How to play casino stocks in a

00:00:00 Speaker A

Goldman Sachs initiated coverage of gaming stocks with a buy rating for Wynn and Caesars, neutral rating for Las Vegas Sands, and a sell rating for MGM Resorts. The analyst citing a choppy landscape for gaming stocks for the rest of 2025. One of the analysts behind the note is Lizzie Dove, Goldman Sachs Global Investment Research vice president, and she’s joining us now. Lizzie, thanks for being here.

00:00:24 Lizzie Dove

Thank you for having me. Happy to be here.

00:00:27 Speaker A

So, um, it’s interesting when you look at the broader sort of consumer spending and leisure environment as it relates to casinos on sort of the high macro level. How are you thinking about those trends?

00:00:45 Lizzie Dove

It has definitely been choppy for casinos more broadly. If you look at Vegas, there’s a real bifurcation, which I think is interesting. The lower to mid-end has been performing not as well, the leisure side of things, particularly, but the higher end where Wynn has most exposure to has been going well. What’s interesting though, if you look at regional casinos, which is more of that drive-to leisure consumer, those trends have really been accelerating over the last couple of months, and so there’s been a real bifurcation between the two.

00:01:22 Speaker A

And is that latter category to do with that people are worried about the economy, worried about spending, um, also with gas prices lower, maybe they’re not going to fly to Vegas, but they’re going to drive to their local casino?

00:01:40 Lizzie Dove

Exactly. Exactly. We think it represents a bit of a trade down there because to your point, maybe they don’t want to spend hundreds of dollars flying to Vegas, having to buy the hotel, but if it does a casino, you know, less than from their home, and that’s, you know, a great way to spend an evening, that is definitely something that we’ve been seeing. And that’s shown by the number of visitors, which is increasing to regional casinos, not the spend per visitor. So it really is a volume story.

00:02:23 Speaker A

Um, I want to get to the stock you don’t like before we get to to win. I want to talk about MGM for a minute and why you think that one is not as well positioned versus some of those competitors. Does it have to do with that geographic exposure, or are there other elements here?

00:02:46 Lizzie Dove

There’s other elements is what I would say. So they do have more of that lower to mid-end exposure, which has been where there’s been a little bit of choppiness amongst the data, but the key for MGM, why we have a more cautious view, is they are going through a huge CAPEX cycle. They are spending upwards of $5 billion on a Japan project, which won’t open until 2030. So in the meantime, cash flow conversion is coming down. We think there’s going to be pressure onto buybacks, and so we do see merit to that project. We think it’ll be great, but not until five to six years when it opens. And investors aren’t patient for that, and in the near term, you have the choppiness of Vegas and cash flow coming down. And so that really is the basis of our view.

00:03:44 Speaker A

And then I guess on the flip side, you have Wynn, which has invested, but it’s closer to the finish line, I guess, or a near-term finish line. It’s going to be opening a new project in 2027. Um, what is that project, and why are you optimistic about it?

00:04:05 Lizzie Dove

It’s a great point. It is the single most interesting thing in gaming right now that I think is being overlooked by investors. So Wynn is opening the first ever casino in the UAE. That is coming just in less than 18 months time in the first quarter of 2027. There aren’t going to be any gaming competitors in the UAE, they’ll have a four to five year runway, and there is a huge target market for it. The number of tourists that visit Dubai every single year is about 14 million. So there’s a real large target market there. It’s double that of Singapore, and so we think it’s really exciting and currently not being priced in.

00:04:57 Speaker A

Why do you think that is? Why do you think investors are not sort of paying more attention to that?

00:05:03 Lizzie Dove

I think with gaming, they tend to be a shorter term time horizon. And so if you look over the next 12 months, that is really the focus. What is happening in Vegas, what is happening in regionals, what is happening in Macau too. But as we get closer to this being just a year out, with six months from it being one year out, that’s when I really think it will start to matter. There’s also going to be an investor day later this year that can put some more numbers behind it, and so I think that’s when it’s going to start being tangible.

00:05:39 Speaker A

And then Lizzie, um, the other buy-rated stock here is Caesars. That’s more of a Las Vegas itself play. Um, what do you like there? And certainly versus some of the other Las Vegas-based competitors?

00:06:01 Lizzie Dove

So as I said with Vegas, there’s this bifurcation. And I think what’s interesting with Caesars is that if you look at convention and business attendance, that’s still doing really well. That’s growing double digits, and Caesar has the biggest exposure to that in the first half of 2026. There’s several conferences that only appear every three years. Those are happening in the first half of 2026, and one of them is right on Caesar’s doorstep in the hotel itself. And so we think there’s an inflection point at Vegas, but more importantly, Caesar’s is in a CAPEX harvesting mode. Their cash flow is about to inflect to over $4 billion over the next three years cumulatively. And so what has been a very levered stock, it’s high five times right now, has a pathway to being under four times over the next few years, which we think is really going to be key.

00:07:09 Speaker A

Lizzie, thanks so much for joining us. Really appreciate it.

00:07:13 Lizzie Dove

Thank you.