“Business is really great,” Jay Snowden, CEO of Penn Entertainment, which operates 43 properties, told G2E attendees: “There’s a narrative that it’s going to go bad.”
The fair usually has an unofficial theme. This year, executives in attendance lamented the disconnect between the strength of their business and the weakness of their company's stock. Many suggested that the market overreacted to a likely downturn.
Vicente Sadusky, CEO of slot machine maker International Game Technology (IGT), said his company's margins are close to all-time highs and sales have exceeded expectations. IGT shares are down about 37% this year.
“There is clearly a lot of uncertainty in the global market right now,” Sadusky told guests at an event in the fair's hall last week. “The best thing is that we are reaching our numbers. We have great strength in each of our businesses and so far we are not seeing any deterioration in consumption,” Sadusky said.
Casinos were among the first businesses to reopen after the pandemic shutdowns. Gambling customers came back with everything. Profits and stock prices soared. But this year, the tables have turned. An S&P casino stock index is down 33% — 10 percentage points higher than the market as a whole.
Markets are looking to the future, of course, and there are signs of a slowdown for the industry.
Casino revenue in Nevada, the world's biggest gambling destination, has been flat for the past two months. Activity has slowed in areas that cater to more spendthrift consumers, such as downtown Las Vegas and Laughlin, Nevada. In a possible sign that rising gas prices are hurting travel, car traffic to California's Las Vegas dropped 7.5% in August.
Nevada's gambling revenue, often considered crisis-resistant, declined during the 1990, 2001, and 2008 recessions.
Ray Pineault, CEO of Mohegan Gaming & Entertainment, said his casinos are still getting good results. "We anticipate a soft landing in this supposed recession," said the executive.
Source: Bloomberg
