American Gaming Association Predicts Slowdown in US Gaming Industry in 2025
The Future Conditions Index of the American Gaming Association (AGA) weighs the opinions of gaming CEOs and measures the expected direction of conditions in the U.S. casino gaming industry over six months. In early October, the AGA published its report predicting that a slowdown in the U.S. gaming industry is coming. The gaming industry expanded rapidly in 2023 and early 2024, but growth is showing signs of deceleration.
The Q3 2024 survey was conducted in August and September 2024. A total of 32 executives responded. This included executives of major iGaming and/or sports betting operators, major gaming companies, tribal gaming operators, and major gaming equipment suppliers.
Growth expectations soften
According to the Future Conditions Index, gaming CEO growth expectations are softer relative to six months ago. Executives that expect decelerating growth outweigh those expecting accelerating growth. A slow moderation could start to happen. The figure of CEOs who expect a decline over the next three to six months is 28% higher than those who are optimistic about the near future. In the Spring 2024 report, the difference between pessimists and optimists was only four percentage points. CEOs expect the growth pendulum to swing back from the strong run over the past few years. Despite this, US online gaming is still very well positioned and CEOs see overall balance sheet health improving. Many CEOs believe the gaming industry is currently in a good state.
A combination of factors
US GDP growth expanded 3% year-on-year in Q2 of 2024. However, many gaming executives cite uncertainty around the economic environment as a key factor limiting operations. Some factors driving CEO pessimism are state regulations, inflation, and geopolitical risks.
The race for the presidency is introducing uncertainty. It typically takes time for new policies to shape the economy. CEOs anticipate a reduction in the rate of hiring over the next few months and a decrease in revenue growth. Gaming equipment suppliers anticipate capital investments slowing down.
A moderate slowdown
The AGA study also references analytics from Oxford Economics. These predict that while the economy will slow down in the coming months, it is unlikely to slide into recession. It appears that fears of labor market weakness are overdone.
Consumer spending growth is expected to stay positive with household net worth gains and only a slight increase in unemployment. Interest rate cuts by the Federal Reserve could moderate some of the economic challenges in the gaming industry.
Will online gambling slow down?
Business leadership in the online casino industry is confident of closing out the year with good results. The Q2 2024 results for the online gambling market saw a 34% year-over-year growth, which was ahead of expectations. The increase in sports betting revenue was 39% for Q2, and iGaming saw growth of 27% year-over-year. According to some expert analysts, online gaming revenue for North America will increase throughout 2024. After this, it could slow down in 2025 before picking up again in 2026.