International credit watcher Fitch Ratings is painting a rosy picture for the global gambling industry for 2018 amid a strong economic backdrop.
In its latest note, Fitch noted that healthy balance sheets and leverage profiles and continued economic growth across gaming’s key markets will help lift the global gambling industry’s revenue next year.
“2018 is set to be a good year for gaming operators and suppliers globally amid a strong economic backdrop and a relatively benign new supply environment,” Fitch senior director Alex Bumazhny said in a note. “While many gaming companies will ramp up returns to shareholders, we expect these returns to be balanced with preserving, and in some instances improving, balance sheet strengths.”
Fitch, however, reminded operators to be very watchful of possible global headwinds which may dampen momentum in certain jurisdictions.
These headwinds, according to Fitch, include the potential fixed-odds betting terminals crackdown in UK, the forthcoming details on the Macau license renewal process, and greater saturation in the northeast U.S., with four new major casinos coming online.
In the summer of 2018, Hard Rock Hotel & Casino Atlantic City will open its doors to the public while the opening of Revel is also expected in the near future as it is expected to be sold in the coming months. Competition will also become tougher with the opening next year of both MGM Springfield in Massachusetts and Resorts World Catskills in Thompson, New York.
“Northeast U.S. will get more saturated with four casino openings in 2018. More broadly, the regulatory and new supply risks are relatively benign in the mature gaming industry,” the analyst said.
Among the things that operators and investors should also look at next year is the enactment of Japan’s integrated resort implementation bill, the continued VIP recovery in Macau, and amplified merger and acquisition activity among U.S. and European operators.
“That said, tailwinds remain including considerable convention capacity being added, limited new hotel supply for at least three more years and, in Fitch’s opinion, Las Vegas’ favorability as a leisure/convention destination,” the report stated.
