Although Nevada has been enjoying an unprecedented increase in gross gaming revenue (GGR) this year, an undercurrent of concern ripples through the boardrooms of the gaming industry. Chief Executive Officers are eyeing the approaching clouds of a possible recession threatening the US economy, a storm which could break as soon as the current quarter.
Imminent concerns emerge from the American Gaming Association’s (AGA) most recent Gaming Industry Outlook. While the Current Conditions Index registered 100.6 in the third quarter indicating a marginal surge from the preceding three months, the Future Conditions Index has dimmed slightly to 99.6 and is forecasted to suffer a minor downturn over the next half a year.
Although these CEO’s growth expectations remain optimistic, they have tempered their hopes with the baseline economic outlook of a mild recession commencing in the fourth quarter. The gaming executive’s optimism about the current states fades when looking forward, considering the views about the imminent business climate are more cautious.
While the Las Vegas strip, the pulsating heart of the US casino industry, is showing resilience against recession signals, some gaming captains have observed the surge in inflation influencing some customers to tighten their belts on spontaneous spending.
In the past, a recession has been characterized as an economy that has undergone negative GDP growth in two consecutive quarters, a circumstance the US economy fell into last year. After a period of lavish government spending that saw inflation figures touch a 40-year high and prompted a 20-year record in interest rates, our economy may wobble into vulnerability. The gambling industry might find itself squarely in the crosshairs of this expected downturn.
The shadows of this decline will likely be shaped by consecutive Fed rate hikes, stringent lending environments, and rampant inflation compelling consumers and businesses to curtail spending, hiring and investment. Yet, despite these anticipated ill-effects on consumer spending, survey results continue to suggest that even in these uncertain times, the lure of the casino may still see over a third of adults visiting one within the next year.
The landscape of job gains in the US throws into stark relief our susceptibilities to recession. More than 70% of job gains since January 2021 are not new positions but rather a repopulation of roles lost during the coronavirus pandemic. In light of this, along with real wages dropping by 5%, spells potential vulnerability for those in the gaming industry.
The specter of recession looming over the gaming industry has significant implications as even a muted downturn would lead to a dip in discretionary spending. This decline would challenge gaming companies, particularly those harboring substantial debts. Macroeconomic climates are already precipitating contention in the industry.
Weaving together the threads of this narrative draws us to a perplexing panorama of the gaming industry’s evolution. As audiences, investors and executives pivot and adjust to these changing realities, one might wonder what role will online casinos play in this fluctuating landscape? Could they offer a more resilient alternative to the traditional brick-and-mortar establishments? Take a closer look at our compilation of top online casinos for this month to explore this exciting avenue further.