(October 9, 2023) — As it has been doing annually since 2005, Spectrum Gaming Group today released its annual list of the Top 10 U.S. Trends in Gaming – the most significant issues that regulators, operators and suppliers need to consider as they make plans for the coming year.
Spectrum, founded in 1993, has long focused on the future of gaming – at the market, jurisdictional and national levels. Spectrum this year is splitting its trends into U.S. and international lists, reflecting the tremendous growth – or attempted growth – in both sectors. The list of Top 10 International Trends will be released next month.
This U.S. list below (ordered alphabetically), with input from our experts on the ground throughout the country, represents both the opportunities and challenges that will be most impactful to revenue, profitability and public policy.
- Cautious Outlook: Macroeconomic concerns in the new year and the continued proliferation of gaming in all sectors warrant a cautious outlook for the gaming industry, though newly opened markets and verticals should perform well.
- Competitive Pressures vs. Regulation: Increasingly, states are both regulators and suppliers, resulting in conflicting pressure: What is best for sports betting or the expansion of digital gaming in a state may not be best for lotteries or traditional casinos. States will feel increased pressure to maximize revenues while balancing regulatory integrity
- Competitive Pressures vs. Synergies: Lotteries and casinos have long functioned as distinct industries, but as both expand and improve their digital offerings, they are evolving into separate verticals within the same gaming industry. This is evidenced by Aristocrat’s pending purchase of NeoGames.
- Cybersecurity: Despite following internal and regulatory protocols, Caesars Entertainment and MGM Resorts International were impacted by cyberattacks. Are smaller licensed entities in Nevada and other jurisdictions that do not have the resources of major firms more vulnerable to future attacks? Company reputations and consumer confidence are at stake.
- Digital Gaming: Three companies have come to dominate the online gaming sector, with only one being connected to a traditional casino company. Many firms have exited sports betting, and few are making money. The shakeout will continue with closures and consolidation, as both B2B and B2C companies fight to find a niche or challenge the leaders while seeking a path to profitability. All are waiting for the spread of igaming legalization to enhance business metrics. Meanwhile, the continued trend in Europe of restricting advertising for digital gaming is being echoed by lawmakers and regulators in the United States, which will lead to a shift from traditional marketing to more targeted and affiliate tactics. Those operators who are vertically integrated to acquire via such methods will enjoy much larger margins overall, while those that are not efficient in these methods will fuel the growth of a very large U.S. affiliate market, currently dominated by 3-5 groups.
- Horse Racing: The new Horseracing Integrity & Safety Authority (HISA) and Horseracing Integrity & Welfare Unit (the enforcement arm of HISA) continue to evolve and seek Federal Trade Commission approval of modifications. In opposition to federal oversight, some stakeholders are advocating for the Racehorse Health & Safety Act, which would replace the current federal legislation with state compacts that would coordinate regulatory decision-making and action of the state racing commissions. Meanwhile, with the continued long-term declines in horse racing foal crops, the industry will continue to find it difficult to balance running as many races as is feasible with providing attractive betting opportunities with full fields of horses. This trend – along with a growing concern for the safety of horse and human participants – will put added pressure on the continued operations of some racetracks.
- Igaming: States continue their slow walk to legalizing online casino, as both the states and retail casino operators remain wary of the potential impact that internet-based casino products could have on retail casino revenue and capital investment.
- Ilottery: Despite the ongoing worry among lottery directors that their customer bases are aging, only 12 states have introduced ilottery. Each of the 12 jurisdictions has experienced overall sales and increased play among a younger demographic, including in retail sales. Yet lotteries are mindful that retailers remain fearful that ilottery will decrease in-store sales.
- New York, New York: The most prized available gaming licenses will be awarded when the New York State Gaming Facility Location Board selects up to three full-scale casino licensees. A key decision will be whether the board essentially converts current racetrack gaming operations Empire City and Resorts World NYC into full casinos while also selecting a third winner, or awards the three licenses to other applicants. With the license fee set at a minimum of $500 million and capital investment in the billions, the stakes will be high for these operators to generate a meaningful ROI. Meanwhile, applicants will continue their intensive – and expensive – lobbying and PR campaigns.
- Unregulated Gaming: States and the casino industry continue to fight what they see as a scourge, the proliferation of “skill” games and other unregulated electronic gaming devices present in bars, restaurants, gas stations and other retail locations, as well as in more covert gaming rooms. Proponents of such games argue they are needed to support small business. Some states may move to ban them, others to effectively legalize them as part of a distributed-gaming reform bill.
This Top 10 Trends was prepared by Spectrum Gaming Group executives, Spectrum Associate subject-matter experts, and Spectrum Gaming Capital.