The U.S. gaming industry accounts for a $328.6 billion impact on the country, according to a new study released this week by the American Gaming Association (AGA). That includes producing 1.8 million jobs and $104 billion in wages and salaries.
The study also notes that gaming generates $52.7 billion in tax revenue to federal, state, and local governments. AGA officials noted that these funds provide stable sources of revenue for the governments and communities on the receiving end.
“The U.S. gaming industry delivers long-term growth and impact to communities, generating significant tax revenue, creating strong jobs, supporting local small businesses, and funding critical community priorities,” AGA President and CEO Bill Miller said during remarks at the Global Gaming Expo.
Execs Offer Overall Positive Outlook
The AGA regularly takes a look at the industry’s impact on the economy. This year’s report says the gaming sector directly employs more than 700,000 people. The study puts that in context with the broader U.S. economy:
- Gaming provides more direct jobs than the air transportation, postal service, or motion picture and video industries.
- Direct casino employment accounts for one in 33 leisure and hospitality jobs.
The $53 billion in taxes coming from the industry plays a critical role in many communities. This revenue funding for local programs and services, education, infrastructure and economic development, and adding significant revenue to states’ general funds.
Many Americans have taken notice of the industry’s importance to the American economy. A record 71% of adults say the casino gaming industry has a positive impact on the U.S. economy.
Gaming Execs View Economic Climate Positively
In other news, the AGA also released details on the industry’s economic outlook based on discussions with leaders from several gaming companies. The results were part of the Gaming Industry Outlook survey and signaled some positivity regarding the industry at the moment.
According to the survey, a majority of gaming executives view the current business situation as good (42%) or satisfactory (55%). This was an overall increase from the first quarter when 62% reported good conditions and 35% described current climate as satisfactory.
When considering future business conditions, 58% believe the next three to six months to be about the same. Of the others asked about this topic, they were about evenly split between those anticipating better or worse conditions.
“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,” Miller said. “Gaming CEOs remain focused on delivering world class entertainment options against the backdrop of broader economic uncertainty.”
The survey took into account Oxford Economics’ forecast that the American economy will experience a mild recession beginning in the fourth quarter.
“However, even with an anticipated slow down in consumer spending, consumer survey results continue to indicate that more than one-third of adults expect to visit a casino during the next 12 months, consistent with prior quarter results,” the survey notes.
Rating the Corporate Side
The Gaming Industry Outlook asked executives to consider their company’s own financial situations, with mixed results. Those surveyed expect their overall balance sheet health to improve (26% net positive) over the next three to six months and pace of capital spending to increase (24% net positive).
However, these same executives also expect the pace of revenue growth to decrease (13% net negative) and describe a restrictive credit environment. Gaming supplier CEOs broadly expect the pace of unit sales to increase through the end of the year. Many operator CEOs reported that they plan to increase capital investments in food and beverage.
Overall, executives see gaming and other casino-related spending on the rise. Operators expect gaming units in operation to increase (11% net positive), while 67% expect greater-than-normal investments in food and beverage. Another 33% expect greater-than-normal capital spending on gaming machines.
Gaming equipment manufacturers foresee new units or expansion use to increase as well with a 44% net positive. The survey also asked about some of the major business challenges the industry faces. A total of 58% reported that inflation or interest rate concerns as factors limiting operations, followed by overall uncertainty of the economic environment at 55%.
That positivity may not be in congruence with recent stock market trends regarding the industry. A Yahoo Finance analysis reported this week that slumping gaming stocks may indicate an upcoming recession.
“Publicly listed casino owners and operators have seen their share prices slump since the start of August, with some entering bear-market territory after dropping more than 20%,” according to Yahoo. The report also noted: “Casino stocks’ losses have likely been driven by Wall Street taking a gloomier view on the economy.”
