Las Vegas Casinos Face Potential Headwinds as Economic Factors Shift
Posted on: September 7, 2023, 03:01h.
Last updated on: September 7, 2023, 03:01h.
The casino gaming industry has been resilient amidst economic challenges, but new data suggests a potential shift.
Despite recording a record $1.28 billion in gross gaming revenue (GGR) in July, signs are emerging that consumer cyclical spending could face challenges and the industry’s post-coronavirus boost may be fading.
A new report from the Stifel Think Tank highlights “decresling discretionary categories” and ongoing macroeconomic concerns.
The report indicates that while overall consumer spending has remained healthy, discretionary categories such as gaming, travel, and leisure are showing signs of weakness or stagnation.
Implications for Credit Card Spending
Credit card spending within the amusement, gaming, and leisure segment has remained relatively flat for over a year, according to the Stifel report.
Despite these challenges, operators like Caesars Entertainment, MGM Resorts International, and Wynn Resorts have seen modest increases in credit card transactions at their establishments.
The situation is compounded by the fact that credit card debt among US consumers has surpassed $1 trillion, and auto loan and credit card default rates are at a 10-year high.
While Las Vegas’ GGR figures have not yet reflected these potential declines, recent stock market performance suggests investor concern.
Other Concerns and Economic Indicators
The US jobs market also plays a crucial role in consumer discretionary spending. Recent indicators point to potential challenges, with most jobs created since early 2021 being roles restarted after COVID-19 shutdowns. Many of these new jobs are low-wage and part-time positions.
Additionally, cities like Las Vegas, Dallas, Miami, and Tampa Bay are closely tied to housing trends, and recent data shows negative or slowing trends in these areas. This could impact local casinos in the Las Vegas Valley.