A research firm estimates the global market for casino gaming equipment will expand by a compound annual growth rate of “more than 15 percent” in the period 2017 to 2021.
Technavio – a market research brand of Infiniti Research Ltd, with offices in Canada, the United States, the United Kingdom, India and China – thinks moves to legalise and regulate casino business, or ease regulation in existing markets, will be factors in the improvement.
It anticipates the casino gaming equipment market will be worth US$54.16 billion in 2017, rising to US$96.38 billion by 2021.
“The easing of government regulations related to casino markets is one of the major factors contributing to the growing demand for casino gaming equipment,” said Ujjwal Doshi, described in a Technavio press release as a lead analyst for the firm on media and entertainment services research.
“Many countries, such as Japan, are aiming at legalising casino gaming because of the growing popularity of gambling and the high revenue contribution from casinos,” added the analyst in the release.
The study is said to cover the current market for casino gaming equipment and growth prospects globally for 2017 to 2021.
The report lists casino tables, slot machines, gaming chips and video poker machines as the four major product segments. Technavio said casino tables and slot machines accounted for over 50 percent of the market in 2016.
Technavio noted while there was an increase in demand for equipment, the barriers to entering the casino supply market were significant.
“The setting up of manufacture units in various countries is quite expensive for manufacturers as only a few casinos opt for high-quality casino gaming equipment,” the research house said in its press release.
The firm added that online ordering of casino equipment was a growth area of the market. “The online sales of machines such as slot machines and video poker machines increased by nearly 14 percent in 2015 as compared to 2014,” it said.
Investment analysts covering the casino industry have additionally noted the growing importance of online digital casino products to sales and marketing efforts by the traditional casino equipment firms as well as to start-up businesses.
In its quarterly earnings for the three months to September 30, filed in early November, gaming and lottery equipment and services firm Scientific Games Corp reported revenue from its interactive division rose 66.4 percent year-on-year, to US$85.2 million. The interactive segment still only represented 11.8 percent of group revenue for the period.
Technavio suggests however that even in the bricks and mortar casino industry – that remains the main source of traditional suppliers’ business – equipment sales will be increasingly influenced by the tastes of those recently reaching adulthood – people commonly referred to as “Millennials”.
“The increasing digitalisation in most entertainment segments such as gaming and movies has been a major factor attracting the younger age group (18-35),” said the research firm in the release.
It added: “They are more attracted to innovative games, due to which casino players [venues] are integrating games like Call of Duty and Angry Birds into casinos; which are gradually replacing slot machines.”
Many of the traditional equipment manufacturers – that have in the past focused on business in North America and Europe – will need to expand their footprint in markets with faster-growing consumer demand for casino gaming – such as those in Asia Pacific – partly in order to service the debts they acquired in recent takeovers of rival brands, investment analysts have noted.
Between 2013 and 2014, Scientific Games was involved in several leveraged acquisitions of rival gaming equipment suppliers totalling billions of U.S. dollars in value. In 2013 it bought Chicago-based slot machine maker WMS Industries Inc for US$1.5 billion. In November 2014, Scientific Games completed a US$5.1-billion deal to acquire Bally Technologies Inc. A year earlier, Bally Technologies had itself taken over Nevada-based SHFL entertainment Inc in a US$1.3-billion transaction.
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Andrew Lo Kai Bong
Executive director of project investor Suncity Group