The American Gaming Affiliation reported final week that even after one of many strongest quarters in historical past, the trade seems headed for deceleration over the following six months.
The AGA Gaming Trade Outlook, developed by Fitch Rankings with Oxford Economics, stated its survey of 26 executives from main worldwide and home gaming corporations, tribal gaming operators, single-unit on line casino operators, main gaming tools suppliers and prime iGaming and sports activities betting operators, performed between March 29 and April 10, indicated issues gained’t be as rosy by the top of the 12 months as they’re now.
That’s exhausting to fathom, contemplating the spectacular run the trade is on in Southern Nevada and the lineup of particular occasions on the horizon that might entice document numbers of holiday makers.
Nevertheless it’s additionally true that what goes up should come down.
Michael Lawton, senior financial analyst for the Nevada Gaming Management Board, who crunches gaming win numbers for the state each month, advised me final week how even when Nevada gaming win numbers are stellar within the months forward, they might not look notably good in comparison with document statistics from 2022.
He provided a chart to clarify what he meant: On Tuesday, the Management Board reported the state’s 441 main licensed casinos gained $1.31 billion from gamblers — the second-best March in historical past and the twenty fifth straight month that win exceeded $1 billion — nevertheless it was a 3.2 % decline from final 12 months.
Robust comparisons abound
He stated future year-over-year comparisons will likely be robust as 2022 noticed a number of document month-to-month performances — April, Might and June had been the state’s greatest efficiency in historical past. Solely in July will the sample break, as July 2022 was solely the second-best July ever. Then, August will likely be in contrast with the most effective August ever from 2022.
It’ll go on and on like that by way of November (second-highest win was in November 2022) then till March 2024, which will likely be in contrast with March 2023 (second greatest March) and 2022 (greatest March ever).
So the warning has been sounded. Gaming win most likely will decline percentage-wise this subsequent 12 months. In the meantime, trade leaders anticipate a mini-recession within the months forward.
The AGA report relies on two indices. The Present Situations Index measured 106 and mirrored robust progress in on line casino gaming-related financial exercise within the first quarter relative to the prior quarter (index values above 100 point out exercise is growing). The Future Situations Index decelerated to 97.1, indicating annualized trade financial exercise over the following six months is predicted to lower reasonably.
The Future Situations Index displays the present Oxford Economics forecast that the U.S. economic system will expertise a light recession within the second half of 2023, with shoppers coming below strain as nominal revenue progress softens, financial savings decline, inflation stays excessive and enterprise funding spending slows.
Whereas that appears like ominous information, Las Vegas all the time appears to be the wild card in relation to market resiliency.
It has been well-documented that Las Vegas finds a method to reshuffle by way of exhausting instances, and for the remainder of the 12 months, it’s well-positioned to face up to the economic system’s headwinds.
We can have new lodge room capability from Crimson Rock Resorts’ Durango property and Fontainebleau on the Strip. We will even have an progressive new leisure venue with the MSG Sphere at The Venetian.
Two of the town’s largest particular occasions are on the calendar with the System One Las Vegas Grand Prix in November and Tremendous Bowl LVIII in February 2024.
In the event you look additional down the street, there’s the high-speed rail from California on the horizon, new lodge and sports activities leisure capability within the type of Oak View Group’s leisure district and the prospect of Main League Baseball and the Nationwide Basketball Affiliation ultimately having a Las Vegas handle.
How is all of it going to shake out?
Brendan Bussmann, a gaming trade analyst with Las Vegas-based B World, stated there isn’t any doubt challenges await us.
“Las Vegas and Nevada proceed to climate unprecedented challenges from financial and geopolitical forces that proceed to problem the restoration that we have now skilled over the past couple of years,” Bussmann stated in an emailed assertion. “Whereas one month doesn’t imply a development, the second and third quarters had been about sustaining the trajectory earlier than heading into the robust alternatives with new occasions and new belongings to the market that may enable for a bump in visitation and income.”
He stated whereas indicators level to a recession, the pipeline for occasions going ahead is robust, particularly within the fourth quarter and within the first quarter of 2024. He added that enterprise journey continues to return and that ought to assist preserve the wheels from coming off the bus.
“We’ve been bumping up in opposition to this for a while with inflation and different financial challenges that we proceed to face as we close to full restoration,” he stated. “You would need to return 40-plus years to even get a comparability by way of financial and geopolitical occasions. With that stated, Las Vegas has and can proceed to adapt and develop into stronger because it encounters these challenges.”
He stated even with final week’s nationwide financial information exhibiting progress home product slowed to 1.1 %, Las Vegas is nicely positioned to organize for the worst.
“Whereas I don’t see the music stopping prefer it did through the Nice Recession, there are a variety of indicators that time towards a slowdown which seemingly could result in some bumpy roads forward however alternative to clean over these towards the top of the 12 months,” he stated.
Contact Richard N. Velotta at email@example.com or 702-477-3893. Observe @RickVelotta on Twitter.