Gaming CEOs are optimistic that the record revenue generated by the industry in 2021 will continue, according to the American Gaming Association’s Gaming Industry Outlook.
Presented in partnership with Fitch Rating, the survey indicated that 67% of respondents rate the current business situation as `good’, with none rating the situation `poor’. Six months ago, 54% of surveyed CEO rated the situation `good’.
Also, four in ten gaming CEOs expect improvement over the next two quarters; only 13% expect business conditions to decline.
“Gaming executives are signaling confidence in our continued recovery that is in line with record-setting consumer demand for gaming,” said AGA President and CEO Bill Miller in a statement. “I’m optimistic that 2022 will see the return of a true sense of normalcy for gaming.”
While gaming CEOs are generally positive about the industry’s economic outlook there are some concerns. Supply chain issues were mentioned as a reason to be worried by 75% of CEOs. Also, 67% of CEOs mentioned inflationary and interest rate concerns, and labor shortages were mentioned by 54%.
“Like businesses across the country, our industry is grappling with supply chain, labor and inflation challenges that, if left uncontrolled, could dampen our continued growth and economic outlook,” Miller said.
But COVID-19 and demand for meetings and events are no longer among the top five concerns for gaming CEOs.
The Gaming Industry Outlook includes two separate indices: the Current Conditions Index and the Future Conditions Index.
Despite all-time high commercial gaming revenue through the first two months of 2022, the Current Conditions Index of 93.5 reflects a slowing in casino gaming-related economic activity compared to record industry growth in the fourth quarter of 2021. The index shows that the gaming industry has grown at an annualized pace of approximately 16.5% over the last three quarters.
The Future Conditions Index stands at 101.1, reflecting anticipated expansion of casino gaming-related economic activity over the next six months at a modest 1.1% annualized rate, a return to normal industry growth after a year of tremendous industry expansion from pandemic-era lows in 2020.
The majority of gaming CEOs surveyed, 79%, expect the pace of wage and benefit growth to increase over the next three-to-six months, while 50% expect the pace of hiring to increase. And 53% of gaming operators plan to invest more capital than normal in hotel facilities in 2022, while about one-third plan to invest more than normal in slots on the casino floor (27%) and brick-and-mortar sportsbooks (33%).
Suppliers report increased optimism for sales growth over the next six months, as 100% of respondents expect sales of gaming units for new or expansion use to rise; 86% expect sales of gaming units for replacement use to rise; and 71% expect the pace of their capital investment to rise.
The AGA Gaming Industry Outlook is a partnership with Fitch Ratings and prepared biannually by Oxford Economics. It provides a measure of recent industry growth and future expectations. The first quarter 2022 survey was conducted between March 21 – April 1, 2022, with 24 executives responding, including executives at the major international and domestic gaming companies; tribal gaming operators; single-unit casino operators; major gaming equipment suppliers; and major iGaming or sports betting operators.
