As 2022 dawns, experts, operators weigh in on the state of the gaming industry (Part 1) Rege Behe, CDC Gaming Reports · December 27, 2021 at 7:20 pm Publisher’s note: This piece is part one of a two-part series. Part two is available here. The last few years in the gaming industry can be summed up in Frank Sinatra songs. The record-setting revenue of 2019: “It Was a Very Good Year.” The downturn of 2020: “I’ll Never Smile Again.” And the rebound that took place in 2021 might be “I’ve Got the World on a String.” But what will 2022 hold? Will it be “The Best is Yet to Come” or “Do I Worry?” In this two-part series, CDC Gaming Reports talked to gaming industry experts, operators and analysts about the past year, and what to look for in 2022. This year’s gaming revenue totals have been astounding. What were your expectations entering 2021? Jonathan Jossel, CEO, Plaza Hotel & Casino, Las Vegas: We truly didn’t know what to expect. We figured that 2021 had to be better than 2020 given the devastating impact the shutdowns during the early days of the pandemic had on gaming and the entire economy. But we also knew COVID was unpredictable and weren’t sure how the public would react to returning to casinos and traveling during a pandemic. We certainly did not expect the great turn-around we saw in 2021 from 2020, which I believe was due to the availability of vaccines, economic stimulus money, and simply a pent-up demand to travel and return to a sense of normalcy. In addition, I think the revenue and growth of downtown Las Vegas specifically is due, in large part, to the significant reinvestment in downtown, including 800 new residential units, the opening of Circa, and the exodus of Greyhound with new redevelopment planned for the building. Colin Mansfield, Fitch Ratings Sector Head U.S. Gaming & Leisure: Domestic gaming performance has far outpaced Fitch’s 2021 expectations, especially on the Las Vegas Strip. Fitch had previously expected the declines across regional gaming markets relative to 2019 to continue through 2021, with a fuller recovery taking form in 2022, but the recovery has been quicker. The mid-single digit percent growth over pre-pandemic GGR can be attributed to strong customer spend and casino visitation improving across the country. Fitch’s initial 2021 view took into account continued property capacity limitations, variant concerns, and overall lower casino visitation in 2021. In Vegas, gaming revenues have come in well above Fitch’s 2021 outlook and are currently on pace for slight growth over 2019 levels. Fitch expected the market to continue to be pressured by the lack of convention business and lower amounts of domestic leisure travel to the area. Strong slot and non-baccarat table performance has helped to offset the lower amounts of visitation, especially in convention travel. Domestic travel has rebounded nicely, with airlift approaching 2019 levels. Andrew Klebanow, Co-Founder and Principal, C3 Gaming: Few people could have predicted the remarkable performance of the US gaming industry in 2021. Leading up to the new year, there certainly were indicators that there was a considerable amount of pent-up demand, and operators were reporting strong bottom line performance, driven by both strong demand and dramatically improved operating margins. The latter was due to a reduction in operating expenses as casino operators kept their buffets, poker rooms, and bingo halls closed. Nevertheless, the rebound in demand in 2021 was astounding. Moving forward, there are some clouds on the horizon as health authorities warn of another surge in the pandemic. That will slow the return of the convention segment, and some older demographic segments. Regardless, most Americans appear to have accepted the risks of living in a world with Covid and will seek out entertainment. Casinos, unlike theaters, are perceived as safer environments, at least in the eyes of the many that patronize them. As such, I expect continued strong performance in 2022. Was there any single development in gaming that surprised you this year? Something unexpected (besides revenue) that you didn’t anticipate? Omer Sattar, Co-CEO and Co-founder Sightline Payments: Whether it’s leagues, operators, investors, or payments providers, the collaborative efforts focused on responsible gaming are setting a new standard: The NFL donated millions of dollars to the National Council on Problem Gambling; DraftKings and FanDuel are providing educational content to NBA fans about gambling responsibly; SeventySix Capital became the first investment company to join the American Gaming Associations’ public service campaign. Sightline and Global Payments are funding research at UNLV to analyze how cashless technologies can influence stronger responsible gaming frameworks. These partnerships are a further indication of the gaming industry as a mainstream form of entertainment. Even Disney has expressed their intentions to build a more robust sports betting strategy. Maintaining a robust responsible gaming ecosystem in tandem with this growth requires effort from everyone in and around the industry. These unprecedented collaborations are moving us in the right direction. Steve Ruddock, Content Director, BettingUSA.com; Editor-in-Chief, Gaming Law Review: The biggest surprise of 2021 for me was the buy-in from professional sports leagues and teams. These entities were once the most prominent opponents of legal sports betting, and while I fully expected them to show up at the table with their hand out following the repeal of PASPA, I never would have suspected we’d be at a point where they are intimately involved in betting, let alone license holders in some states. Jon Hanlin, Aristocrat Senior Vice President of Commercial Strategy and Business Analytics: The gaming industry struggled for years on how to attract younger players to play slot machines, but interestingly in a post-reopening world when slot machines revenue peaked, we surprisingly saw more younger players on the games. Given the lack of entertainment options in the COVID lockdown world, casinos provided an entertainment outlet for younger people looking for one. Time will tell if the industry will see a long-term adoption of younger players on slot machines from this development, but it was certainly a contributing factor to the rapid recovery of our industry. Jonathan Jossel, CEO, Plaza Hotel & Casino, Las Vegas: The past year has shown me just how popular and resilient Las Vegas truly is. For example, I was surprised by how many people would still travel to Las Vegas and to casinos, despite the pandemic and the necessary changes to the experience (wearing masks, social distancing, etc.). I was also surprised by how much people truly love Las Vegas and missed it. We saw this not only in the return of visitors physically to Las Vegas, but also via a tremendous level of virtual interaction with our property through social media and our podcast. We saw more downloads of our Vegas-focused podcast “On the Corner of Main Street” than ever before and had more interactions with people from all around the world on our social media channels. Mike Kaplan, Chief Revenue Officer, PayNearMe: Entering the year we expected gaming would see increased adoption, but what surprised me most was the rate at which states have been able to pass regulation and launch – for example in Arizona and Louisiana. An interesting output of this rapid pace is the broader acceptance of igaming and sports betting throughout the US, and in particular by household names such as Disney and USA Today from a media perspective. Dave Kubajak, JCM SVP of Sales, Marketing & Operations: The labor shortages across the country had an unforeseen impact in all areas of our industry, including a shortage of cage and count room workers. Our new ICB ASAP product, which brings robotic automation to these areas, proved to be very timely. Several First Nation, Native American, and large corporate casino groups have looked beyond the increased security and enhanced efficiencies of the robotics automation and realized ICB ASAP is an effective solution to their labor challenges as well. Click here to read part two. Rege Behe is lead contributor to CDC Gaming Reports. He can be reached at email@example.com. Please follow @RegeBehe_exPTR on Twitter.