If the United States and other major economies are headed for a recession in the near future, it doesn’t appear evident to major CEOs in the gaming industry.
One of the questions I asked of several CEOs of major gaming technology companies at the recent G2E was about the prospects of a recession.
While none said they see a buoyant economy ahead, neither do they see much evidence of a slackening of business confidence or a lessening of buying sentiment by the casino companies that comprise their customers.
Those questions were asked in Fantini Research’s annual CEO One-On-One video interviews in which top CEOs discuss their companies and the state of the industry in quick-take 10 to 12-minute video interviews. The interviews can be seen at https://www.fantiniresearch.com.
As CEO of both a payments company and a games company, Mike Rumbolz of Everi has a unique perspective on the gaming industry economy.
On the fintech side, Everi sees first-hand, in real time, the activity of casino patrons as they tap ATMs, write checks and request credit to finance their gambling. There is no evidence of a customer slow-down, Rumbolz said.
On the business-to-business side, there may be some suggestion of a reluctance to order now, but that might have more to do with ephemeral reasons, like the timing of G2E, and he expects to normalize by the first quarter, Rumbolz said.
Harald Neumann is CEO of Novomatic, an international company that is perhaps the most diversified of all gaming companies with operations ranging from its own gambling venues to being a supplier of slot machines to others to operating sports betting and online gaming. The Austrian-based company operates in 70 countries and owns a majority of Ainsworth, the Australian slot company with a major American presence.
At a recent conference of European business leaders, there was a consensus that a slowdown is coming in part thanks to things like the U.S.-China trade tensions, Neumann said. The sentiment in favor of a recession was the highest ever recorded by the group.
However, the evidence so far is to the contrary, with Novomatic enjoying a strong and growing second half of 2019. Thus, prospects of a slowdown are more sentiment than reality, Neumann said.
Yet another CEO with a broad and international perspective is Trevor Croker of Aristocrat.
Aristocrat is very sensitive to trends and monitors them closely, and what it sees is good confidence among its customers, Croker said. He added that Aristocrat is confident it will continue to grow, and is spending 11 percent to 12 percent of revenue on R&D to drive growth. He also observed that two-thirds of revenue is recurring. This will help Aristocrat ride out tough times when they come, Croker said.
In discussions with other CEOs outside the G2E One-On-One format, including casino operators, I also saw confidence that any downturn will not be as severe as the Great Recession of a decade ago, and people will still seek out entertainment.
In other words, from a casino perspective, gaming may again prove to be recession-resistant, if not recession-proof.
