The good news: most gaming executives are upbeat about current business conditions. But those positive viewpoints are tempered by economic uncertainty in terms of growth expectations.
Those are the takeaways from the American Gaming Association’s Gaming Industry Outlook, a survey of 26 industry executives –the Gaming Executive Panel — presented in partnership with Fitch Ratings.
According to the survey, 62% of gaming executives termed the current business climate good, and 35% said it was satisfactory. But only 20% expect future conditions will improve, while 64% anticipate that the climate for business will remain the same.
“Gaming’s record momentum has continued into 2023 and that is clearly reflected by the attitudes of gaming executives around the country,” said AGA President and CEO Bill Miller in a statement. “While projections of slowing growth across the American economy are muting expectations for gaming in the medium term, our industry is well-positioned to weather any potential headwinds.”
The Gaming Industry Outlook is a look at current and future economic health of the industry based on executive sentiment, casino visitation plans, gaming revenue, and economic indicators.
The Outlook includes two separate indices, the Current Conditions Index and the Future Conditions Index.
The Current Conditions Index of 106.0 indicates strong growth in casino gaming economic activity in the first quarter of 2023 relative to the fourth quarter of 2022, the commercial gaming industry’s highest-grossing quarter to date. Over the last three quarters, industry activity has expanded at an annualized pace of approximately 8.4%, reflecting real underlying growth, controlled for the effects of inflation. Comparatively, the national U.S. economy grew 2.9% over the last two quarters of 2022, the most recently available quarterly data.
The Future Conditions Index decelerated to 97.1 in the first quarter 2023, indicating annualized industry economic activity is expected to decrease moderately over the next six months. This is partially driven by Gaming Executive Panel results—which remain positive but have softened relative to six months ago—and the current Oxford Economics forecast predicting the U.S. economy will experience a mild recession in the second half of 2023.
Gaming Executive Panel results show indicate more cautious attitudes about growth over the next six months, with most executives expecting the pace of new employee hiring, revenue growth, and customer activity to decrease over the next 3-6 months. Competition for current employees continues to be a challenge, with talent retention cited as another area of concern by the panel.
Operators and suppliers expressed optimism across certain segments of their businesses:
More operators expect capital investment (21% net positive) and gaming units in operation (14% net positive) to increase over the next 3-6 months than decrease.
Gaming equipment manufacturers are positive, with almost all supplier executives expecting sales of gaming units for replacement use to increase (88% net positive) and most expecting units for new or expansion use to increase (63% net positive). No gaming manufacturer expected the pace of sales to decrease.
Concerns around interest rates and inflation (cited by 69% of respondents) and economic uncertainty (38%) remain for industry executives. Supply chain delays have fallen out of the top five concerns of executives, replaced with geopolitical risk (31%). Concerns around availability of credit have also eased in the past six months, with 20% of executives reporting access to credit as tight while 20% view credit access as easy.
The AGA Gaming Industry Outlook is presented in partnership with Fitch Ratings and prepared biannually by Oxford Economics and provides a measure of recent industry growth and future expectations. The first quarter 2023 survey was conducted between March 29 – April 10, 2023.
