An end to the growth
Las Vegas casinos could face a slowdown next year, with analysts predicting that the current gaming revenue boom will come to an end in 2023.
Fitch Ratings Service analyst Colin Mansfield has predicted that Las Vegas gaming revenue could fall by as much as 10% next year as part of a broader slowdown in the US economy.
Las Vegas casinos have bounced back quickly after the COVID-19 pandemic crushed the industry in 2020. Casinos in the city shut down for 78 days at the start of the pandemic, and Las Vegas Strip gaming revenue fell to just $3.7bn for the year, the lowest total since 1996.
a record $7.1bn in gaming revenue in 2021
Few anticipated just how quickly the gaming industry would recover. Las Vegas Strip casinos pulled in a record $7.1bn in gaming revenue in 2021. In the 12-month period ending this June, that number grew to $8.1bn.
More downside than upside
Mansfield based his revenue decline predictions on the expectation of a broader economic slowdown. However, the analyst says that even if the economy avoids a recession, it will be difficult for Las Vegas casinos to keep up their current pace.
“The market is far above pre-pandemic revenue levels,” Mansfield said, via The Nevada Independent. “But when you take into consideration the headwinds that are starting to play out, we got to a point where we said, ‘there’s more downside here than upside.’”
He expects any decline to be relatively mild
Mansfield isn’t calling for panic in the gaming industry, however. He expects any decline to be relatively mild, one that would still leave Las Vegas casinos making “plenty of money.” He also points out that Vegas should continue to benefit from convention business and a number of special events, including Super Bowl LVIII in February 2024.
“It’s not anything that is incredibly detrimental to the marketplace,” Mansfield said. “Profitability is insanely high right now.”
Wider US predictions
Indeed, Las Vegas casinos have posted impressive numbers over the past two calendar years. Vegas has once again surpassed Macau as the world’s leader in gambling revenue, as the Chinese enclave continues to struggle under China’s COVID-zero policies.
Despite this success, Mansfield isn’t the only person casting doubt on whether Vegas casinos can continue growing their gaming revenues. Last week, the American Gaming Association announced that US casinos brought in $14.8bn in gaming revenue during the second quarter, the highest Q2 total ever recorded.
AGA CEO Bill Miller cautioned that casinos might struggle to beat their year-over-year totals in the second half of 2022. Yet he said the recent growth has left the US gaming industry in great shape.
“Our 16-month growth streak since March 2021 shows that we are well-positioned for the long term and for any headwinds in the short term,” Miller said.