Gaming executives are less optimistic about business conditions than they were in the first quarter, according to the American Gaming Association’s (AGA) Gaming Industry Outlook.
In the third quarter, the vast majority of gaming executives viewed their current business situation as “good” or “satisfactory.” The percentage of those with a good outlook, however, dropped from 62 percent in the first quarter to 42 percent in the AGA’s latest report.
The overall positive results shouldn’t be surprising. The gaming sector has enjoyed explosive growth over the past few years. Legalized online sports betting sites continues to spread like wildfire across the country. Just last month, Kentucky became the 35th state to legalize sportsbooks and the 25th state to offer legal sports betting.
Meanwhile, the pent-up demand caused by the pandemic generated a tidal wave of travelers to casino destinations. In August, Nevada reported its 30th consecutive month with a gambling win over $1 billion.
“The significant expansion and record demand for legal, regulated gaming in the post-pandemic era have allowed our members to consistently invest in our product and people to deliver innovative entertainment options for American adults,” said AGA President and CEO Bill Miller.
Likewise, executives’ slightly more cautious outlook is also understandable. When asked about their top challenges, 58 percent of executives mentioned inflation and interest rates as potential headwinds to business. Higher US interest rates not only make business investments more costly, but they also have a history of triggering recessions. And while consumers happily rushed back to casinos over the past couple of years, their appetite might wane – especially if faced with higher prices and/or poor economic conditions.
Despite, the slight shift in outlook, gaming executives still plan to invest in their businesses over the coming year. They are, however, changing the focus of their investments. This reporting period shows a significant increase in the number of executives planning to increase their capital spending on food and beverage. Casino floor slots also appear to be gaining traction for increased capital investment.
