The second-best thing about this week’s “Gaming Industry Outlook” executive survey is that it is chockful of optimism. Cautious optimism, to be sure, but optimism nonetheless, as CEOs gaze into the future.
Given a nation buffeted by inflation and political division, a prediction brimming with cautious optimism sounds like a very good thing, indeed. But don’t take my word for it. Ask American Gaming Association President and CEO Bill Miller.
“Our industry remains cautiously optimistic — and has weathered this volatile economy — because of resilient consumer demand,” he said in a statement heralding the industry handicap, compiled in partnership with Fitch Ratings. “Looking ahead, future consumer confidence and spending remain an outstanding question for our continued growth.”
Not only would a reasonable person expect a different response from Miller, but the consensus presented in the “Outlook’s” findings is bound to give even the most fretful casino-industry executive reason for at least a little optimism, no matter how cautious.
The survey was conducted from Aug. 30 to Sept. 6, with responses from 26 executives representing a wide variety of domestic and international gaming companies, as well as tribal and solo operators, equipment suppliers, and igaming firms. If the survey sample is less than comprehensive, it succeeds in taking the industry’s temperature as it rolls toward the November midterm elections and the New Year.
Statistically speaking, most of the executives surveyed called the current business climate good or satisfactory and 92 percent “expect these conditions to continue or improve over the next three to six months.” Just 8 percent believe economic conditions will get worse.
Given a recent history that has included casino closures due to a pandemic and economic uncertainty in most corners of American life, that mostly positive scorecard is probably something to smile about.
Bolstered in part by the rapid growth and popularity of legalized sports betting, the industry has put up remarkable revenue figures, despite genuine economic headwinds. When you can say your industry is relatively stable – and has just come off a record-setting second quarter – with inflation keeping many customers closer to home and rethinking their casino splurges, it’s a reminder of the strength and appeal of the business model.
Not to interrupt the cautiously optimistic celebration, but I have to wonder what Las Vegas casino operators are thinking as they watch regional fuel prices fluctuate and the cost of groceries climb. Add to that rising interest rates and I have to believe that a lot of loyal customers aren’t just tempted to rethink their travel plans, but also aren’t feeling nearly as cautiously optimistic about their immediate future.
The industry “Outlook” acknowledges, “Gaming CEO growth expectations remain positive, but have softened relative to six months ago, according to the Gaming Executive Panel — a major input in the Future Conditions Index.”
Adding darker clouds to the skyline, the “Oxford Economics” outlook predicts the U.S. economy will experience “a mild recession in the first half of 2023, as high inflation, rising interest rates, lingering supply-chain difficulties, softer labor market dynamics, and global headwinds weaken demand.”
If that less than optimistic prediction is accurate, then Americans will have even more worries and likely fewer dollars left over for travel and entertainment. That will not only increase competition for players, but also present new challenges to the industry’s marketing and customer service.
Other variables are beyond even the most creative casino executive’s control. Supply-chain issues have been a frustration for months throughout the country and beyond and two of three CEOs surveyed see that trend continuing.
In a phrase, call it cautious optimism.
If cautious optimism is the second-best thing about the AGA’s “Gaming Industry Outlook,” then what is the best thing?
I’ll tell you. If that prediction turns out to be wrong, there’s a very good chance that no one will remember it.
