Gaming CEOs Mostly Bullish, But See Some Challenges
Gaming chief executive officers (CEOs) are mostly constructive on the near-term outlook for the industry while holding more enthusiastic attitudes about long-term trends.
People take pictures in front of the “Welcome to Fabulous Las Vegas” sign. Gaming industry CEOs are bullish in their outlooks despite macroeconomic challenges. (Image: Getty)
A recent survey by the American Gaming Association (AGA) indicates 94% of gaming CEOs queried view the current business environment as “good” or “satisfactory” — a percentage that’s in-line with what was seen in the third quarter 2023 poll.
Gaming’s record-setting growth over the last three years has set a new standard for industry success,” said AGA President and CEO Bill Miller in a statement. “However, as we enter a period of market normalization, continued investment and innovation in offering world-class, responsible entertainment experiences will be required to maintain industry momentum.”
Looking further out, nearly a third of the executives polled by the trade group believe business conditions will improve over the next six months.
Data Not Necessarily Supportive of Gaming CEO Views
It could be argued that the optimism expressed by gaming CEOs in the AGA survey is misplaced, particularly at a time when consumer confidence has tumbled for three consecutive months.
Additionally, some analysts say there are negative headwinds emerging on the Las Vegas Strip — a view that comes on the back of mounting evidence of retrenchment at some regional casinos, particularly in the Midwest and the South.
Persistently elevated inflation, which has resulted in the highest US interest rates in two decades, appears to be taking a toll, albeit modest for now, on the casino gaming industry. It’s affecting consumer spending and leading to higher costs for operators at a time when many are planning significant capital expenditures to spruce up venues. Half of the CEOs questioned by AGA expect construction and renovation costs to be high over the next year.
“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,” according to AGA.
Gaming Industry Growing Faster than US Economy
Data indicate that the gaming industry is expanding at a more rapid rate than the broader US economy. The AGA’s first-quarter reading of the Current Conditions Index checked in at 102.8, confirming year-over-year growth of 2.8%.
That’s well ahead of the 1.6% increase in US GDP in the first three months. That gap could further widen in favor of the gaming sector because some experts believe the first-quarter GDP report will be revised lower. By some estimates, the US government has spent $2.50 for each $1 of economic growth, indicating the gaming industry is a more effective steward of capital.
Looking further out, the gaming Current Conditions Index could modestly increase over the next six months even when factoring in sticky inflation.
“This outlook reflects Oxford Economics’ forecast that the U.S. economy will slow during 2024 but avoid recession. Despite a projected economic slowdown, consumer survey results continue to indicate that more than one-third of adults expect to visit a casino during the next 12 months, consistent with prior quarter results,” noted the AGA.
The post Gaming CEOs Mostly Bullish, But See Some Challenges appeared first on Casino.org.
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