Industry analysts rarely indulge in “what if” history.

But Deutsche Bank’s Carlo Santarelli did precisely that today, musing in an investor note as to what the 2022 gaming sector would be like had COVID-19 not intervened two years ago. Basically, Santarelli predicted that 2022 will be leaner than it would have been, albeit at not-inconsiderable 2019 levels. He attributes this to temporarily elevated household-savings rates “and shifts in recreational spend dynamics, some of which are likely to prove transitory.”

Nationwide between January and November 2019, private-sector gambling win was $21.9 billion. Had that trajectory continued uninterrupted, the comparable period in 2020 would have brought in $22.3 billion. (This year, revenues have leapt to $22.9 billion, a more-than-normalized rate of escalation.)

“As such, one can conclude that, perhaps, regional GGR in the YTD is only ~2.6% higher than it would have been had the pandemic, and the aftermath of the pandemic, never occurred,” wrote Santarelli, who went on to cite upcoming “challenging” comparisons.

“It goes without saying,” Santarelli said, “that the expansion of dollars in circulation has driven strong consumer spending across many verticals, including regional gaming, which has been a significant absolute, and relative, beneficiary.”

However, caught between declining unemployment compensation and inflationary pressures on consumer goods, regional casinos are likely to feel the impact in a less-than-salutary way. This is especially true of states with lower household income, where casinos have outperformed those in more affluent states. Of particular note, savings — as both a percentage of household income and on a personal basis — have returned to 2019 altitudes, well below 2021’s.

Also, casinos disproportionately benefited from discretionary spending, outperforming such traditional entertainment alternatives as amusement parks, movies, spectator sports, and concerts. While casinos, lotteries, and even horse racing benefited, Santarelli implies that this is a trend that will not continue. He sees non-gaming entertainment becoming more competitive for the consumer dollar.

States with below-median income will also have a hard time replicating their 2021 success, especially if it was driven by government-stimulus outlays. As a case in point, Santarelli cites Illinois, which was already in a downswing thanks to the proliferation of slot routes. In the next two years, Illinois will have to absorb significant new casino competition within the state (not to mention the rapid growth of sports betting in the Land of Lincoln). While he thinks the brick-and-mortar casino market will grow revenue as a whole, especially without COVID-related restrictions, he added, “We believe growth will remain challenged until the new capacity comes online, at which point, we expect further pressure on existing operators in the state.”

Nor did Santarelli have much comfort for Pennsylvania, New Jersey, and Michigan, all dinged for “stark underperformance” as igaming gains traction in each state. He foresees no change here, even with new brick-and-mortar capacity added in Pennsylvania, “despite the seemingly easy comparisons for the B&M operations.”

Had terrestrial gaming in the three states performed according to trends, it would have generated $8 billion last year, not the recorded $7 billion, a five percent decline from 2019. Igaming, in the same period, has ramped up from $516 million to $3.6 billion, a significant shift in consumer preference.

Santarelli drew no overarching conclusions from these regional trends. However, his report does not lay out a roseate scenario for gaming-revenue growth (at least from traditional casinos) in the new year.