Red Rock Resorts' Q4 2024: Unpacking Contradictions in Sports Betting, Consumer Trends, and Margin Outlook

These are the key contradictions discussed in Red Rock Resorts' latest 2024Q4 earnings call, specifically including: Sports Betting Hold Impact, Consumer Spend Trends, and Margin Expectations.



Strong Financial Performance:
- Red Rock Resorts reported record net revenue of $492.6 million for the fourth quarter, up 7.2% from the prior year’s fourth quarter.
- The Las Vegas operations delivered their best performance ever in terms of net revenue and adjusted EBITDA.
- The growth was driven by strong gaming segment performance, despite unfavorable hold in sports betting.

Durango Casino Resort Growth:
- The Durango Casino Resort achieved increased visitation, theoretical win, and new customer sign-ups in its first year.
- The property is on track to become one of the highest margin properties, generating a net return of almost 16%.
- This growth is attributed to enhanced operational performance, incremental play from existing customers, and attracting new customers to the brand.

Capital Expenditures and Expansion:
- Red Rock Resorts plan to spend between $375 million to $425 million in 2025, with $285 million to $325 million allocated for investment capital.
- The company is expanding the Durango Casino Resort with a $120 million project expected to complete by January 2026.
- These investments are focused on reinvesting in existing properties and enhancing amenities to drive visitation and spend.

Sports Betting Impact:
- The company experienced a $8 million loss in sports betting in October and an additional $6 million in December, totaling $14 million in losses for the quarter.
- Despite these losses, the sports business was healthy with nearly 10% growth in handle.
- The impact on margins was significant, by around 150 basis points, but the company is optimistic about future outcomes, especially with a better Super Bowl result.

Expansion in Reno:
- Red Rock Resorts has 8 acres of land ready for development in Reno, which is gaming entitled.
- While there are plans to develop the site, the priority remains on opportunities in the Las Vegas market, and the company is open to divesting if an attractive offer arises.