High-end gaming is dominating the Las Vegas market

Executives from the Las Vegas Strip have stated that high-end gaming is still outpacing lower-tier gaming, and that this disparity could grow even further for certain operators. 

This was addressed in a note to investors by Carlo Santarelli, an analyst at Deutsche Bank, following his meetings with C-level management in Las Vegas last week.

Nevertheless, there appear to be some discrepancies regarding this theory, with Deutsche Bank maintaining its stance that high-level games are not totally free of obstacles.

According to Santarelli, there has been no significant change in reinvestment in this category so far this quarter. However, due to the Super Bowl’s impact, reinvestment rates are expected to be lower in the second quarter compared to the first.

Post-pandemic, the gaming revenue collection pertaining to Las Vegas turned out to be a record breaker. However, in recent years, a distinct distinction has emerged, with high-stakes events like the Super Bowl and Formula 1 taking precedence over lower-end gaming options, which are experiencing a decline

Santarelli observed that the high-end dominance has been the sole consistent factor, as demonstrated by the game of baccarat. Over the past year, it has effectively driven gaming revenue to positive comparisons. However, in recent years, there has been a significant change in its fortunes, as income generation has gradually declined. It has now reached the sage, where there is minimal traction, resembling a flat end run. This should serve as a wake-up call for Las Vegas.

In his account, the customers in the lower and intermediate rungs exhibit a slight degree of submissiveness, while the big-time players exhibit a greater degree of aggression. In his opinion, this is due to improved living conditions, deeper coffers, and a surplus of loose change that is being used to pursue better income opportunities. As a whole, things appear to be working out well for the big shots who are willing to take risks in the hopes of growing the luxury market. In contrast, the casinos at the lesser end of the spectrum appear to be more subdued. 

Additionally, Santarelli believes that the promotional environment has not changed substantially, with private and single-asset proprietors being responsible for the majority of the promotional efforts. These measures are in accordance with recent endeavors and support the statements made by gaming executives in earnings reports.