Americans seem to not bother that much by the rising inflation rates as they remain big spenders at local casinos.
According to some figures released at the beginning of November, the commercial casino industry in the US had marked its best quarter ever, generating more than $15 billion from local players over the third quarter of 2022. The trend was confirmed by the trade body representing the country’s casino sector – the American Gaming Association (ASA) – which stated that local gambling halls are on the way to their best year ever in 2022.
The President and CEO of the American Gaming Association, Bill Miller, explained that while business challenges remain for the local casino industry, the consumer demand for their services remained high so that the sector’s record success was being fuelled. He further noted that the ongoing momentum of the industry provided it with confidence for the future, especially amid the ongoing broader economic volatility.
A total of 16 out of 33 states where gambling was operational a year ago, reported quarterly highs in the overall gambling revenue. These 15 states included five of the six biggest casino gambling markets – Nevada, Pennsylvania, New York, Michigan and Indiana.
Casino, Sports Betting and Online Gambling Register Strong Growth in Q3 2022 Despite Volatile Economic Conditions
One of the gambling historians at the University of Nevada Las Vegas, David Schwartz, explained that Americans seemed to be willing to shrug off inflation and constantly rising prices and spend their money at casinos no matter the tougher economic conditions.
He cited the Powerball jackpot that recently exceeded $2 billion and attracted wide interest from players from all over the country and shared that, in his opinion, such a massive participation rate demonstrated the continuing appeal of gambling. Mr. Schwartz further noted that such instances show that customers may have an even bigger appetite for gambling services in volatile and uncertain times.
According to figures confirmed by the American Gaming Association, the commercial casino sector, excluding tribal casinos in the US that are required to report their revenue separately from the rest of the industry, generated $15.17 billion as winnings in the third quarter of the year (July, August and September 2022). The registered amount surpassed the previous record that was set in the second quarter of the year (April, May and June 2022) and amounted to $14.81 billion.
The organization’s CEO also confirmed that the year-over-year growth rate of 8.8% in the casino sector in the third quarter of 2022 was a lot bigger than the 2.6% growth rate of the broader US economy in the same period.
Apart from that, brick-and-mortar slot machines and casino table games have remained the foundation of the industry’s overall revenue increase, marking a 1.8% growth to $12.27 billion from the same period in 2021. On the other hand, the revenue generated by sports betting services has continued to grow, with the relatively new form of gambling setting a quarterly revenue record worth $1.68 billion. The figure represented an almost 81% increase in comparison to the figure posted a year ago.
According to data provided by the AGA, there has been solid growth in existing markets as factors in the increase, with the win percentage of US sportsbooks being higher than usual. An all-time annual high of $4.78 billion was registered in sports betting revenue through September, a result that was higher than the 2021 full-year record of $4.34 billion.
Online gambling also performed pretty well, with the sector coming close to setting a new three-month record, reporting $1.21 billion in revenue.
Largest Casino Operators in the US Retain Growth over Q2 and Q3 of 2022
The performance of the casino and sports betting industry makes an even greater impression considering the turbulent inflation rates. Even more, casino companies have seen their stock prices plummet in June, at a time when inflation has soared at rates that have not been registered in about forty years and fears that the recession would hit hard not only investors but consumers, too.
In mid-June, the American Gaming Association reported that Caesars Entertainment‘s share price has declined by 50% in the then-quarter, followed by Bally’s stock price, which dropped 40% over the same period. MGM Resorts and Penn National Gaming both suffered a 35% share price decline over the second quarter of 2022.
Despite the hit, the trade body of the licensed and regulated casino industry reported that April 2022 was the best April ever. The industry reported a 12.4% year-over-year revenue increase to $4.99 billion. At the time, that was the month with the second-highest gross gaming revenue, after March 2022.
During the second quarter, casino executives said there had not been any slowdown in customer spending at the time, although the costs for housing, gas and food have been exponentially rising, except in the very lowest demographic of American consumers. In June, one of the gaming analysts working at Jefferies, David Katz, revealed there had been evidence of a major difference between the local markets’ expectation of a serious recession hit and the current operating strength of the sector.
The analyst said that some of the largest casino and gambling giants in the US – Wynn Resorts, Boyd Gaming, Red Rock Resorts, and Golden Entertainment – had confirmed that their business levels remained strong in the second and third quarter of the year, with the volume levels and demand pricing being above the ones from before the Covid-19 pandemic outbreak. The recovery of the international travel and conference business in Las Vegas has probably been among the main reasons for the strong and stable performance of the sector.
Smaller casino and gambling properties, however, tell a different story. According to owners of such businesses, they have started seeking the detrimental impact of inflation, considering the amount of cash local customers have been withdrawing from ATMs at casinos across the country. According to some reports, the process has accelerated over the last few months, with the trend being a downward spiral. Bars have been hit by the largest percentage decline, while casino slots and table games have faced a slowdown in operation and performance.
