US gaming execs positive about current business conditions but future outlook mixed, says AGA report

US gaming executives are positive about current business conditions but feel cautious about future growth expectations, according to the latest American Gaming Association (AGA) Gaming Industry Outlook.

The trade industry body's report shows that, in the face of slowing revenue expansion, gaming industry leaders continue to hold an overall positive view of the current business situation, with a notable improvement in credit conditions.
 
The majority of respondents (88%) view the current state of the gaming industry as either good or satisfactory. Meanwhile, executives have a more conservative outlook on future business conditions.

When it comes to the future of the sector, respondents are split on whether they expect conditions to improve over the next three-to-six months (3% net positive) or a decrease in customer activity (28% net negative). 
 
"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." 

Gaming Executive Panel 

Since Q1, gaming executives' sentiment has shifted, with a greater number of respondents now expecting a decline in customer activity over the next three to six months (28% net negative, up from 4% net negative in Q1). Despite this, panelists foresee improvements in overall balance sheet health (34% net positive). 
 
Additionally, more executives reported access to credit as easy (19%) rather than restrictive (3%) for the first time in two years, and fewer cited interest rates as a major limiting factor than in the spring.

• Hotel (56%) and food and beverage facilities (56%) continue to be the main and growing focus of capital investment among operators, followed by live entertainment (28%) and casino floor slots (22%).  
• Meanwhile, gaming equipment suppliers now believe their pace of capital investment and game sales will decelerate (13% net negative).

These expectations are impacted by evolving macroeconomic challenges, says AGA, with the uncertainty of the economic environment vaulting to the top of executive concerns (56%, up from 34% in Q1), followed by state regulatory concerns (31%), and inflationary or interest rate concerns and geopolitical risk (both 34%). 

The Gaming Executive Panel consists of senior-level AGA member executives selected to represent the breadth of the casino gaming sector. Respondents were segmented across three primary categories: casinos operators and owners, gaming equipment suppliers and iGaming and/or sportsbook operators.

The Current Conditions Index  

The Current Conditions Index for Q3 2024 was 97.3, which is consistent with a real annualized contraction of 2.7 percent, the group said. The Current Conditions Index measures real economic activity in the industry, as measured by gaming revenue, employment, and employee wages and salaries. 

Each component is adjusted to control for seasonal patterns and monetary measures are adjusted for inflation. Data is estimated through the most recent quarter for each index component based on available monthly data as of the point of index calculation. Index values above 100 indicate activity expanded during the quarter, while index values below 100 indicate a contraction.

The Future Conditions Index  

Meanwhile, the Future Conditions Index, an indicator of changes in industry conditions, measured 98.9 in Q3. This indicates an environment in which real economic activity in the gaming sector, after controlling for underlying inflation, is expected to moderately decrease over the next six months (1.1% annualized rate).

The Future Conditions Index is based in part on Oxford Economics’ outlook for the economy and measures the expected direction of conditions in the U.S. casino gaming industry over the coming six months. 

It is based on the following three components: economic conditions (measured as Oxford Economics’ forecast for growth in personal disposable income, household net worth, and consumer spending on services), consumer intentions to visit a casino in the future, and the aggregate sentiment expressed in the Gaming Executive Panel.

Each of the economic drivers in the Future Conditions Index (disposable income growth, household net worth, and consumer spending) is expected to show positive growth in real terms, though growth for the remainder of the year and into 2025 is expected to be weaker.

About AGA's Gaming Industry Outlook

The AGA Gaming Industry Outlook is prepared biannually by Oxford Economics, providing a measure of recent industry growth and future expectations. The Q3 2024 survey was conducted between August 21 and September 6, 2024.

A total of 32 executives responded, including executives at the major international and domestic gaming companies, tribal gaming operators, single-unit casino operators, major gaming equipment suppliers, and major iGaming and/or sports betting operators.