Top casino and online gaming officials hold an overall positive view of the industry but are worried about business slowing down in the near future.
Cccording to an American Gaming Association survey released Tuesday, U.S. gaming industry expansion slowed in recent quarters and the near-term outlook is “more tempered” than in prior years. The survey further determined that most executives are seeing slowdowns already - and expect a decrease in customer activity and growth in the coming quarters.
“After years of very strong consumer gaming spending growth, expectations around customer activity over the next three to six months have cooled considerably,” said AGA vice president of research David Forman in a statement announcing the survey results.
“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.”
Survey details
The latest installment of the AGA’s biannual Gaming Industry Outlook found current conditions were largely positive, even when compared to the survey’s results in the first half of 2024. The forward-looking portion projects a decrease in economic activity over the next six months.
Real economic activity in the gambling industry, including gaming revenue, employment, and employee wages, expanded at the end of 2023 and through the beginning of 2024, continuing trends that began after COVID-19 pandemic restrictions were lifted in most jurisdictions in 2021. Economic data released by the AGA reflected this expansion even when considering inflation.
Still, leading gaming industry officials fear a future economic slowdown, according to the survey. The analysis took responses from 32 executives from major American commercial, tribal, and online gambling operators.
"...expectations around customer activity over the next three to six months have cooled considerably,” per a survey of casino executives released by the American Gaming Association today, though execs still hold an overall positive view of the industry
— Ryan Butler (@ButlerBets) October 1, 2024
These trends mirror larger macro-level economic projections that the U.S. will avoid a recession but face declining activity through the end of 2024 and the beginning of 2025, per Oxford Economics’ current forecast included in the study. The survey cites optimism from both economists and gaming executives that interest rate cuts from the Federal Reserve will help spur growth despite other financial headwinds.
Still, most gaming executives surveyed now cite uncertainty around the economic environment as a “key factor” limiting operations. Most respondents also expected a decrease in hiring pace, revenue growth, and capital investment.
Overall, more executives expect a negative overall “outlook of their business situation” compared to the prior 2024 survey.
An increase in credit access, spurred by the Fed’s rate cut, was among the positives for casino executives. The survey also found that the share of consumers that expect to visit a casino over the next 12 months has improved relative to a year ago, reiterating an earlier AGA study that saw Americans' increasing favorable views toward gambling.
Industry stability means new reality
The AGA's survey is one of the more notable negative projections about the casino industry’s financial health in the years since the pandemic’s onset created the most significant challenge in the history of regulated brick-and-mortar casino gambling.
Virtually all of the roughly 1,000 combined U.S. tribal and commercial casinos suspended operations in March 2020. It wasn’t until the second half of 2020 that casinos reopened – still with significant restrictions – and 2021 (or later) that all restrictions were removed.
With the pandemic’s threats largely subsided, the American economy saw a significant boost in pent-up travel demand to casinos and other entertainment destinations. Though the ensuing spending also spurred significant inflation increases, gambling companies still saw sustained growth in 2022 and 2023.
Corporate earnings reports and state-level financial disclosures have shown stagnation in brick-and-mortar casino gaming in 2024. Tuesday’s AGA study reflects a more stable (if slightly declining) financial bottom line for the industry after huge losses and massive gains in the years after the pandemic.
Bottom line
The lowest moments for casino gambling have given way to some of the highest. Casino leaders are rightfully understanding that the rapid comeback is not sustainable. Macro-level factors increasingly indicate the industry will now go back to a solid, but not nearly as spectacular, run in the near-term future.
