HomePublicationsNewsletter ArchiveNewslettersVolume 21Issue 23Moody's Announces Outlook for U.S. Gaming Industry

On Tuesday, July 14, 2015, Moody’s Investors Service released an announcement that it has revised its outlook on the U.S. gaming industry from negative to stable. The outlook status was changed to negative in June of 2014 due, in part, to declining revenues. Moody’s reports that since this time the trend has reversed, with revenue expected to increase over the next 12 to 18 months.  A full copy of the report can be accessed by Moody’s research subscribers by clicking here.

“The stable outlook reflects our view that gaming revenue, which is a leading indicator of company profitability, will increase up to 2% each month on a year-over-year basis over the next one to two years,” says Senior Vice President, Keith Foley. “This will translate to a 3% to 4% increase in industry EBITDA during the same period.”

According to the announcement, in total, the 18 states Moody's tracks reported a 4.1% increase in year-over-year monthly gaming revenue in May 2015 and a 4.0% increase in April. In May, all but New Jersey and Connecticut saw improvement. And though new casinos in Maryland, Ohio and Louisiana contributed to the increases, revenue grew even excluding those states, suggesting that the amount of revenue cannibalized from existing casinos could be easing.

“[The] Moody’s report highlights that even in the face of intense competition, the gaming industry is finding ways to grow and serve as strong community partners,” stated American Gaming Association President and CEO, Geoff Freeman. “However, it’s incumbent upon state officials to review their gaming policies to ensure they promote innovation and reinvestment that will spur greater growth, create more jobs and provide additional tax revenues that support vital public services.”

"Our revenue and EBITDA forecast for the US gaming sector incorporates our view that US consumers, who remain under pressure from weak growth in disposable personal income, will continue to limit their spending to items that are more essential than gaming," Mr. Foley states.

 

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