sands (LVS) is likely to suffer because of the ongoing issues in Asia, which also include uncertainty over the future of gaming regulations in Macau. Analysts specifically highlighted the company’s problems in the region, which has been a major focal point of the operator’s long-term growth strategy. LVS has been cutting ties with Vegas in favor of Asia, but the COVID-19 issues there have caused Morgan Stanley to lower its third- and fourth-quarter forecasts for LVS.