Continued economic growth across gaming’s key markets worldwide should generate positive lift throughout the industry globally in 2018, a new Fitch Ratings Service report projects, but regulatory and leverage risks could dampen momentum in certain jurisdictions.
“2018 is set to be a good year for gaming operators and suppliers globally amid a strong economic backdrop and a relatively benign new supply environment,” said Alex Bumazhny, senior director at Fitch, also noting that balance sheets and leverage profiles across much of the industry remain in a healthy state.
“While many gaming companies will ramp up returns to shareholders, we expect these returns to be balanced with preserving, and in some instances improving, balance sheet strengths,” he said.
Against that sunny prognosis, Fitch highlighted several key headwinds facing the industry moving into the new year.
Greater saturation in the northeast U.S., with four new casinos coming online, is a key concern; as is a potential crackdown in the U.K. on fixed-odds betting terminals and forthcoming details on the Macau license renewal process.
Taken together, that’s not a bad outlook.
“More broadly, the regulatory and new supply risks are relatively benign in the mature gaming industry,” the report notes.
Key themes to watch for the year include Japan’s pursuit of an integrated resort implementation bill – which could be a key driver for capital expenditure in 2019 if passed, the continued VIP recovery in Macau, and amplified merger and acquisition activity among U.S. and European operators.
Continued development along the Las Vegas Strip was also highlighted as another key theme, although growth in revenue per available room in Southern Nevada is expected to shrink from its current 6 percent clip now that fundamentals are back to pre-recession levels.
“That said, tailwinds remain including considerable convention capacity being added, limited new hotel supply for at least three more years and, in Fitch’s opinion, Las Vegas’ favorability as a leisure/convention destination,” the report states.
