Yesterday, the American Gaming Association (AGA) officially unveiled its Gaming Industry Outlook report in partnership with Fitch Ratings.
Furthermore, the report shows that a large proportion of gambling CEOs feel positive about current business conditions, while economic uncertainty dampens hopes for future industry growth.
Uncertainty about the future business situation:
All in all, almost every CEO surveyed describes the current business situation as good (62%) or adequate (35%). Moreover, panelists report a more careful outlook for the future, with only 20% believing that future conditions will be better than today and two-thirds (64%) believing that future conditions will be the same as they are now.
In this regard, AGA President and CEO Bill Miller, said: “Gaming’s record momentum has continued into 2023 and that is clearly reflected by the attitudes of gaming executives around the country.
“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.”
Current conditions garner a positive response:
The Current Conditions Index of 106.0 displays a strong increase in casino gaming economic activity in Q1 2023 versus Q4 2022, marking the commercial gaming industry’s highest-grossing quarter to date.
During the last three quarters, industrial activity grew at an annual rate of about 8.4%, reflecting real underlying growth, controlled for the effects of inflation. In addition, the national U.S. economy increased by 2.9% in the last two quarters of 2022, which is the most recent quarterly data available.
A moderate decline in industry economic activity in the near future:
The Future Conditions Index shows a slowdown to 97.1 in Q1 2023, indicating that industry economic activity is forecast to moderate over the next six months.
The forecast is driven in part by the Gaming Executive Board’s results, which are still positive but have softened from six months ago, along with Oxford Economics’ current forecast that the U.S. economy will endure a mild recession in the second half of 2023.
Moreover, the Gaming Executive Panel’s results display a more careful view of growth over the next six months, with most executives believing the pace of new hires, profit growth and client activity will slow over the next three to six months, not increase.
Also, competition for current employees remains a challenge, and retaining talent was cited as another area of concern by the panel.
However, operators and providers show tremendous optimism in particular segments of their businesses. These segments are:
- more operators expect capital investment (21% net positive) and gaming units in operation (14% net positive) to increase over the next three to six months than decrease;
- gaming equipment manufacturers are particularly 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.
One of the things CEOs are most worried is interest rates and inflation (stated by 69% of respondents) and economic uncertainty (38%).
Meanwhile, supply chain delays dropped out of CEOs’ top five concerns and were substituted by geopolitical risk (31%). In addition, worries about credit availability have also decreased over the past six months, with the share of CEOs reporting access to credit as limited (20%), equally balanced by the proportion who consider it easy (20%).
Gaming Industry Outlook Description:
Oxford Economics has prepared the Gaming Industry Outlook.
It offers a timely measure of recent industry growth and future expectations. The survey for the first quarter of 2023 was officially conducted between March 29 – April 10, 2023.
During the survey, 26 CEOs were surveyed, involving CEOs of major global and domestic gaming companies, tribal gaming operators, single-unit casino operators, famous gaming equipment suppliers, and major iGaming and sports wagering operators.