Deutsche Bank Predicts Casino Sustainability as Pent-up Demand Dries Up

The Deutsche Bank Gaming, Lodging, Leisure & Restaurant Conference in Miami has attracted a healthy bit of interest, CDC Gaming Reports wrote in a recent article noting down the highlights of the event. The publication estimates that the numbers of attendees were up 60% compared to 60%, making it one of the most significant expos for the industry in recent months.

Deutsche Bank analyst Carlo Santarelli praised the interest in the conference and went on to explain the challenges companies and business operators will face in the coming months to achieve “sustained recovery.” Santarelli was confident that bookings would remain strong for next year.

While there are some signals that look promising, casinos aren’t immediately looking to return to pre-pandemic levels, running at 70% of the 2019 workforce. However, most are going to push up for at least 85% compared to 2019. 

Caesars Entertainment and The Mirage resorts have been perceived as positive signals of that recovery, Santarelli explained, and the return of high-yielding tables such as baccarat in the third quarter of the year was equally praised by the analyst. 

Recovery in Sight, Costs Increasing to Sustain It 

While recovery is clearly on the horizon, casinos are not yet in the clear. They have reported numerous issues that they would need to address, as confirmed by the analyst. According to Santarelli, wagers are inching upward as the United States workforce has been moving away from in-person jobs.

Recruitment for casino staffers has become harder, and shortages have been prevalent. The supply chain has also been disrupted to the point where basic staples of the hospitality experience, such as food and drink, have been going up in terms of pricing. At the same time, businesses have been challenged to keep prices low to stimulate consumption. 

However, the increase in wagers is expected to have a positive impact on Las Vegas locals gaming revenue, Santarelli explained. He cautioned that casinos should brace for a slowdown in revenue, as the pent-up demand is beginning to wear off, and highlighted the fact that many jurisdictions are pushing aggressively ahead with iGaming solutions, such as Michigan, Pennsylvania, and New Jersey.

The Future of the Gambling Industry and Legalization

Deutsche Bank has also spent time thinking through the implications of responsible gambling in future legalization efforts in the United States. According to the bank’s analysts, responsible gaming will play an essential role in spurring bolder legalization moves. 

Meanwhile, manufacturers of physical gaming machines can expect a bit of a slow down in the second half of 2022. However, casinos are committed to purchasing new games to keep attracting fresh foot traffic on casino floors. 

Land-based operators are still a little uncertain about how to treat the iGaming sector. Some have argued that it’s unlikely to see a rapid expansion of the sector, mostly because local legislators would be concerned about losing taxable income for the public purse.

Others though suspected that the iGaming sector in the United States could number between 15 and 20 states as early as by the end of 2022.