After years of underperformance, the gambling market is poised for a strong comeback, according to this analyst.
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00:00So Chad, tell me, what's your outlook for the gambling market in 2025?
00:05Sure. So interestingly enough, the gambling market has underperformed five out of the last eight years.
00:12Now, this is a business. Historically, it's a very good cash flow businesses where you have good growth in Las Vegas, good growth in the regional markets.
00:22What we saw in the past couple of years was a resurgence or kind of beginnings of sports betting.
00:29So with underperformance in five out of the last eight years, we actually think 2025 will be a very strong year in all parts of gaming here.
00:40The first area is going to be right there on sports betting, right?
00:44We just finished the Super Bowl. We had record viewership. We had really good engagement in terms of activity on some of these sites.
00:51And the growth in the U.S. for sports betting has grown 40 to 70 percent for the past three years.
00:58We don't think we're going to get there in 25, but we still expect 30 percent growth.
01:03And we think that's enough for some of these high flying, slightly higher multiple stocks exposed to sports betting.
01:10As we look around the globe, the next area would be Macau.
01:15So within China, that's the second largest gaming market in the world.
01:21Macau has had a very difficult recovery since Covid here.
01:26It's still about 20 percent below those levels.
01:30So we are looking for some stimulus in China and in Macau to kind of boost some of that growth in that market.
01:37So we're looking for 10 percent growth there. The big players in that market are Las Vegas Sands and women resorts.
01:44And then bringing it back to the United States, Las Vegas, Las Vegas continues to evolve, shifting from gaming to non-gaming.
01:53You have a lot of really good entertainment acts, whether it's sporting acts or concerts, bringing people to the city.
02:012024 was unfortunately about flat in terms of visitation and revenues.
02:07And we're looking for a little bit of growth in 25, particularly as we get through the year.
02:12And the U.S. consumer just feels better about kind of where we are and their ability to spend on discretionary items.
02:19So tell me, you mentioned this in your first interview, what is your view of the U.S. consumer?
02:25What indications are you getting from the consumer when you look at how they're spending in terms of gaming, gambling,
02:34traveling to Las Vegas, Macau, all that kind of stuff?
02:38Sure. In our sector, we usually come to about one and a half to two percent of people's household income goes towards these types of things.
02:50When we look at cities, countries, different markets, that's kind of the sweet spot there in terms of where we arrive.
02:59So clearly the U.S. economy needs to continue to improve for that customer to spend more.
03:07What we've seen since the U.S. election. Now, again, this is the animal spirits and really just kind of personal feelings of the individuals.
03:17We've seen some nice growth in the middle of the country.
03:21So in the Indianas, the Iowas, kind of those markets, also Michigan.
03:29And we're seeing some nice growth in January from a year over year perspective.
03:34We've also had a few companies report earnings and they've said the casual gambler is starting to come back at a slightly higher frequency with a slightly higher budget.
03:46Now, again, we'll see what happens with the different policies that go into place, how that affects the consumer's wallet, given that this is a highly discretionary item.
03:58But we do think that the baby boomer consumers particularly really like to play their slot machines.
04:06And we think that's an area where people have more savings, more time.
04:11And that'll be a nice trend in twenty five and twenty six.