Positive Outlook Among Gaming Executives, Yet Caution Prevails for Future Growth

Despite a slowing in revenue growth, gaming industry officials remain optimistic about the present economic situation. The most recent American Gaming Association (AGA) Gaming Industry Outlook report shows an improvement in credit conditions. The prognosis for the future is still more cautious, though.

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The Status of the Gaming Industry Right Now

The majority of respondents (88%) see the current state of the gaming industry as either “good” or “satisfactory.” This reflects the ongoing stability within the sector. Yet, when looking at the future, executives display a more conservative perspective. They are divided on whether business conditions will improve over the next three to six months, with a net positive of only 3%. A significant 28% foresee a potential decline in customer activity.

David Forman, Vice President of Research at the AGA, noted the shift, saying, “After years of very strong consumer gaming spending growth, expectations around customer activity over the next three to six months have cooled considerably.” Despite this, gaming businesses remain in a strong position, supported by robust balance sheets. For the first time in two years, more executives view access to credit as “easy” rather than “restrictive.”

Shifts in Gaming Executive Sentiments

The sentiments among gaming executives have changed significantly since the first quarter of 2024. More respondents now expect a decline in customer activity over the next three to six months (28% net negative, up from 4% in Q1). Yet, there is optimism in certain areas. Executives expect overall balance sheet health to improve, with a net positive of 34%.

Additionally, a higher number of respondents (19%) view credit access as easy, compared to only 3% who see it as restrictive. This is a notable improvement, considering that access to credit was a major concern in the past two years. These days, interest rates are thought to be less of a constraint.

Capital Investment Focus

Hotel and food and beverage facilities remain important areas of capital expenditure for operators, with 56% of respondents prioritising these industries. Live entertainment (28%) and casino floor slots (22%) follow as additional investment priorities. Though suppliers of gaming equipment currently foresee a slowdown in capital investments and game sales (a 13 per cent net negative increase), there has been a change in expectations.

Macro Economic Challenges and Concerns

The evolving macroeconomic landscape has brought new challenges for gaming executives. Uncertainty around the economic environment has risen to the top of executive concerns (56%, up from 34% in Q1). Other major issues include state regulatory changes (31%) and concerns related to inflation or interest rates (34%).

Economic Performance Indicators

The Current Conditions Index

The Q3 2024 Current Conditions Index was 97.3, indicating a real annualized contraction of 2.7%. This index measures the real economic activity within the gaming industry, including factors such as gaming revenue, employment, and employee wages and salaries.

The Future Conditions Index

The Future Circumstances Index, which projects changes in industrial circumstances, stood at 98.9 in Q3. This points to a moderate decrease in real economic activity in the gaming sector over the next six months, at an annualised rate of 1.1%. The index adjusts for underlying inflation to present a clear picture of future growth expectations.

About the AGA Gaming Industry Outlook

Oxford Economics publishes the AGA Gaming Industry Outlook biannually. It provides a timely overview of recent industry growth and future expectations. The Q3 2024 survey was conducted between August 21 and September 6, 2024, with participation from 32 executives. Respondents included representatives from major international and domestic game companies, tribal gaming operators, single-unit casino operators, gaming equipment suppliers, and major iGaming and sports betting operators. Meanwhile, if blackjack online gambling is what you seek, Starpunternews.com is the perfect place to explore.

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