Moody’s Investors Service is feeling much better about the financial future of gaming than it did around the same time last year.
The credit rating agency said today that it has upgraded the outlook for the U.S. gaming industry to stable from negative. Moody’s assigned the industry a negative outlook last June partly because of declining gaming revenue, but a new agency report now anticipates that revenue will rise for the next 12 to 18 months.
Moody’s Senior Vice President Keith Foley said in a statement that the agency thinks gaming revenue will increase by as much as 2 percent each month compared to the year before. He said that should result in increases of 3 percent to 4 percent in the industry’s earnings before interest, taxes, depreciation and amortization.
Most of the 18 states tracked by Moody’s saw gaming revenue grow in both April and May of this year, and the industry is now feeling positive effects of “several years of aggressive cost cutting,” the agency said. The 18 states saw a collective 4 percent increase in April and a 4.1 percent increase in May compared with one year earlier.
In fact, only two states — New Jersey and Connecticut — did not improve in May, Moody’s said. And revenue grew even without considering new casinos in Maryland, Ohio and Louisiana, which Moody’s interpreted as an indication that “the amount of revenue cannibalized from existing casinos could be easing.”
Still, Foley said in the statement that Moody’s believes American consumers will keep their spending limited to “items that are more essential than gaming” due to lackluster disposable income growth. That will continue to put pressure on the industry.
American Gaming Association President Geoff Freeman praised the report for showing that, despite “intense competition,” casinos can grow and be good members of the community.
“However, it’s incumbent upon state officials to review their gaming policies to ensure they promote innovation and reinvestment that will spur greater growth, create more jobs and provide additional tax revenues that support vital public services,” Freeman said in a statement.
He urged public officials to join the gaming association’s anti-illegal gambling initiative, which launched in April.