Economic activity in the U.S. gaming industry is expected to continue to expand over the next six months
“As we settle into spring, I’m hopeful that we’ve turned the corner into a normalcy that the industry has not experienced in some time. I’ve seen it in my travels to ICE in London and the bustle at the Indian Gaming Tradeshow this week”, said Bill Miller, president of American Gaming Association – AGA, adding: “It’s also reflective in the optimism of our latest Gaming Industry Outlook, which you can find out more about below along with updates on other AGA priorities and progress.”
AGA has published that its Outlook Index presented in partnership with Fitch Ratings, stating that, “While gaming revenue, a key index component, has posted strong year-over-year increases, it has slowed sequentially from the busier fourth quarter of 2021.”
Economic activity in the U.S. gaming industry is expected to continue to expand over the next six months, sustaining the broad gains experienced since Q3 2020, according to Miller.
The CEO Outlook Index provides a snapshot of the current and future economic health of the industry based on executive sentiment, casino visitation plans, gaming revenue and other economic indicators. The Outlook includes two separate indices:
The Current Conditions Index measured 93.5, reflecting a slowing in casino gaming-related economic activity relative to strong growth in the prior quarter (index values above 100 indicate activity is increasing). The Future Conditions Index stood at 101.1, indicating annualized industry economic activity over the next six months is expected to expand modestly.
The positive growth outlook reflected in the Future Conditions Index is supported by favourable economic conditions and positive expectations expressed by the Gaming Executive Panel—reflecting the views of 24 AGA member CEO respondents. More than two-fifths of the panel participants (42%) expected business conditions to be better than normal over the next three-to-six months, as compared to only 13 percent who expected worse than normal conditions.
Economic activity in the industry, as measured by gaming revenue, employment and employee wages and salaries in the Current Conditions Index, slowed in Q1 2022 relative to Q4 2021, with an index reading of 93.5.
The smoothed version—effectively a three-quarter weighted average—of the Current Conditions Index, which is reported with two-quarter lag and is less impacted by short-term fluctuations, stood at 116.5 in Q1 2022. This indicates industry activity has been expanding in recent quarters at an annualized pace of approximately 16.5 percent.
Gaming Executive Panel highlights
Gaming executives expressed positive sentiment across a range of indicators, with all respondents indicating the current business situation is good (67%) or satisfactory (33%), and more than two-fifths indicating future conditions are expected to be better (42%) than the present. Compared to Q3 2021, more executives see the current situation as good, but optimism for continued improvement in business conditions over the next six months has subsided.
Panel participants overwhelmingly expect a quicker pace of wage and benefit growth over the coming months and compared to Q3 2021, the net responses indicating an increased pace of hiring have declined.
Supply chain issues remain the top concern for gaming executives as 75 percent of respondents cited it a factor limiting operations, followed by inflation and interest rate concerns (63%), as well as concerns about a shortage of labour (54%). Multiple executives underscored in written comments that securing talent and supply chain issues were requiring greater than normal levels of management attention. Notably, consumer health and safety concerns, as well as concerns over meetings and event demand dropped from the top five limiting factors, reflecting declining direct business impacts from the pandemic.
The Gaming Industry Outlook Index is prepared bi-annually on the behalf of the American Gaming Association by Oxford Economics and presented in partnership with Fitch Ratings. It provides a timely measure of recent industry growth and future expectations. For access to the full report please access: https://www.americangaming.org/resources/aga-gaming-ceo-outlook/
