As 2009 comes quickly to a close, it is hard not to reflect on one of the most challenging years that the gaming industry has ever seen. We were hit by the economic one-two punch of decreased consumer spending and extremely tight credit markets. As the industry battled both of those factors, we saw gaming revenues drop across the country and Nevada was hit especially hard. However, despite what some would consider a bleak year, there are reasons to feel optimistic.
One of the reasons for optimism comes from Global Gaming Expo (G2E), which wrapped up last month with attendance figures that were higher than projected across the board. The number of show floor attendees actually rose 7.3 percent, and the strength of the show’s attendance figures were a pleasant surprise for everyone involved in the show.
Looking beyond the number of attendees, there was a general feeling of optimism around this year’s show, and in fact, several exhibitors said immediately after the show that their sales related to G2E were high, and in a few cases, at record levels.
Another reason for optimism is that revenue figures for the past few months suggest that the industry may be turning a corner.
Throughout 2009, gross gaming revenues for the U.S. commercial casino industry were consistently depressed; every month, they have lagged significantly behind 2008 figures. However, in the recent months, declines have been smaller than they were earlier in the year. Whether these individual data points can be classified as a legitimate trend remains to be seen.
There are reasons for optimism, and while many economists have declared that the recession that took hold in the middle of last year has ended, that statement is more of a statistical technicality than a practical reality. With unemployment still at near-historic highs and consumer spending significantly depressed, Main Street is still feeling the hard impacts of this recession. Gaming is, at its core, a consumer-driven industry, and as long as discretionary spending is significantly down, this industry and those like it will continue to suffer.
For this reason, full recovery for the gaming industry may take some time, and some resort markets, like Las Vegas, that require air travel and longer stays may take even longer than regional U.S. markets. While it is yet to be seen if the energy and excitement surrounding this month’s City Center opening will translate into higher visitor volume and gaming revenue, but there is a great deal of optimism that the opening will help all of the cities properties.
While the state of the economy and its effect on the gaming industry will likely be at the top of most in the gaming industry’s minds, there are issues here in Washington that we at the American Gaming Association will be keeping a close eye on as they stand to impact the gaming industry in the coming year. The expected culmination of the healthcare debate and the introduction energy reform legislation certainly will affect the gaming industry as they will all businesses. With the delay in implementation of the UIGEA regulations, Internet gambling also is likely to be discussed in the halls of Congress, although prospects for any progress on that issue during an election year are unlikely. The AGA also will continue to monitor tax issues and federal regulatory matters that will impact gaming companies’ bottom lines.
The coming year will be another difficult one for the gaming industry, however there are signs that the industry may have turned a corner, and that is something we can all look forward to.