The US gaming industry saw its sharpest real economic contraction since the pandemic in the first quarter of 2025, according to the American Gaming Association’s (AGA) Gaming Industry Outlook, released this week. The report, which draws on data from 28 senior executives across tribal and commercial operators, suppliers, and iGaming firms, reveals that while short-term sentiment among gaming executives has darkened, there remains cautious optimism about the industry’s longer-term prospects.
The Gaming Conditions Index (GCI) — which tracks real gaming revenue, employment, wages, executive sentiment, and casino hotel RFP activity — fell by 0.9% in Q1 2025 compared to the same period last year. , “the Index decline was primarily driven by weaker real wages, marginally negative sentiment, and below-average revenue growth,” with elevated inflation continuing to suppress real gains.
“This is the largest contraction since the pandemic,” the AGA noted, as inflation-adjusted revenues and wages failed to keep pace with cost-of-living increases.
Despite these challenges, executives are not anticipating a recession. According to Oxford Economics’ baseline scenario included in the report, real disposable income is projected to expand 2.4% by Q1 2026, suggesting that household incomes will outpace inflation. However, consumer headwinds persist — household wealth is expected to decline by 7%, and real spending on services is forecast to slow to just 1.4%.
Executive sentiment: still negative, but slowly improving
While aggregate sentiment among industry leaders remained negative at -5.6%, it marked a slight improvement from Q3 2024. The AGA explained:
“Gaming executive sentiment was negative…as more respondents continued to give negative responses than positive across a range of questions pertaining to their business situation, revenue growth and customer activity.“
For the first time since the AGA began tracking this data in 2021, more executives reported a negative business situation (36%) than a positive one (18%). Still, future expectations have improved, with 14% expressing optimism, 82% staying neutral, and only 4% expecting further deterioration.
“This reflects expectations that revenue will grow more in the next six to 12 months than it did in the previous six to 12 months,” said the report, with 46% of respondents anticipating increased revenue in the coming months.
US capital investment rises amid hiring caution
Gaming companies are signalling a shift toward increased capital investment, even as caution remains around hiring and wage growth. According to the report:
“41% of executives expect the pace of capital investment to increase, compared to 19% who expect a decrease.“
The most common targets for investment remain hotel and food and beverage facilities, though enthusiasm has dipped since Q3 2024. Investment in hotel facilities, for example, dropped from 56% of executives in Q3 2024 to 40% in Q1 2025.
On the hiring front, expectations remain muted. “Employee wages and benefits were selected along with tax or regulatory policy changes and data protection as the top areas placing additional pressure on profit margin,” the AGA found.
Notably, concerns about insufficient customer demand dropped significantly, from 22% in Q3 2024 to just 11% in Q1 2025, suggesting a stabilising consumer base despite economic pressures.
Uncertainty takes centre stage
Executives cited economic uncertainty, inflation, and geopolitical risk as major factors impacting business.
Respondents also pointed to the impact of tariffs, state and federal regulatory shifts, and cybersecurity as areas requiring increased attention. As one executive put it:
“Maintaining margins in an uncertain economic environment” is a key strategic focus moving forward.
Supplier sentiment rebounds
On the supplier side, the tone is more upbeat. For the first time since Q3 2023, gaming equipment manufacturers expressed positive expectations across sales of both new and replacement gaming units, as well as capital investment.
“Despite negative present business sentiment and tight credit, the future outlook has improved,” the AGA concluded.
