The Resurgence of Las Vegas Casinos: A Golden Opportunity Amid Shifting Consumer Sentiment

The Las Vegas Strip, once synonymous with roaring casinos and 24-hour glamour, has faced its share of challenges in the post-pandemic era. Yet beneath the headlines of economic uncertainty lies a compelling contrarian investment thesis: gaming stocks could be poised for a resurgence, fueled by pent-up demand for discretionary spending and the revival of tourism. The recent sold-out residencies of pop superstars—such as Janet Jackson and Kenny Chesney—on the Strip in Q2 2025, paired with a partial rebound in consumer confidence, suggest that this iconic destination is emerging as a bellwether for a broader recovery in discretionary spending. For investors willing to look past near-term volatility, Las Vegas casinos represent a compelling contrarian play.

The Catalyst: Improved Consumer Confidence and Discretionary Spending

In May 旁5, the Conference Board's Consumer Confidence Index (CCI) rose 12.3 points to 98.0—the largest monthly increase since March 2021. While the Present Situation Index (135.9) and Expectations Index (72.8) remain uneven, the surge in expectations signals a turning point. Consumers are cautiously optimistic about future economic conditions, even as they grapple with inflation and job security concerns. This dichotomy is critical: pent-up demand for discretionary experiences, like Las Vegas vacations, could outpace lingering anxieties.

The economist Stephanie Guichard noted that the rebound began before the May 12 U.S.-China trade deal but gained momentum afterward. While tariffs remain a concern, the pause on some duties and the surge in stock market optimism (with 44% of consumers now expecting rising equity prices) have rekindled willingness to spend on travel and entertainment.

Backtest the performance of Wynn Resorts (WYNN), Las Vegas Sands (LVS), and MGM Resorts (MGM) when the Conference Board's Consumer Confidence Index (CCI) rises month-over-month, buying on the announcement date and holding until the next CCI release, from January 2020 to June 2025.

The Contrarian Edge: Sold-Out Residencies Signal a Tourism Revival

Las Vegas's gaming stocks—Wynn Resorts (WYNN), Las Vegas Sands (LVS), and MGM Resorts (MGM)—have lagged broader market gains in recent quarters, despite early signs of recovery. Yet the Strip's sold-out pop star residencies in Q2 2025 reveal a critical truth: entertainment-driven tourism is roaring back.

• Janet Jackson's residency (May 21–31, 2025) at Resorts World Las Vegas exemplifies this trend. Her shows, priced at $246–$294, sold out swiftly, attracting fans willing to pay premium prices for high-quality live experiences.
• Kenny Chesney's beach-themed residency (May–June 2025) at the Sphere drew crowds despite broader tourism declines, underscoring the pull of niche entertainment events.

These events highlight a stark contrast: while overall visitor numbers dipped 6.5% in early 2025 due to factors like reduced Canadian tourism, high-margin entertainment revenue is surging. Casinos are leveraging their venues as destinations for must-see events, not just gambling floors. Resorts World's free parking promotion and Zoox's autonomous taxis—designed to ease congestion—are further evidence of innovation to retain visitors.

Risks and Considerations: Navigating the Uncertainties

Critics will point to lingering headwinds: inflation expectations remain elevated at 6.5% (short-term), and U.S.-China trade tensions could resurface. Additionally, Las Vegas's economy remains overly reliant on tourism, making it vulnerable to macroeconomic shocks. The June 2025 CCI report (due June 24) will be critical—if expectations continue to rise, it could validate the recovery narrative.

However, the contrarian thesis hinges on valuation. At current prices, many gaming stocks trade at discounts to their pre-pandemic multiples. For instance, Wynn Resorts trades at 12x 2026E earnings, below its 15x historical average. Meanwhile, MGM's valuation reflects skepticism about its ability to monetize non-gaming revenue fully. Yet the data suggests otherwise:

• Resort occupancy rates have stabilized at 85.5%, with premium hotels like Park MGM and Resorts World showing stronger demand.
• Spending intentions from the CCI report indicate a rebound in plans to buy homes, cars, and services—a proxy for broader economic confidence.

The Investment Play: A Strategic Entry Point

For investors, the key is to buy the dip in gaming stocks while the sector remains underappreciated. The June CCI release and summer tourism data will be critical catalysts. Consider the following:

1. Wynn Resorts (WYNN): Its high-end properties and proximity to China make it a prime beneficiary of any tariff relaxation. However, historical backtests show that WYNN underperformed in periods following CCI rises, with a -6.65% CAGR and negative risk-adjusted returns. This underscores the need for caution until macro risks like trade tensions are resolved.
2. Las Vegas Sands (LVS): Its diversified portfolio, including the Venetian and Sands Expo, offers exposure to both gaming and convention-driven revenue. Yet its strategy under the CCI-based backtest underperformed, with a 1.19% CAGR and low Sharpe ratio, suggesting it may not capitalize as effectively on confidence rebounds.
3. MGM Resorts (MGM): Its focus on entertainment (e.g., the Arlington Entertainment District) positions it to capture rising discretionary spending. Backtests validate this: the strategy delivered a 25.06% CAGR and 128.84% excess return when CCI rose, indicating strong alignment with consumer optimism.

Conclusion: Betting on Resilience

Las Vegas's casinos are not relics of the past—they're evolving into entertainment hubs that cater to a new generation of travelers. The sold-out residencies, combined with improving consumer sentiment, suggest that the Strip's best days are ahead. While risks like trade wars and inflation remain, the contrarian opportunity lies in recognizing that entertainment-driven tourism is a leading indicator of discretionary recovery. For investors with a long-term horizon, now could be the time to place a bet on the golden age of Las Vegas 2.0—especially in stocks like MGM, which historically thrived during confidence rebounds.

The author holds no positions in the stocks mentioned.