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US gaming executives are less optimistic about the current business landscape, citing weakened economic conditions as their top challenge, according to the American Gaming Association (AGA).

The AGA’s Gaming Industry Outlook report, produced biannually by Oxford Economics in partnership with Fitch Ratings, draws insights from a panel of 33 execs representing the US gaming sector.

Current business conditions

The study indicates that a significant portion of gaming execs view the current business situation favourably, with 42% describing it as “good” and 55% as “satisfactory”. 

However, this sentiment has moderated since the first quarter of 2023, when 62% reported good conditions and 35% found them satisfactory.

AGA president and CEO Bill Miller stated: “The significant expansion and record demand for legal, regulated gaming in the post-pandemic era have allowed our members to consistently invest in our product and people to deliver innovative entertainment options for American adults.”

However, Miller also acknowledged the broader economic uncertainty, emphasising that gaming CEOs remain committed to delivering world-class entertainment options.

Two indices

The report features two indices: The Current Conditions Index, which measures casino gaming-related economic activity, stood at 100.6, reflecting modest growth of 0.6% in Q3 2023 compared to the second quarter. High inflation during this period tempered the index’s growth.

Looking ahead, the Future Conditions Index is at 99.6, indicating an anticipated slight decrease in annualised industry economic activity over the next six months. 

This outlook aligns with Oxford Economics’ forecast of a mild recession in the US economy, starting in Q4 2023.

“The downturn will be driven by the impact of cumulative Fed rate hikes, tighter lending conditions and high inflation leading consumers and business to cut back on spending, hiring and investment,” the report stated.  

Top business challenges

When asked about their top business challenges, 58% of executives cited concerns related to inflation or interest rates, followed closely by the overall uncertainty of the economic environment (55%).

Elsewhere, boardroom views on future financial conditions were mixed. 

Approximately one-quarter of gaming execs describe access to credit as tight (26%), slightly outnumbering those reporting it as easy (19%).

Respondents, on balance, expect improvements in their overall balance sheet health (26% net positive) and an increase in capital spending (24% net positive). 

However, they anticipate a decrease in the pace of revenue growth (13% net negative) and describe access to credit as somewhat restrictive.

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