BofA Securities analyst Shaun C. Kelley said the gaming sector is starting 2026 with online sports betting still at the center of investor focus, even as softer trends across Las Vegas, regional casinos, and Asia temper near-term expectations.
Online Betting Dominates, But Volatility Persists
As fourth-quarter earnings approach, Kelley said his team updated forecasts for Las Vegas, regional casinos, and Macau, reviewed recent online betting trends, and refreshed earnings bridges for DraftKings Inc (NASDAQ:DKNG) and Flutter Entertainment Plc (NYSE:FLUT).
Kelley noted that gaming stocks declined about 9% in the fourth quarter and into January, with U.S. operators down roughly 4%, Macau names off 13%, and digital and online gaming stocks falling 23%.
He said December data came in soft across online betting, Las Vegas hotel metrics, and regional casinos.
Even so, he reiterated that Las Vegas locals and regional properties could still benefit in the long term from operating leverage and potential fiscal stimulus.
In online gaming, Kelley said BofA’s earnings bridge sits ahead of consensus for DraftKings but below the Street for FanDuel.
While hold rates surprised to the upside, weaker betting handle in December and January reignited concerns around promotional intensity and profit margin risk.
As a result, he sees DraftKings positioned for a strong fourth-quarter beat, while FanDuel faces more pressure.
Las Vegas Remains Mixed As Locals Outperform
Turning to Las Vegas, Kelley said his fourth-quarter estimates remain modestly below Street expectations.
On the Strip, BofA’s blended forecast runs about 1% below consensus and roughly 2% below for MGM Resorts International (NYSE:MGM).
He said gaming revenue held up, but RevPAR and visitation stayed weak, with December exceptionally soft.
Kelley expects the first quarter to remain somewhat pressured before easier comparisons arrive in the second quarter.
In contrast, he said Las Vegas locals continue to track well, with BofA’s estimates running above consensus.
Asia And Regionals Show Diverging Trends
In Asia, Kelley said Macau’s fourth-quarter EBITDA should land roughly in line with Street expectations.
He highlighted solid revenue growth and said BofA sits slightly above consensus, driven by strength at MGM China.
He added that investor focus will likely shift to Las Vegas Sands Corp’s (NYSE:LVS) market share trends and tougher year-over-year comparisons beginning in the second quarter.
In Singapore, Kelley said Marina Bay Sands could modestly outperform expectations, supported by Formula One shifting into the fourth quarter and improving hotel metrics.
For regional casinos, Kelley said BofA’s estimates are slightly above the Street, led by strength at MGM Resorts and Boyd Gaming Corp (NYSE:BYD).
However, he flagged potential weakness at Penn Entertainment Inc (NASDAQ:PENN) due to increased competition in Louisiana.
He also noted that same-store gaming revenue trends softened throughout the quarter.
Still, Caesars Entertainment, Inc’s (NASDAQ:CZR) results suggest promotional intensity may be leveling off, which could support margins over time.
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