U.S. ratings agency warns of social gaming threat

The respected international rating agency Fitch has issued a report on social gaming, noting that casino-themed games on social networks pose a competitive threat to regional land casinos.

The agency additionally noted that online gambling is less of a threat as federal-level legislation is unlikely to be passed any time soon.

“We believe there is meaningful overlap between casino and social game players, and spending on social games, along with lotteries and other low-cost, convenient alternatives, eats into the customers’ casino and other recreational budgets,” Fitch commented in its report.

The regional land casino market in the US is largely saturated, Fitch observed, explaining that wages among lower-tier punters are stagnant; there has been a reprioritisation of disposable income; there is potentially a lower propensity to gamble among younger generations, and the baby boomer generation now nearing retirement is not as well-prepared in pension terms, suggesting they will have less disposable income.

“Baby boomers make up a critical core of the existing gambler base, and low interest rates are dampening seniors’ incomes in the near term,” the report points out.

Examining regional US markets for land gambling, Fitch suggests that only Kentucky and New Hampshire are likely to legalise more land casinos in the immediate future. Others – like Ohio – are likely to continue taking business from gamblers in neighbouring states rather than going after further expansion.

Changes in gambling preferences, and particularly the younger generation’s preference for table games, will likely result in a shift away from slot action, currently at 85 percent of total revenues, to just 75 percent, the ratings agency predicts…a trend that is likely to further drive consolidation among lottery and table game suppliers.

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