The Las Vegas locals gaming market shows apparent strength with a 6% year-to-date increase in gross gaming revenue (GGR). However, Deutsche Bank analyst Carlo Santarelli reveals underlying weaknesses in this growth narrative.

When excluding Red Rock's new Durango Casino & Resort, which opened in December 2023, the local market actually shows a 3% decline in GGR for 2024. The Durango property has cannibalized business from other Red Rock venues, particularly the Red Rock Resort in Summerlin, offsetting Durango's favorable margin profile.

Red Rock management maintains optimism, with CFO Stephen Cootey suggesting that Las Vegas Valley population growth will counterbalance any cannibalization effects. This assertion holds merit given that planned new casino locations are strategically distant from Durango.

Boyd Gaming faces similar challenges. Despite geographic diversification, Santarelli projects:

• 1.5% revenue decline in 2025
• 3.3% cash flow reduction
• Continued pressure in regional gaming markets

For Red Rock Resorts, despite strong analyst support (9 of 14 rating it "buy" or "strong buy"), concerns include:

• Projected slight decline in cash flow and revenue for 2025
• Challenging growth targets needed to offset planned expenditures
• Ongoing Durango expansion costs

These insights suggest a more cautious outlook for Las Vegas locals casino operators than current market sentiment indicates, with underlying market dynamics pointing to potential challenges ahead.

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