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U.S. regional gaming weakness to persist: Fitch

Jul 22, 2014 Newsdesk Latest News, Top of the deck, World  


U.S. regional gaming weakness to persist: Fitch

The long-term same-store growth in U.S. regional gaming revenues will remain challenging, Fitch Ratings Inc said in a report on Monday. The rating agency attributed the pessimism to “saturation across regional markets, stagnant wages among the lower tier players, and proliferation of online/social gaming,” among other factors.

“The U.S. regional gaming supply has largely met demand, with most states now having some form of casino-based gambling,” Fitch said.

Earlier this month, Moody’s Investors Service Inc lowered its outlook on the U.S. gaming industry to ‘negative’ from ‘stable’. It cited “declines in comparable monthly gaming revenue for most jurisdictions … over the last year-and-a-half”.

U.S.-based Telsey Advisory Group however said regional gaming showed signs of improvement in May. “Gross gaming revenue across 22 reporting states declined 0.4 percent, stemming a string of steeper declines in the earlier part of the year,” the research house said in a report.

In Monday’s report, Fitch said casino-themed social games “are a net negative for the U.S. regional casino operators”.

“We believe there is meaningful overlap between casino and social game players, and spending on social games, along with lotteries and other low-cost, convenient alternatives, eats into the customers’ casino and other recreational budgets,” the rating agency said.

“We are less concerned about online gaming legislation, which we do not expect to pass on the federal level in the near- to medium term,” Fitch added.

The rating agency estimates gaming revenues derived from slots in regional markets will decline to roughly 75 percent of total revenue by 2030 from the current mix of about 85 percent.

“The shift largely reflects the younger generations’ preference for table games. With only a modest new supply coming online, suppliers’ slot sales and operations will likely continue to struggle,” Fitch said.

“We see consolidation with lottery and table game suppliers and participation in social gaming as smart hedges against the difficult backdrop for the suppliers’ core products,” it added.

GTech SpA, an Italian commercial lottery operator and provider of gaming technology, last week confirmed it is buying U.S.-based gaming supplier International Game Technology in a US$6.4 billion deal. Standard & Poor’s Rating Services has lowered GTech’s corporate credit rating following the announcement of the deal.


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