Macroeconomic factors have gaming CEOs tepid on industry’s continued growth
AGA’s biannual Gaming Industry Outlook reveals concerns around interest rates and inflation
The US regulated gaming industry is in the midst of a sustained period of growth but macroeconomic headwinds have CEOs hesitant to forecast more of the same going forward, according to the American Gaming Association’s (AGA) latest Gaming Industry Outlook.
Of the 26 executives surveyed for the biannual report, conducted by the AGA in concert with Fitch Ratings, 97% described the gaming business environment as either good (62%) or satisfactory (35%).
That sentiment is reflective of a boom period in the industry as highlighted by the first quarter of 2023, which doubled as the highest-grossing quarter to date for casino gaming-related economic activity.
“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.
When the focus turned to the future, however, industry executives were more tepid in their outlook, with only 20% envisaging a better business climate and nearly two-thirds (64%) expecting future conditions to remain the same.
A majority of the respondents (69%) cited inflation and interest rates as their primary concern.
A pair of indices that measure economic activity are in line with the general temperatures of executives.
The Current Conditions Index of 106.0 revealed strong growth in casino gaming-related economic activity in Q1 2023 relative to Q4 2022, while the Futures Conditions Index of 97.1/92.9 indicates a moderate decrease in economic activity is to be expected over the next six months.
The discrepancy is reflective of the potential onset of a mild recession in that period.
“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,” said Miller.
That optimism is buoyed by the continued growth of certain sectors of the industry, namely manufacturing. A vast majority of supplier executives (88% net positive) expect sales of gaming units for replacement use to increase.
Not one, conversely, is expecting the pace of sales to decrease, while supply-chain delays are notably no longer among the top five concerns of executives.
The Gaming Industry Outlook was conducted between March 29 and April 10, 2023, and included executives from across the full spectrum of industry stakeholders.