U.S. gaming industry growth to slow down, says AGA

Garance Limouzy October 1, 2024

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U.S. gaming industry growth to slow down, says AGA

The U.S. gaming industry is experiencing a slowdown in growth following a period of rapid expansion, according to the latest American Gaming Association (AGA) Gaming Industry Outlook report, published today, 1 October 2024. The report provides insights into the current and future economic health of the gaming sector, drawing on casino visitation trends, executive sentiment, and key economic indicators. “The near-term outlook is more tempered than in prior years”, reads the report.

Slowing growth

For the third quarter of 2024, the report shows a contraction in real economic activity, with the Current Conditions Index, a tool to measure real economic activity in the industry, as measured by gaming revenue, employment, and employee wages and salaries, standing at 97.3. This decline is consistent with a 2.7 percent annualised contraction. “The gaming industry expanded briskly in late 2023 and early 2024,” the report explains, but recent quarters have shown signs of deceleration.

The Future Conditions Index, which projects the industry’s outlook, dropped to 98.9 in Q3. This decline points to an expected 1.1 percent contraction over the next six months, with the study reporting that growth expectations have softened considerably among gaming executives. “More executives now expect revenue growth to slow rather than accelerate,” the report notes, citing that slightly more gaming executives anticipate the pace of revenue growth to decelerate rather than accelerate over the next three to six months.

***Current Conditions and Future Conditions Index. Source: AGA.***

A combination of factors

The slowing growth is attributed to several factors, including inflation, rising interest rates, and increased caution in hiring and capital investments. A majority of gaming executives now cite uncertainty in the economic environment as a limitation on operations. A rising number of executives also expect a decrease in customer activity over the next few months.

Despite this, the share of consumers that expect to visit a casino over the next 12 months remains solid, having improved relative to a year ago, and household wealth is expected to continue growing, according to the report. The AGA study also references analysis from Oxford Economics, which predicts that while the U.S. economy will slow in the coming months, it is unlikely to slip into recession. The Federal Reserve’s interest rate cuts could also help temper some economic challenges for the gaming industry.

Investment priorities

In addition to revenue, gaming executives are also cautious about hiring. More executives anticipate a reduction in hiring over the next six months. Meanwhile, investment priorities have shifted.

Gaming equipment suppliers now anticipate a slowdown in capital investments. They are also more cautious regarding the sale of gaming units, both for replacement purposes and for new or expanding projects.

On the other hand, investments in hotels and food and beverage facilities remain a top priority for 56 percent of respondents, and this focus has been growing. Additionally, interest in live entertainment investments has risen to 28 percent, up from 16 percent in the first quarter of 2024.