While the American Gaming Association reports a fourth straight year of record revenue, the gaming industry advocate also is pointing to a first quarter report that outlines a softer market and some concerns from industry executives that discretionary spending could decline.
This is a big-picture study on gaming overall in the United States as opposed to a specific look at pari-mutuel gaming. But the concerns certainly apply and, beyond that, the majority of racing jurisdictions today on some level are tied to added-gaming.
Earlier this year the AGA reported that United States commercial gaming revenue reached an annual record of $71.92 billion in 2024, a total that surpasses 2023's previous high of $66.5 billion by 7.5%, marking the industry's fourth straight record revenue year.
But those strong annual numbers gave way to some concerning trends in the first quarter, when the AGA reports that real economic activity in the gaming industry fell at the fastest rate since the pandemic. While first quarter gaming revenue expanded by nearly 6% compared with the same period of 2024, the concern is that January-March 2025 marked a third straight quarter of decelerated growth.
The AGA's Gaming Conditions Index as measured by gaming revenue, employment, employee wages and salaries, executive sentiment, and casino hotel request for proposal activity declined 0.9% in the first quarter of 2025. The index decline was driven by weaker real wages, marginally negative sentiment, and real below average revenue growth.
Economic uncertainty has gaming industry executives concerned. In its survey of gaming executives, the number of respondents to give negative answers on the industry's outlook increased 5.6%.
The AGA said, "Like others, AGA member companies face a landscape where consumers' discretionary activities will be tested by tariffs on imported goods and stock market setbacks."
Some of that uncertainty appeared to show itself in Churchill Downs Inc.'s recent decision to pause three projects at its flagship racetrack. In April the company cited current macroeconomic conditions and increasing uncertainty surrounding construction costs related to tariff and trade disputes behind its decision to pause multiyear projects to develop the Skye, Conservatory, and infield areas. The decision came just two months after CDI announced the $900 million infrastructure improvements.
"The decision to pause the Skye Terrace and infield projects was a difficult one for us to make because we do not want to disappoint our fans; however, we have a responsibility to be disciplined given the recent changes in the economic environment. We remain committed to growing our iconic flagship asset over the long term with projects that will provide new once-in-a-lifetime experiences for our guests and deliver best-in-class shareholder returns."
AGA also offered an economic outlook in which it anticipates household wealth declining 7% by the first quarter of 2026. It notes the economy is digesting multiple shocks including tariffs, supply chain uncertainty, and tighter financial market conditions. Those concerned industry executives believe any downward trends may first impact employees.
"Although executives are bullish on capital investments, expectations around the pace of hiring and wage growth remain muted," the AGA report said. "Employee wages and benefits were selected along with tax and regulatory policy changes and data protection as the top areas placing additional pressure on profit margin over the next 6-12 months."
While gaming executives are concerned about the months ahead, the report noted that their long-term outlook remains optimistic.
