U.S. Gaming Execs Weigh 2024 Market in AGA Report

The latest findings from the American Gaming Association’s (AGA) Gaming Industry Outlook reveal that, despite slowing revenue growth, gaming industry leaders maintain a generally optimistic view of the current business environment. The report, compiled with input from industry executives, shows a significant improvement in credit conditions, although expectations for future growth are less certain.

Positive Business Sentiment Amid Slower Revenue Growth

According to the AGA’s recent survey, an overwhelming 88% of gaming industry leadersconsider the present state of the sector to be either good or satisfactory. This positive sentiment persists even as the industry faces decelerating revenue expansion. However, when looking ahead, executives are more cautious, with some predicting a decline in customer activity in the coming months.

“After years of very strong consumer gaming spending growth, expectations around customer activity over the next three to six months have cooled considerably,” said David Forman, Vice President of Research at the AGA. Despite this tempered outlook, Forman emphasized that gaming businesses remain on solid financial footing, ed by robust balance sheets and improved access to credit.

Shifting Executive Expectations on Future Business Conditions

The survey indicates that expectations for future business conditions are more divided. Respondents are nearly evenly split on whether they believe the market will improve or worsen in the next three to six months, with only 3% holding a net positive outlook. Notably, 28% of executives anticipate a reduction in customer activity during this period, reflecting a shift in sentiment since the first quarter of 2024.

A significant portion of executives (34%) expect to see improvements in their overall financial health, and many report that credit is now more accessible than it has been in recent years. For the first time in two years, 19% of respondents indicated that access to credit is “easy,” compared to just 3% who view it as restrictive. Additionally, fewer executives now cite interest rates as a significant obstacle, indicating that financial pressures may be easing slightly.

Investment Priorities and Macroeconomic Concerns

Despite a cautious outlook for future growth, the gaming industry continues to prioritize capital investments in key areas. The survey found that 56% of operators plan to focus their investments on hotel and food and beverage facilities, signaling a shift toward enhancing customer experience beyond the gaming floor. Other areas of investment include live entertainment (28%) and casino floor slots (22%).

On the other hand, gaming equipment suppliers expect a slowdown in their capital investments and game sales, with a net negative sentiment of 13%. This deceleration aligns with broader concerns about the global economic landscape. Uncertainty surrounding the economy has become the top concern for industry leaders, with 56% of executives identifying it as a key issue, up from 34% earlier this year. Other prominent concerns include state regulatory challenges (31%), inflation, and interest rate fluctuations (both cited by 34%).

Current and Future Conditions Indexes Reflect Industry Trends

The AGA’s Gaming Industry Outlook also provides a quantitative measure of the sector’s performance through its Current Conditions Index and Future Conditions Index. For the third quarter of 2024, the Current Conditions Index stands at 97.3, reflecting a slight contraction in real annualized economic activity of 2.7%. This index tracks metrics such as gaming revenue, employment levels, and wages within the industry.

Looking forward, the Future Conditions Index, which offers a glimpse into potential changes in the sector, came in at 98.9 for Q3 2024. This suggests that, after ing for inflation, the gaming industry could experience a modest decline in real economic activity over the next six months, with an annualized rate of decrease of 1.1%.

Survey Details

The findings are based on a biannual survey conducted by Oxford Economics, on behalf of the AGA. The survey, which took place between August 21 and September 6, 2024, gathered responses from 32 executives representing a cross-section of the gaming industry. These respondents included leaders from major international and domestic gaming companies, tribal gaming operators, single-unit casino operators, key gaming equipment suppliers, and significant players in the iGaming and sports betting sectors.

Source:

“Gaming Executives Positive on Current Business Conditions, Cautious on Future Growth Expectations“, americangaming.org, October 1, 2024.