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I'm using ArcGIS Pro 2.4.3 and ArcMap 10.7.1 and I thought these versions can read zLAS files without having to unzip them.

When I put a zLAS file into a LAS Dataset (LASD) everything looks normal (I open the properties and see the classification codes as well as the number of points in each code. I can bring the LASD into a map and zoom to the level that the points become visible. I can filter so I'm just seeing ground points then change the symbology from elevation to classification and and watch the points change from blues and yellows to brown for ground).

However, when I use the Las Dataset to Raster tool and choose the elevation field to create a Digital Terrain Model (DTM)/bare-earth raster - the output is no data:( I know this because I use the identify tool and click on a pixel and the value is No Data. To further demonstrate, I choose the symbology for the DTM and choose to display no data cells as red and the entire raster turns red.

Do we have to use the Convert LAS geoprocessing tool and choose as compression type "None" to "unzip" the file and save it as a LAS file?

Because when I use that tool, then use the LAS file it creates, input that LAS file into a LAS Dataset, I can use the LAS Dataset as Raster tool and it creates the DTM raster.

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Yes, you do. Esri botched the zLAS support so far. "Unzip" and then they work fine with geoprocessing. [Here is a workflow link][1] for using LAZ files in ArcGIS. [Here is a workflow link][2] for using LAZ in ArcGIS Pro.

It looks like you will need a 3D analyst or Spatial Analyst license in Pro or a data interoperability license in ArcGIS. [1]: https://support.esri.com/en/technical-article/000018224 [2]: https://support.esri.com/en/technical-article/000018920

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