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The Spring Outlook

While expecting revenue growth to slow, CEOs remain confident in future

The Spring Outlook

Recently released data from state regulators published by the American Gaming Association (AGA) shows that Q1 2024 was the highest-grossing month ever for the commercial gaming sector and the 13th quarter in a row with annual growth. But something that can’t go on forever, won’t.

While the industry is still expanding, revenue growth is decelerating as we settle into a new normal for gaming—at least in terms of revenue levels—in a post-Covid and post-PASPA world. And while brick-and-mortar gaming remains strong, industry growth has been primarily driven by online sports betting and iGaming so far this year.

As the industry’s premier trade association, the AGA regularly asks our member CEOs how they view today’s business environment, their outlook over the next few quarters, and what their biggest challenges are in navigating current operating dynamics. AGA’s Spring Gaming Outlook Index, featuring a survey of member CEOs, shows that most remain confident in their businesses and our industry.

Let’s examine a few of the report’s major takeaways.

Gaming executives report an improving outlook on future industry business conditions while remaining satisfied with the current business environment.

Nearly all gaming executives surveyed characterized the current business environment as good (44 percent) or satisfactory (50 percent), mirroring similar sentiment from Q3 2023. Meanwhile, executives are more optimistic about future conditions than they were in AGA’s Fall Outlook, with 32 percent of CEOs expecting business conditions to improve over the next six months, up from 20 percent in Q3 2023.

Business situation

Expectations for decelerating growth have influenced expectations for increases in capital investment and gaming units in operation, with smaller net positive sentiments than before.

While gaming executives have become more positive in their views that overall balance sheet health will improve over the next six months (42 percent net positive), they expect the pace of revenue growth (13 percent net negative) and new hiring (22 percent net negative) to slow, impacting how suppliers and operators are planning for the future.

In contrast to past Outlooks, gaming equipment suppliers are slightly pessimistic about the sale of gaming units for replacement use and new or expansion use (both 13 percent net negative). However, they remain optimistic about the pace of capital investment (38 percent net positive) in their businesses.

Growth Expectations

Half of operator CEOs expect capital investments in hotels over the next year to be higher than normal, and compared to last fall, more also expect higher than normal levels of capital investment in meetings and conventions and table games (28 percent). Meanwhile, 44 percent of CEOs expect increases in food and beverage investment, down from 67 percent in Q3 2023.

Factors Limiting

Evolving macroeconomic and geopolitical forces are shifting industry challenges.

Executives report that inflationary or interest rate concerns continue to be a major factor limiting operations (28 percent), but these have been overtaken by geopolitical risk (34 percent) and uncertainty of the economic environment (34 percent) as the biggest limiting factors for their businesses. These will be factors to watch throughout the remainder of the year and especially during the upcoming presidential election cycle.

Factors Limiting Operations

In all, the Spring Gaming Outlook shows that industry executives have a sober outlook for the pace of revenue growth over the next few quarters. Despite these attitudes and uncertainty around the cost of capital and the political landscape both at home and abroad, executives expect to continue to invest in their businesses and shore up balance sheets.

As consumers engage with gaming products at record levels and our members continue to invest in creating world-class entertainment experiences, it’s not surprising that executives are bullish on the business outlook for gaming through this summer.

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