The gaming industry is experiencing a slowdown.
In the American Gaming Association's gaming outlook released Tuesday, the trade industry group said revenue growth has tailed off following rapid expansion in late 2023 and early 2024, with short-term expectations more tempered than in previous years.
“After years of very strong consumer gaming spending growth, expectations around customer activity over the next three to six months have cooled considerably,” AGA vice president of research David Forman said. “Still, gaming businesses remain well positioned, with executives touting strong balance sheets and more viewing access to credit as easy than restrictive for the first time in two years.”
The report found that 88% of 32 industry executives who responded rated business as good or satisfactory, while 28% expect a decrease in consumer activity over the next three to six months.
However, 56% of respondents from gaming companies, sports betting and iGaming operators, tribal gaming operators, gaming equipment suppliers, and single-unit casino operators cited economic uncertainty as the top concern. That’s up from 34% in Q1.
State regulation, inflation, and geopolitical risks were also among the top issues highlighted.
Dual index
The outlook’s two-part piece “provides a snapshot of the current and future economic health of the industry based on executive sentiment, casino-visitation plans, gaming revenue, and economic indicators.”
The Current Conditions Index (CCI), which measures real economic activity in the gaming industry, reported a 2.7% real annualized contraction. The Q3 2024 score of 97.3 is measured by gaming revenue, employment, and employee wages and salaries.
Elevated inflation led to the CCI's tempering, but it was less of a factor in the Q3 growth slowdown.
The Futures Conditions Index, which indicates changes in industry conditions, reported a 98.3 in Q3. That shows “real economic activity in the gaming sector, after controlling underlying inflation, is expected to moderately decrease over the next six months,” according to the AGA report.
Positive signs
Gaming equipment suppliers who responded, “believe their pace of capital investment and game sales will decelerate (13% net negative).”
However, gaming executives reported “access to credit as easy (19%) rather than restrictive (3%) for the first time in two years,” the AGA outlook stated. Fewer executives in Q3 than in the spring said interest rates were a major limiting factor.
Hotel and food and beverage facilities are the main growth focus of capital investments among 56% of operators. Live entertainment and casino floor slots continue to be high on the list too at over 20% each.
