Top gaming-industry executives are more optimistic than they were six months ago. That was among the findings of the American Gaming Association’s fifth semi-annual “Gaming Industry Outlook,” prepared by Fitch Ratings and released today.
Thirty-three C-suite executives were surveyed for the “Outlook.” They varied from gaming suppliers, igaming operators, and major international and domestic bosses to CEOs of standalone or tribal casinos. The study was conducted between August 28 and September 6.
The survey concluded that the casino industry “continues to grow, but has decelerated from the strong pace of sustained expansion in the wake of the pandemic.” The “Outlook’s” Current Conditions Index stood at 100.6, meaning that increases in gambling are continuing, but the Future Conditions Index was 99.6, pointing to a slowdown over the next six months.
These numbers were interpreted by the AGA to mean that the forecast remains “positive, but also [indicates] a baseline economic outlook that anticipates a mild recession starting in the fourth quarter.” The cautious mood was attributed to a Oxford Economics prognostication of a downturn “driven by the impact of cumulative Fed rate hikes, tighter lending conditions, and high inflation leading consumers and business to cut back on spending, hiring, and investment.”
Even so, recent studies indicate that 33 percent of American customers plan to visit a casino sometime in the next year. Also, the Future Conditions Index was more positive than six months earlier, with positive responses outpacing negative ones by 6.4 percent, compared to 4.1 percent earlier.
The Current Conditions Index showed current casino-industry activity to be “strong,” if not growing at the rates seen in 2021 and 2022. Gambling revenues and employee salaries were also inflation-adjusted in the survey, resulting in an Index that was “tempered by persistent high inflation” in the third quarter.
Taking a nine-month look at the economy, the Current Conditions Index rose to 102. 8. “This indicates that industry activity has been expanding in recent quarters at an annualized pace of approximately 2.8 percent and reflects real underlying growth, even when controlling for the effects of inflation,” interpreted the AGA, in its official release of the survey.
Executives were relatively sanguine about current economic conditions, finding them “good” (42 percent) or “satisfactory” (55 percent). Looking ahead, 58 percent anticipate the next quarter or two to be “about the same.”
The top concern of gaming execs tended to be interest rates and/or inflation (58 percent). Twenty-six percent had experienced difficult access to credit, while 19 percent said they had faced no such adversity.
Capex maintenance and equipment purchases were expected to continue, despite economic concerns. These included anticipation of slower gambling revenue (13 percent) and less aggregate hiring (19 percent). But 26 percent expected their balance sheets to improve.
Suppliers of gambling equipment were notably upbeat. Forty-four percent expected more capital investment in the form of new and replacement units. Still, casino floors were not as high a priority for investment by operators as food and beverage outlets (67 percent of respondents) or hotel rooms (39 percent).
