The American Gaming Association (AGA), in collaboration with Fitch Ratings, has presented the latest Gaming Industry Outlook. This comprehensive report reflects the sentiments of gaming executives and provides insights into the current state of the industry and expectations for the future. While current business conditions are generally viewed favorably, there is a neutral outlook on what lies ahead. This analysis underscores the ongoing challenges and opportunities in the gaming sector.
Current Business Sentiment:
The AGA’s report reveals that the majority of gaming executives hold a positive view of the current business situation. Approximately 42% describe it as “good,” with an additional 55% finding it “satisfactory.” However, there has been a moderation from the previous quarter when 62% considered conditions “good,” and 35% found them “satisfactory.”
Future Business Expectations:
When asked about future business conditions, over half of the surveyed executives anticipate that the next three to six months will remain “about the same” (58%). The remaining responses are almost evenly split between those expecting “better” or “worse” conditions, resulting in a net positive of 3%. This neutral outlook reflects the evolving landscape and economic uncertainties.
Current Conditions Index:
The Current Conditions Index, measuring 100.6, indicates a modest 0.6% growth in casino gaming-related economic activity during Q3 2023 compared to Q2 2023. However, this growth has been tempered by persistently high inflation levels affecting gaming revenue and employee wages.
Future Conditions Index:
The Future Conditions Index stands at 99.6, suggesting a slight decrease in annualized industry economic activity over the next six months. This outlook aligns with predictions of a mild recession in the U.S. economy starting in Q4 2023. Nevertheless, consumer surveys indicate that over one-third of adults plan to visit a casino within the next year, maintaining a consistent trend.
Executive Perspectives:
Gaming executives’ views on future financial conditions are varied. On balance, 26% anticipate an improvement in their overall balance sheet health over the next three to six months, while 24% expect an increase in capital spending. However, a net negative of 13% predicts a slowdown in revenue growth, and access to credit is considered somewhat restrictive.
Sector-Level Expectations:
Gaming supplier CEOs broadly anticipate an increase in unit sales by year-end.
Many operator CEOs plan to boost capital investments in food and beverage offerings.
Casino operators predict an increase in gaming units in operation and higher investments in food and beverage.
Gaming equipment manufacturers expect a rise in units for new or expansion use.
Challenges and Uncertainties:
Executives have identified challenges, with 58% expressing concerns related to inflation or interest rates limiting their operations. Additionally, 55% cite overall economic uncertainty as a factor affecting their business decisions.
About the Outlook:
The AGA Gaming Industry Outlook is produced in collaboration with Fitch Ratings and prepared biannually by Oxford Economics. It serves as a valuable gauge of recent industry growth and future expectations. The Q3 2023 survey included responses from 33 executives representing major international and domestic gaming companies, tribal gaming operators, single-unit casino operators, major gaming equipment suppliers, and leading iGaming and sports betting operators.
The AGA’s Gaming Industry Outlook provides a comprehensive snapshot of the gaming sector, capturing the sentiments of industry leaders and offering valuable insights into its current state and future prospects. While a positive assessment of the present is evident, executives remain cautious about the future, given the evolving economic landscape. This report underscores the resilience and adaptability of the gaming industry as it continues to navigate through challenges and opportunities.