AGA’s Fall 2022 Gaming Industry Outlook Shows Mixed Results

Economic Conditions Expected to Worsen

The American Gaming Association (AGA), in partnership with financial services company Fitch Ratings, presented their Fall 2022 Gaming Industry Outlook report. 

Given the current economic conditions, the report actually shows a moderate decrease in economic activity in the gaming industry over the next six months. However, this is offset by the cautious optimism of the industry’s biggest executives. 

The report shows that the Current Conditions Index is 99.5 and that gaming-related economic activity has grown roughly 4.9% over the last three quarters. This number is adjusted for inflation.

The Future Conditions Index, which measures the projected gaming-related economic activity for the next six months, is currently 95.3. So, the report projects that this gaming activity will decrease moderately over the next six months at an annualized rate of 4.7%. Coinciding with this projection is the Oxford Economic Outlook, which is currently anticipating a mild recession in the first half of 2023. There are several factors contributing to the bleak outlook including high inflation, rising interest rates, supply chain disruptions, softer labor market dynamics, and global headwinds. 

Industry Experts Weigh In

The Gaming Industry Outlook also conducts a Gaming Executive Panel as part of its report. A total of 26 executives responded including those at international and domestic gaming companies, tribal gaming operators, casino operators, and major iGaming and/or sports betting operators. Despite what the indices show, these executives have a more neutral perspective on the industry as a whole. 

“For gaming operators, future customer activity is a major question mark with expectations evenly split between expansion and contraction. Among gaming suppliers, half expect the sales of both new and replacement units to increase over the next two quarters, while none expected a decrease in sales,” per the press release from the AGA.  

The percentage of executives expecting the pace of hiring new employees to pick up decreased from 50% in Q1 to 28%. Furthermore, supply chain issues remain a serious concern as 65% of panel participants cited that supply chain delays are a limiting factor in their current operations. Other limiting factors noted were inflation and interest rate concerns which 62% confirmed, and economic environment concerns which 50% of panelists confirmed. 

92% of those surveyed expect these conditions to continue over the next three to six months while 8% think conditions will get worse. Another 38% indicated that they expect future economic conditions to be better.

Safe In The Short-Term?

“Our industry remains cautiously optimistic—and has weathered this volatile economy— because of resilient consumer demand,” said AGA President and CEO Bill Miller. “Looking ahead, future consumer confidence and spending remain an outstanding question for our continued growth.”

The good news is that almost all executives surveyed indicated that business is booming, at least for now. Of those surveyed, 68% described their business situation as “good” and 28% called it “satisfactory.” 

As we dive deeper into a busy fall sports season, the short-term success of the industry should be in decent shape. Between NFL, NHL, MLB, and NBA seasons as well as an increase in states participating in the gaming industry, these operators may be able to keep their heads above water, at least for now.