Strong performances by Golden in Las Vegas, contrasted with a tourism downturn at The Strat.
In a recent development, Golden Entertainment's Nevada casinos, including the iconic Strat, are bracing for changes as a result of the latest federal tax legislation.
The Strat, a popular Strip property, experienced a slowdown in June, mirroring the trend of other Strip properties. Occupancy for the quarter was 69%, a 4% decrease from last year, with a further drop to 60% in June. Weaker Strip demand continued into July, but there's been stabilization of bookings in August.
However, the most significant impact may come from a change in the deduction of gambling losses. Effective from 2026, the deduction will be limited to 90% of gambling winnings, down from the previous 100%. This change could result in gamblers, including those frequenting Nevada local casinos, owing federal income tax on a portion of their "phantom" winnings even if they break even financially.
This tax change is expected to generate significant additional federal revenue, but it may reduce the attractiveness and profitability of gambling in Nevada. The potential negative financial impact on Golden Entertainment's Nevada local casinos in 2026 and beyond is a cause for concern.
Nevada lawmakers, including Senator Catherine Cortez Masto and Representative Dina Titus, have strongly opposed this change, arguing it will harm the state’s gaming industry, a significant part of Nevada’s economy and employment base. They warn it may push wagering into illegal markets and reduce overall gaming revenue, impacting local casinos negatively.
Members of Nevada’s congressional delegation are actively working on legislation seeking to restore the 100% deduction to mitigate these impacts. Meanwhile, no recent Nevada state-level tax legislation directly impacting Golden Entertainment’s local casinos in 2026 was found. However, tax provisions related to gaming workers’ tipped income remain under discussion.
Despite these challenges, Golden Entertainment's casinos demonstrated resilience in Q2. The company generated $163 million in revenue and $38 million in EBITDA. The performance of Golden's two Las Vegas locals casinos contributed to a 3% increase in revenue and a 7% increase in EBITDA.
The event calendar in Laughlin this quarter featured a concert and a rodeo, driving higher revenue. However, the table games held less than 10% in Laughlin, negatively impacting EBITDA by $1.5 million. The promotional environment impacted the tavern business's performance in the second quarter, causing a 7% year-over-year revenue drop.
Looking ahead, Golden Entertainment anticipates the biggest beneficiary in 2026 from recent legislation providing tax relief on tips, overtime, and additional tax deductions for seniors. Additionally, two new tavern builds are scheduled to open over the next six months, and improved Strip visitation and recent tax legislation are expected to support near-term organic growth at all properties.
In summary, the main expected impact of the federal tax law changes on Golden Entertainment's Nevada local casinos in 2026 is a likely increase in the effective tax burden on gamblers, potentially reducing gambling activity and thus possibly hurting casino revenues and the broader local economy dependent on gaming.
Gamblers frequenting Nevada local casinos might find the weather less appealing if they have to pay more federal income tax due to the changes in the deduction of gambling losses from 2026. The potential reduction in gambling activity could also affect the performance of sports-related events in Nevada, as many tourists travel to Nevada for sports-gaming entertainment.
