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Gaming industry CFOs are looking toward worrying economic trends as they plan budgets for 2023.
After a post-pandemic resurgence, the industry has begun to flatten due to lower consumer demand. Inflation and rumors of recession have customers tightening their budgets to cope with the high prices of food and other necessities. In addition to inflation, casinos also have to contend with the constant shift in gas prices. High gas prices will continue to impact tourism, with customers less likely to spend on trips — especially to rural casinos.
How can casinos counteract these financial strains?
Player promotions are one way to get people through the doors, as proper incentives paired with good timing can help continue to attract customers, even ones with less discretionary income. Despite the negatives, tribes are hopeful about the outlook for 2023. While many are not predicting an all-out recession, there is an expectation for increased expenses and decreased revenue. In response, focus is shifting to banking relationships — in particular, those regarding loan covenants and lines of credit.
In the back office, tribes are busy preparing for GASB 87 and GASB 96. They have to be ready for the impact new audit expectations will have on their financial statements and lease reporting. Further complicating matters is the challenge casinos are having in finding staff to assist their financial teams. But, staffing issues are not endemic to finance.
Labor Concerns and Staffing Solutions
Labor remains a key issue throughout the industry due to recruitment struggles. There are also concerns over wage compression; however, board members are unlikely to address the issue without further incentive from wage studies. Upgrading their talent management software is one way an organization could improve recruitment and the onboarding process. But tribes are already exploring more creative solutions as well, including hiring international students, pursuing housing initiatives and providing transportation options.
Some may also look to expand remote work and opportunities for those without tribal affiliation. Outside of the industry, shortages for construction labor and materials continue to extend capex project timelines. Moving forward, organizations will have to rely on making larger deposits earlier to secure a better queue position.
Trend to Watch: Cashless Gaming
Many casino leaders have expressed a desire to learn from early adopters. They’ve seen how launches are becoming easier and more successful and are eager to explore options. In comparison, attitudes towards sports betting still seem to be cold. Across the country, more than half of states already offer sports betting, and more states are likely to follow. However, tribal gaming is awaiting the outcome of lawsuits in Florida and Washington before proceeding. There is also the potential for these lawsuits to trigger challenges in states like New Mexico and North Dakota, where in-person sports betting is occurring without official approval.
The main challenges for casinos in 2023 will be drawing in both customers and workers. Inflation and a potential recession have led to low consumer demand, but the right player promotions can help offset that. For the labor shortage, casinos will have to rethink the recruitment process with new technology and expanded opportunities. Creativity and flexibility may prove to be the way forward.
With over 30 years of experience in serving tribes, Wipfli has a detailed knowledge of the industry that can benefit your tribe and gaming enterprise.
Each year, we conduct a comprehensive survey across the Indian gaming industry to provide a detailed report on the financial state of tribal casinos, the Indian Gaming Cost of Doing Business Report (CODB).
Visit us at Booth #10 to learn more about the Cost of Doing Business Report and to learn more about Wipfli and the services we can provide.