AMERICAN GAMING ASSOCIATION
High Tides
Executives expect record revenues to continue , even if a mild recession occurs
BY DAVE FORMAN
Stop me if you ’ ve heard this before : the U . S . gaming industry is continuing to set revenue records . In the midst of its most successful run ever , the industry saw alltime commercial gaming revenue highs in both 2021 and 2022 — and Q1 2023 was another record-breaking quarter for the industry .
The most recent quarterly earnings calls from many of the industry ’ s biggest players also reflect the high tides gaming is currently enjoying , with several companies praising the past quarter as one of their best yet .
High interest rates have had economists predicting an impending recession for more than a year now , but consumers have been resilient , especially when it comes to their gaming spend . So how do gaming executives view the next six months ? That is the question the American Gaming Association ’ s ( AGA ) biannual Gaming Industry Outlook , presented by Fitch Ratings , attempts to answer .
Here are three takeaways from our latest Outlook , published April 25 , featuring responses from 26 industry executives across casinos operators , gaming equipment suppliers , and iGaming and / or sportsbook operators .
• Gaming executives are overwhelmingly positive on current business conditions , but harbor reservations that the current pace of growth will continue . Nearly every gaming executive surveyed characterizes the current business situation as good ( 62 percent ) or satisfactory ( 35 percent ). However , only 20 percent expect future conditions to be better than today and twothirds ( 64 percent ) expect future conditions to be the same . See Table 1 .
Overall , a greater share of executives expect
Table 1
Table 2
Table 3 the pace of new employee hiring , revenue growth and customer activity to decrease over the next three to six months than to increase .
• Concerns around interest rates and economic uncertainty are driving these dampened expectations , as are a myriad of other factors . However , in a promising turn of events , concerns around labor shortages are abating and supply chain delays have fallen out of the top five factors limiting growth . Top executive concerns are ranked in Table 2 .
• Despite general caution around industry growth rates , operator and supplier executives are both bullish about the long-term health of their businesses . More operators expect capital investment ( 21 percent net positive ) and gaming units in operation ( 14 percent net positive ) to increase over the next three to six months than decrease .
Meanwhile , an overwhelming majority of gaming equipment manufacturers expect sales of gaming units for replacement use to increase ( 88 percent net positive ) and most expect units for new or expansion use to increase ( 63 percent net positive ). No gaming manufacturer expects the pace of sales to decrease over the next six months . See Table 3 .
Ultimately , the Gaming Industry Outlook shows that we expect a marginal slowdown in momentum from gaming ’ s current record pace — a reflection of general concerns around a mild recession in the second half of 2023 , softening CEO optimism , and tightening consumer balance sheets . Despite these headwinds , this spring , more Americans said they planned to visit a casino over the coming year than at any time since the start of 2020 , and CEOs expect to increase investments in the newest games to maintain and grow gaming ’ s share of
Americans ’ entertainment budgets . As long as the industry continues to provide first-choice entertainment options , we believe the industry ’ s outlook remains strong in the long term .
Dave Forman is vice president , research for the American Gaming Association .
10 Global Gaming Business JUNE 2023