American Gaming Association Report Claims Sector Growth to Slow

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The American Gaming Association (AGA) is a trade group representing many of the biggest gambling operators in the US. This week, it teamed with credit rating agency Fitch to publish a report on the state of the US gambling industry going into Q2 2023.

The AGA quizzed top executives of US gambling operators and requested expert analysis of market conditions from agents at Fitch. All of it aims to “provide a snapshot of the current and future economic health of the industry.”

Potential Headwinds

The report was published April 25. It concluded that current conditions are showing strong growth and market confidence. However, it also predicted a slowdown in growth over the course of 2023.

Fitch analysts and industry insiders are less positive on the future of the US gambling sector than they were a year ago.

“Gaming’s record momentum has continued into 2023, and that is clearly reflected by the attitudes of gaming executives around the country,” said AGA CEO and President Bill Miller.

“While projections of slowing growth across the American economy are muting expectations for gaming in the medium term, our industry is well-positioned to weather any potential headwinds.”

Gaming executives surveyed for the report included heads of international corporations, tribal casino operators, software and/or equipment suppliers, sports betting operators, and games development companies.

Overall, respondents were bullish on the current market conditions, but less hopeful about the future. 97% of executives saw the current market situation as good (62%) or satisfactory (35%).

However, only 20% of executives surveyed expected the market to improve in the future. Some 64% expected conditions to remain similar.

Conditions Indexed

To frame the report’s conclusions in quantifiable data-driven terms, the authors used two indices.

The Current Conditions Index looks at economic activity in the industry. It measures employment, gaming revenue, employee wages, overall handles, and more.

This is then translated into one metric, using complex formulas that factor in changes over time in all variables, and accounts for things like inflation.

Fitch and the AGA calculated the Current Conditions Index for the gambling industry as 106.0.

This is a positive number. Anything above 100 indicates consistent growth over the time period of the data set. In this case, the last two financial quarters.

Future Conditions

The second index used in the report is called The Future Conditions Index. This uses various inputs, including computer model predictions and wider economic forecasts, as well as opinions and survey responses from the public, gamblers, and gambling executives.

This index was less positive than the Current Conditions. Fitch and the AGA calculated it as 92.9 – indicating a potential 7% drop in market activity over the next six months.

This future prediction takes into account expert predictions for the global and US economies over the next six months. That’s akin to the Oxford Economics Global Report, published annually in April.

Its outlook on the US and global economies suggests a global slowdown heading into the end of 2023.

Although they’re generally more cautious than this time last year, most US gambling bosses still expect capital investment and total gaming units in operation to grow over the next six months.

Suppliers like game and software developers are the most optimistic, with 88% expecting an increase in sales in the next six months to a year.

Among the most pressing concerns for gambling execs heading into 2023 are inflation and interest rates, followed by labor concerns. Some 69% of respondents cited inflation and/or interest rates as their biggest potential problem, while 33% said labor shortages were their biggest issue.

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