The American Gaming Association’s recent Gaming Industry Outlook reveals promising short-term trends for the U.S. gaming sector, despite executives expressing concerns regarding prediction markets, regulations, inflation, and geopolitical instability that are posing significant challenges.
According to the report compiled with Oxford Economics, real economic activity in the gaming industry saw a year-on-year increase of 1.5% in Q1 2026. The AGA’s Gaming Conditions Index evaluates gaming revenues, employment levels, wages, executive outlooks, and future expectations for events at casino hotels.
The U.S. economy is predicted to stay robust, bolstered by investments in AI and various other industries. Nevertheless, the report highlighted a continuing “K-shaped” economic dynamic, with lower-income families suffering from increased costs due to the ongoing conflict in the Middle East, while higher-income families are expected to maintain positive consumer spending, benefiting from tax reductions.
The report anticipates a 2.7% increase in services spending in Q1 2026 and a 2.4% rise in Q1 2027, household wealth growth projection of 15.8% in Q1 2026 and 3.7% in Q1 2027, alongside real disposable income growth of 0.7% in Q1 2026 and 2.7% in Q1 2027.
Executive confidence has notably improved, reaching 21.4% net positive, the highest since Q3 2022. Over 60% of AGA member executives foresee enhanced capital investment, revenue growth, and improved balance sheet stability in the next six to 12 months.
“The regulated legal gaming industry, both state and tribal, continues to display resilience and adaptability amidst a fluctuating economic landscape,” stated AGA CEO Bill Miller. “Operators are concentrating on innovation investments and providing world-class entertainment while navigating an evolving competitive and regulatory environment.”
The highest expectations revolved around revenue growth and overall balance sheet health, both at a net positive of 56%. Customer activity showed a 32% net positive, and 62% of executives anticipate capital investment growth in the upcoming six to 12 months. Half of the surveyed executives also expect artificial intelligence to lead to cost savings during this timeframe.
The survey indicated that executives’ evaluation of the current business situation has slightly improved to a net positive of 12% in Q1 2026, up from 11% net positive in Q3 2025. However, future expectations have weakened to 8% net positive, down from 26% net positive in Q3 2025.
Additionally, the report noted that promotional activities are expected to decline for the second consecutive quarter, with executives reporting a 31% net negative outlook on promotional endeavors.
AGA Continues Critique of Prediction Markets
The report characterized prediction markets as a major concern for regulated gaming operators. Approximately 81% of executives perceive prediction markets as a “very significant” threat to the regulated gaming industry.
“Illegal sports betting via sports event contracts is increasingly infringing upon the legal, state, and tribal-regulated operators,” Miller cautioned. “The regulated industry considers this a substantial threat and will persist in efforts to defend the integrity of our sector.”
Previously, the AGA has opposed sports event contracts, including aJanuary letter to Congress highlighting issues connected to the Commodity Futures Trading Commission’s self-certification procedures employed by prediction markets.
The association, along with the Indian Gaming Association, contends that these practices undermine state laws and tribal sovereignty while exploiting CFTC regulatory authority. Additionally, the AGA has reached out to sports leagues to discourage partnerships with prediction markets.
This issue has also created division within the industry. DraftKings, FanDuel, and bet365 distanced themselves from the AGA in part due to the association’s stance regarding prediction markets, with DraftKings and FanDuel exiting after establishing their own CFTC-supported prediction market platforms.
Other Operating Pressures Identified
Executives have also reported various operational pressures. Federal regulatory apprehensions were cited by 46% of executives as hindering operations, an increase from 29% in Q3 2025. Competition from emerging forms of gaming was mentioned by 42%, an increase from 25% last autumn. Employee wages continued to be highlighted as the primary expense pressure, as indicated by 54% of respondents, while hiring outlooks have remained negative for the seventh consecutive survey.
Economic and political uncertainties persist in exerting pressure on the industry. The report identifies inflation, tariffs, geopolitical conflicts, supply chain issues, disturbances in the Middle East, and escalating fuel prices as detrimental factors influencing profit margins and consumer expenditure.
Casino hotel event activity remains above pre-pandemic levels, with proposals for business meetings and social events increasing by 2% compared to the preceding year. This indicates a sustained demand for event bookings at casino hotels.
Among suppliers of gaming equipment, sentiment has improved. Supplier expectations for capital investment reached a net positive of 55%, the highest since the initiation of the survey, with 80% of suppliers anticipating increased capital investment, 60% expecting higher replacement sales, and 20% forecasting growth in sales for new or expanded usage.
The AGA emphasized that this outlook is based on executive sentiment, gaming activity, and economic metrics. The Q1 2026 survey encompassed responses from 26 gaming executives.