The American Gaming Association's most recent Gaming Industry Outlook released Tuesday shows industry executives are maintaining an overall positive view of the landscape while also expecting a slowdown of customer activity in the coming months.
Though 88% of respondents in the biannual outlook prepared by Oxford Economics viewed the current gaming landscape as "good" or "satisfactory," there was a near 50-50 split over whether conditions would improve over the next three to six months.
More executives are expecting a decrease in customer activity in that period, with survey results showing a net-negative 28% sentiment. That was notably higher than the net negative 4% from the first quarter of the year.
“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.
“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.”
What's There to Like for Executives
Despite the expected impending decline in customer activity, most executives felt there would be improvements to overall balance sheet health.
One leading indicator for optimism is easier access to credit. There was a net positive 19% response in terms of easier access to credit — the first time such sentiment has been expressed in two years.
Interestingly, actual casino business — more specifically, slots — ranked fourth among seven metrics for focus on growth by executives. More than half targeted facility investments in both hotel and food and beverage as areas for capital investment, followed by live entertainment at 28% and slot action on the casino floor at 22%.
Roughly one in nine considered capital investments in meetings and conventions, sportsbooks and casino floor action for poker as primary points for investing, while one in six didn't consider any of those options as a primary focus.
Where the Headwinds Can be Found
Executives cited three key areas where the industry will slow, with a net-negative 56% for pace of hiring, net-negative 16% for revenue growth and net-negative 15% for capital investment.
Growth expectations have also slowed notably on the supplier side, with a net-negative 13% reported for pace of capital investment. A net-negative 13% was also reported for both the sale of gaming units as replacements for existing unites, as well as new units as part of expansion.
Overall, there were slight contractions reported for Current and Future Conditions. The Current Conditions Index for the third quarter of the year was 97.3, which is an annualized contraction of 2.7%.
That index measures real economic activity in the industry, as measured by gaming revenue, employment and employee wages and salaries.
The Futures Condition Index, which is a leading indicator of changes in industry conditions, registered at 98.9. That estimates a 1.1% annualized contraction over the next six months for real economic activity in the industry after controlling for underlying inflation.
