A Wall Street analyst says the gaming industry is outpacing every other form of entertainment spending, including amusement parks, movie theaters, concerts and live spectator sports as the economy bounces back.
Carlo Santarelli, New York-based analyst for Deutsche Bank, told investors in a report issued Tuesday that the biggest question facing the industry is how long the pace can be sustained.
“In 2019, $142 billion was spent through gambling related channels,” Santarelli wrote. “Of this, $109 billion, or about 77 percent, was spent on casino gaming. After gaming comps turned positive, relative to 2019, in March of 2021, growth in the segment has accelerated, with each of the subsequent months experiencing double-digit increases, relative to the corresponding months in 2019.”
Santarelli said he’ll be watching the trends carefully to see if gaming, which includes casinos, lotteries and horse racing, can maintain its growth pace.
“Despite the growth in spend in both gaming and dining, aggregate recreational spend, including gaming and dining, only turned positive in May, when compared to 2019, while recreational spend excluding gaming and dining has remained down over 20 percent in each month in 2021, when compared to 2019,” Santarelli said in his analysis.
“As such, while broader recreational spend is growing and is likely to continue to grow, the mix shift to gaming has certainly served as a tail wind for increased customer spend in casinos, specifically,” he said.
Santarelli’s analysis included comparisons of third-quarter gaming revenue in 2020 compared with the third quarter of 2019, the fourth quarter of 2020 compared with the fourth quarter of 2019, and a comparison of the first and second quarters of 2021 against the first and second quarters of 2019.
“Over the second quarter of 2021 and in July of 2021, we estimate that the share of recreational spend that gaming has taken from other recreational sectors, amounts to about $18 billion of incremental revenue, on an annual basis, across the gaming channels, of which, casinos make up about 77 percent,” Santarelli said.
“Accordingly, while year-over-year comparisons will stiffen as we move into 2022, we think, in the coming months, one dynamic that will be interesting to watch will be the relative performance of gaming, versus other recreational spend channels, most notably those that have been and continue to be materially off 2019 levels.”
Gaming industry growth has been well documented in the Silver State with the Nevada Gaming Control Board reporting that the state’s casinos collected $1.36 billion from players in July, an all-time monthly record and 80 percent more than was collected in July 2020.
That month was the fifth consecutive month gaming win had surpassed $1 billion.
“July was a perfect storm for gaming win in terms of special events, the month having five weekends, Resorts World’s first full month of operations and a very unusual baccarat month with high hold and increased play from international guests,” Michael Lawton, senior research analyst for the administration division of the Control Board, said in August when the gaming win was reported.
The Gaming Control Board is expected to report August gaming win next week.
“In July, spend on gaming was up 15.6 percent (nationwide) versus July of 2019, while casino spend was up 17.8 percent versus July of 2019,” Santarelli said in his report. “In total, gaming spend accounted for 11.3 percent of total recreational spend, up 130 basis points from the 10 percent of spend the segment accounted for in July of 2019.”