This year’s edition of the Global Gaming Expo, the world’s biggest gaming-related conference and exhibition, took place between September 29 and October 1. Industry representatives from around the globe attended it to acquaint themselves with the latest products, share experience with peers, and discuss the future of this multi-billion industry.
One particular G2E panel drew quite a lot of attention as the future growth of the US regional casino markets was discussed at it. The panel was moderated by Fitch Ratings Service gaming analyst Alex Bumazhny, and gambling operators Rush Street Gaming and Penn National Gaming, together with major slot machine manufacturer Scientific Games Corp. took part in it.
During the panel, Mr. Bumazhny expressed concerns that the growth of regional gambling markets may be either flat or even negative in future. According to the expert, factors that have always been pointed as important for the growth of casino operations – factors such as the improvements in the country’s economy – actually could be considered instrumental to the prevention of double-digit growth trends in the years to come. Such double-digit growth was often registered in the 1990s and the first decade of the new century.
Mr. Bumazhny cited three main reasons for the possible regional casino markets slowdown. In the first place, he pointed out that regions across the nation are already saturated with casinos, particularly the northeast part. However, the gambling expansion continues and more and more venues are to open doors by the end of the decade.
The gaming analyst pointed to Atlantic City, which saw four casinos closing doors last year. He noted that this was to a great extent due to the fact that the popular gambling hub was losing customers to neighboring Pennsylvania and Delaware.
Massachusetts, which licensed three full-scale casinos and one slot parlor last year, is now taking customers from Rhode Island and Connecticut with the recently opened Plainridge Park Casino in Plainville. A lot more examples of states drawing customer base from its neighbors could be given.
The constantly growing social gaming market is another factor that may have adverse effect on the growth of the regional casino industries in future. Mr. Bumazhny pointed to the fact that social game players often pay less than a dollar to buy a wide number of virtual tokens in order to play free-to-play social casino games.
According to Eilers Research, more than $800 million were spent by social game players in the first half of the year. A study conducted by Australia’s Southern Cross University concluded that 58% of those players are also keen slots players. In other words, the social casino market may hurt revenue from slot machines at some point in future.
Another important factor that was discussed during the G2E panel was the fact that millennials, or those aged 21-35, are not particularly interested in gambling at casinos. According to the University of Northern Iowa, that particular customer segment tends to spend less on gambling and prefers table games to slot machines.
Despite the challenges that regional casino markets may face in future, Mr. Bumazhny concluded the panel with a generally stable outlook. According to him, the major gambling operators are healthy, cannibalization from the newly launched casinos is expected to be more benign, and the “overall consumer health” is likely to further improve.
