Truist Warns Las Vegas Strip Recovery Remains Uncertain
A Truist analyst warned the Las Vegas Strip may not return to growth in 2026.
LISTEN TO THIS ARTICLE:In an investor note published on January 13, Truist Securities analyst Barry Jonas cautioned that a recovery for the Las Vegas Strip is far from guaranteed, even as U.S. land-based casinos broadly held up well in 2025. "A return to growth in the challenged Las Vegas is not certain", Jonas wrote, adding that leisure travel headwinds could continue to weigh on Strip performance despite generally healthy results for regional properties.
Jonas argued regional casinos enjoyed a strong 2025 in part because some customers opted to gamble closer to home rather than travel to Las Vegas. "While we'd never write off Las Vegas, we think the leisure challenges will overshadow a strong group outlook for a bit longer", he said, framing the Strip's recovery as dependent on broader leisure demand and macroeconomic factors.
On company calls and in the note, Jonas singled out Churchill Downs as a terrestrial play he prefers, citing the operator's portfolio of growth projects and the stabilizing role of the Kentucky Derby as competitive advantages. By contrast, he downgraded MGM Resorts International from Buy to Hold, arguing that valuation is undemanding but his own forecasts remain below consensus and that "it may be too soon to confidently call a return to growth in 2026".
Gaming real estate investment trusts also featured heavily in Jonas's analysis. After a difficult 2025, he sees the potential for upside in 2026 as a more stable interest-rate and capital-markets backdrop could enable accretive sale-leaseback transactions. He noted an ongoing dispute between Vici Properties and Caesars Entertainment over a regional master lease but suggested there is scope for a "creative win/win solution" that could support both companies and the wider sector. Jonas maintained Buy ratings on both Vici and rival Gaming & Leisure Properties (GLPI), favoring GLPI for its growth pipeline and balance sheet strength, while allowing that Vici could outperform if market sentiment about the Caesars lease improves.
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iGaming, Prediction Markets, and Gaming Tech
Jonas also weighed in on online wagering and the business-to-business segment. He warned that high state taxes on online sports betting remain a drag on operator economics and that while tax relief could ease in 2026, he does not expect immediate waves of new legalization. He flagged prediction markets as an intensifying flashpoint for regulators and operators, calling those offerings "not without risks." Jonas observed that major sportsbooks such as DraftKings and FanDuel would likely be well-positioned whether event-style contracts expand or are curtailed.
Turning to suppliers and technology firms, Jonas highlighted a structural shift in the supplier landscape during 2025 from traditional slot manufacturers toward digital providers and data companies. He kept Buy ratings on Genius Sports and Sportradar, citing their strong growth trajectories and lower earnings volatility as reasons to expect outperformance as they pursue investor-day EBITDA targets.
Jonas acknowledged potential near-term support for some player segments from federal tax changes enacted under the current administration, but he stressed these effects fall short of the COVID-era stimulus tailwinds. He reiterated his broader preference for gaming technology and content, noting that land-based results increasingly hinge on quality gaming offerings rather than non-gaming amenities.
Market Signals to Watch in 2026
Investors and operators will be watching several indicators to gauge whether Jonas's caution proves prescient: Las Vegas visitation trends and convention bookings, state-level moves on online-betting taxation and prediction-market regulation, the pace and structure of M&A and sale-leaseback deals, and execution by data providers such as Genius Sports and Sportradar. Together these factors should shape whether the Strip regains momentum or whether regional markets continue to lead growth in the near term.
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