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US – US gaming CEOs remain positive on current business climate

By - 25 April 2023

The majority of US gaming executives have reported a positive view of current business conditions, while economic uncertainty is tempering future industry growth expectations, according to the American Gaming Association’s (AGA) Gaming Industry Outlook presented in partnership with Fitch Ratings.

Overall, nearly every gaming executive surveyed characterizes the current business situation as good (62 per cent) or satisfactory (35 per cent). However, panel participants report a more cautious outlook moving forward, with only 20 per cent expecting future conditions to be better than today and two-thirds (64 per cent) expecting future conditions to be 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. “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 Current Conditions Index of 106 shows strong growth in casino gaming-related economic activity in Q1 2023 relative to Q4 2022, the commercial gaming industry’s highest-grossing quarter to date. Over the last three quarters, industry activity has been expanding at an annualized pace of approximately 8.4 per cent, reflecting real underlying growth, controlled for the effects of inflation. Comparatively, the national U.S. economy grew 2.9 per cent over the last two quarters of 2022, the most recently available quarterly data.

The Future Conditions Index decelerated to 97.1 in Q1 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—as well as the current Oxford Economics forecast which predicts the US economy will experience mild recession in the second half of 2023.

Results from the Gaming Executive Panel show more cautious attitudes for growth over the next six months, with a greater share of executives expecting the pace of new employee hiring, revenue growth and customer activity to decrease over the next three to six months than to increase. Competition for current employees also continues to be a challenge, with talent retention cited as another area of concern by the panel.

Operators and suppliers both express outsized optimism across certain segments of their businesses. More operators expect capital investment (21 per cent net positive) and gaming units in operation (14 per cent 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 per cent net positive) and most expecting units for new or expansion use to increase (63 per cent net positive). No gaming manufacturer expected the pace of sales to decrease.

Concerns around interest rates and inflation (cited by 69 per cent of respondents) and economic uncertainty (38 per cent) remain top concerns for industry executives. Meanwhile, supply chain delays have fallen out of the top five concerns of executives, replaced with geopolitical risk (31 per cent). Concerns around availability of credit have also eased in the past six months, with the share of executives reporting access to credit as tight (20 per cent) equally balanced by the share that view it as easy (20 per cent).

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