2025: Questions and Answers

2025: A year of questions.

This is the time when prognosticators of various kinds—often consulting firms looking for soft ways to market their services—predict trends for the upcoming year. Yet there may be more questions for 2025 than identifiable trends. So, in that spirit, we’ll look into the new year by raising questions.

• Donald Trump, the biggest wild card of all. No one seems certain what to expect from a Trump presidency. Will he follow through on his bold promises, or are they merely starting points for negotiations? Or will there be a mix of hard-line, negotiable and/or transactional decisions and policies?

  More important, what will be their effect on the economy, and on a stock market that seems more blitheful and blissful than realistic?

  Most specifically, what will any or all of this mean for gaming companies and gaming investors?

  We won’t attempt to predict how the economy and market will perform, but we’ll raise two points about the gaming industry: 1) A former casino owner himself, Trump has been friendly to the gaming industry, which is in the domain of the states, anyway; but 2) he may be more apt to rein in Indian gaming, especially with a secretary of the interior who may oppose the hub-and-spoke idea whereby tribes intend to offer online gaming off reservations as long as the servers are on reservations.

• Las Vegas. How high is high? It has become universally accepted that Las Vegas Strip gaming revenues will grow ad infinitum. But will they? And at what pace? Enough to make up for higher operating costs? The past year has been one of ups and downs for Las Vegas, and while weak periods and financial comparisons have been explained away, the fact is that there have been those periods of weakness in what 12 months ago many thought would be a banner year from start to finish.

  If Las Vegas is entering a slow-growth period, it will be fair to ask what impact that will have on MGM Resorts and Caesars, especially as MGM gets most of its revenues from Sin City.

• Regional casinos. All grown up and nowhere to go? The success stories in regional gaming will be individual property expansions and new infill markets, such as Nebraska and Virginia, or converting the last riverboats to landside. But the fact is that brick-and-mortar revenues have declined materially in jurisdictions where digital gaming is now legal, and even in the infill situations there are cases of cannibalization of existing properties. So, it’s not pure growth.

  Meanwhile, the spread of skill and sweepstakes gaming, often of gray legal status, is continuing to erode brick-and-mortar revenues, a matter that legislators should address given the jobs and taxes that land-based casinos provide.

  The opportunity for needle-moving in regional gaming would be the opening of new jurisdictions. And, slim chance that it is, the legislature of long anti-gaming Texas is in biennial session in 2025 with the likes of Las Vegas Sands pushing for legalization.

• Digital. Finally profitable? This past year has been the time when online gaming in the U.S. began to mature with weak sisters leaving and the bigger players finally reaching the promise of EBITDA-measured profitability.

  The question is whether the trend will accelerate in 2025. Our expectation is that it will.

  Actually, many of the questions about digital were answered this year as DraftKings and Flutter continued their market dominance, Caesars turned profitable and is on the way to showing that money can be made without entering a ruinous market share race, and companies like affiliate Gambling.com and data providers Sportradar and Genius Sports show there can be profitable pick-and-shovel plays in the space.

  Perhaps the most interesting sports betting and iCasino story of the year will be Penn Entertainment. After considerable skepticism, and even criticism, PENN may next year prove whether it can make a meaningful success of digital gaming. It recently launched product enhancements and customer linking with ESPN on its ESPN BET that should tell us soon if the online betting platform will be a home run. If so, PENN might be the gaming operator stock of the year. If not, well, it’s trading below the value of its brick-and-mortar business so there is some downside protection.

  Meanwhile, the industry overall continues to grow.

• Will they take the punch bowl away? The flip side of growth is to attract government attention in the form of more restrictive regulations and legislation. That is especially true of gaming, which can be an easy target given that its benefit to society is just entertainment while opponents see it as socially destructive.

  More restrictions, from bet and loss limits to advertising bans, have been implemented or proposed in a number of major international gaming markets, including Australia and the United Kingdom.

  Legislators love to introduce legislation, and with models already provided, it would not be surprising to see 2025 become the year when materially crimping restrictions start to be imposed in the U.S.