Gaming CEOs Generally Optimistic, Yet Recognize Points of Resistance
Top executives in the gaming sector are generally optimistic about the future of their industry, with most feeling positive about the current business landscape and confident in the long-term prospects.
According to a recent survey conducted by the American Gaming Association (AGA), 94% of the gaming CEOs surveyed saw the current business environment as either "good" or "satisfactory." This is consistent with the views they expressed during the third quarter of 2023.
AGA President and CEO Bill Miller commented on the results, saying, "The gaming industry has experienced unprecedented growth over the past three years, setting a new standard for success. However, as we move into a period of market normalization, it will be crucial for us to continue investing and innovating to maintain momentum and offer top-notch, responsible entertainment experiences."
In the same survey, 30% of the gaming CEOs predicted that business conditions would improve in the next six months.
Doubts about the Optimism of Gaming CEOs
Some observers question the optimism expressed by these gaming CEOs, particularly given the recent decline in consumer confidence, which has fallen for three consecutive months. Additionally, there are concerns about the impact of inflation and rising interest rates on the casino gaming industry.
Analysts also point to the negative trends in the Las Vegas market as a potential cause for concern. Despite this, some regional casinos are cutting back on their operations, especially in the Midwest and the South.
Inflation and interest rates are also causing issues for casino operators. Half of the AGA's CEOs expect construction and renovation costs to be high over the next year.
AGA notes that, "Executives report that inflationary or interest rate concerns continue to be a major factor limiting operations (28%), but these have been overtaken by geo-political risk (34%) and uncertainty of the economic environment (34%) as the biggest limiting factors in the most recent Gaming Executive Panel."
Gaming Industry Outpacing U.S. Economy
The gaming industry is growing at a faster rate than the U.S. economy. The AGA's first-quarter Current Conditions Index came in at 102.8, demonstrating a 2.8% year-over-year growth. This is higher than the 1.6% increase in US GDP in the first three months of the year.
It's possible that the gaming industry's growth will continue to outpace the overall economy. Some analysts believe that the first-quarter GDP report could be revised down, meaning the advantage for the gaming sector could grow even more significant. Some experts even suggest that the gaming sector is more efficient with its capital usage, spending $2.50 for every $1 of economic growth.
Gaming's growth may continue even amidst persistently high inflation, with the AGA predicting a slight increase in the Current Conditions Index over the next six months.
"This outlook reflects Oxford Economics' forecast that the U.S. economy will moderate during 2024 but avoid recession. Despite a projected economic slowdown, consumer surveys indicate that over one-third of adults expect to visit a casino in the next 12 months, the same as in the previous quarter," said the AGA.
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Source: www.casino.org
