With May decline, Las Vegas Strip heads for first post-Covid FY loss
The latest round of data from the Nevada Gaming Control Board, released 27 June, continued a trend of gross gaming revenue decreases for the state, and, perhaps more importantly, for the Las Vegas Strip.
Nevada’s overall GGR for May came in at $1.29 billion, down 2% year-on-year. With one month to go in the fiscal year reporting, the state as a whole is down just over 1%. Unfortunately for stakeholders, the Strip’s figures are worse by comparison.
America’s gambling capital reported a 4% YoY GGR drop to $713.7 million, bringing its running fiscal year total to -3.3%, the worst of the state’s major markets. This means that barring an overly fantastic June, the Strip will see its multi-year run of revenue records come to an end this fiscal year. The May decrease represented the fourth consecutive monthly decline and the ninth in the last 10 months for the Strip.
Similarly, visitation has also begun to decrease. According to the Las Vegas Convention and Visitors Authority, overall visitor volume to Las Vegas has seen YoY declines in every month this year, including a 6.5% drop to 3.41 million in May. Passenger volume at Harry Reid International Airport has now declined in seven of the last nine months, including a 4% May decrease to 4.9 million.
Which side are you on?
The difficulty of analysing the Strip’s performance is that there are strong arguments for both optimism and pessimism. Optimists would point to several factors, such as the difficulty of outpacing several record years in a row, especially from 2024 when the city hosted the Super Bowl; ongoing investments for future growth, such as new sports stadiums and the rebuilding of the Mirage and Tropicana resorts; and historically softer summer months, among others.
Pessimists, meanwhile, have their share of arguments as well: macroeconomic pressures on consumers; higher costs for operators, including increased labour contracts and lease obligations; the impact of tariffs and trade wars with key feeder markets like Canada and Mexico; ever-increasing competition from casino expansion and the necessity for Strip operators to invest elsewhere; and so on.
It is surely too soon to tell which argument will ultimately be right — and the end result could land somewhere in the middle. But with nearly an entire year of data now showing that the Strip is slowing down, the question becomes whether this should be viewed as a natural blip or something more concerning.
“It’s optics more than anything, I think,” Las Vegas-based consultant Brendan Bussmann, of B Global Advisors, told iGB. “We’re seeing companies trying to understand the consumer, understand consumer behaviour, and how best to deal with that. And it goes to the overall point, which is that there’s an ebb and flow to this, and it just depends on which lens you want to look through.”
Contrasting with Covid
Five years ago, the onset of the Covid-19 pandemic was a global catastrophe that impacted every facet of daily life. In Nevada, state casinos closed for 78 days from March-June, which thoroughly tanked revenue, gaming stocks and more. Companies responded by slashing costs to stay afloat. The future outlook appeared even gloomier than it is now. And yet, despite that turmoil, what followed was a dizzying streak of record performance.
By contrast, it seems far more uncertain that the challenges of the current landscape will preclude a similar run. For one thing, the surplus of Covid relief funds for both consumers and states is all but gone. Land-based casinos have also expanded greatly in the last five years, especially in the Midwest and mid-Atlantic regions. The addition of future casinos to major markets like Chicago and New York City specifically could continue to lessen travel interest for gambling in particular.
Since taking office in January, US President Donald Trump has also rankled global financial markets several times with his off-and-on tariff demands, which, as pessimists note, has already impacted Nevada’s visitation. Traffic at Reid Airport in May for Aeromexico and Air Canada was down 17% and 27% YoY, respectively.
Lagging interest rates
From a macroeconomic perspective, the tariff saga also has slowed interest rate cuts for consumers. The US Federal Reserve cut interest rates for the first time since Covid last September, and there was a sense that at least four cuts were coming in 2025. But through June, there have been no cuts to the Fed’s current target funds rate of 4.25%-4.5%.
At an economic panel in Portugal this week, Fed Chair Jerome Powell said that the tariffs have undoubtedly impacted his agency’s decision making.
“In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Powell asserted. Financial analysts, themselves, had difficulty assessing the first half of 2025, a period rife with extreme volatility. Thus, as a discretionary industry, gaming is squarely in the middle of this broader uncertainty.
“We continue to defy economic principle over a host of different things,” Bussmann lamented. “Whether it’s fuel costs, labour costs and costs in general, a lot of it just does not make sense.”
Filling the available space
One of the trends to emerge alongside the Strip’s struggles has been the rise of the region’s ancillary markets like downtown Las Vegas, North Las Vegas, Mesquite and the locals market. All four have outperformed the Strip this fiscal year: per the NGCB, downtown is +1.5%, NLV is +1.4%, Mesquite is +4.6%. Overall, the locals market is +5.3%, the best in the state.
This trend is perhaps the simplest indicator of consumers searching for better value options. Strip average daily room rates have crested over $200 in seven of the last 12 months, including $212 in May. Resort fees from the most prominent Strip operators are higher than ever. For some properties, the fees are more than $50 per night.
In a research note this month, Macquarie senior gaming analyst Chad Benyon wrote that based on these trends, he believes that second-quarter earnings risks are “to the downside for Strip segments”. He then posited that comparatively, locals operators Boyd Gaming and Red Rock Resorts “will meet or exceed” estimates over the quarter.
In first-quarter earnings calls for Strip operators, CEOs largely downplayed economic fears, saying that future bookings were mostly solid. Conference attendance in particular has also been a bright spot, as LVCVA data shows that business travel has seen three consecutive months of double-digit YoY increases. That said, several companies also postponed previously planned capital expenditures. Wynn Resorts pushed back $375 million worth of upgrades, most notably a renovation of its Encore property on the Strip.
Regulatory gruff
The malaise of the Strip is perhaps exacerbated by what has been a hellish regulatory stretch for the region. So far this year, three Strip entities — Resorts World Las Vegas, MGM Resorts and Wynn Resorts — have received multimillion-dollar fines for anti-money laundering violations. Resorts World faced the stiffest penalties ($10.5 million), followed by MGM ($8.5 million) and Wynn ($5.5 million). Another investigation involving the Fontainebleau was also inadvertently leaked at a Nevada Gaming Commission meeting, the same in which Wynn was handed its fine.
State regulators, including NGC Commissioner Brian Krolicki, have asserted that these cases should “serve as a clarion call” for all Strip operators that AML violations will no longer be tolerated. Yet all three of the investigations were first unearthed by federal authorities, not state regulators. This has been a massive blow to Nevada’s longstanding claim to be the “gold standard” of US gaming.
The NGCB, which handles much of the regulatory legwork, has also been beset with turnover in recent years. Industry veteran Mike Dreitzer became the fifth NGCB chair to take office since January 2019 when he replaced Kirk Hendrick in late June. Dreitzer, who previously served as CEO of Gaming Arts, inherits Hendrick’s partial term, which was set to run through January 2027.
Former Las Vegas Municipal Court Judge George Assad is currently the most senior board member, having been appointed in January 2023. Chandeni Sendall was appointed in January of this year.