Slot Industry Faces Uncertainty Amid Tariffs, Experts Say

The slew of tariffs imposed by the Trump administration may present new challenges for slot makers, according to industry experts.

Experts Talk About the Potential Harm of the New Tariffs on Slot Machines

Truist Securities analyst Barry Jonas revealed in an April 11 investor note that the new tariffs would “present challenges” for the sector. This happened at an analyst call with ReelMetrics CEO Nick Hogan last week. ​ReelMetrics is a data science firm specializing in analytics for the global slot machine industry.

Hogan seemed to echo Jones’ words, as according to him, the tariffs are creating uncertainty within the slot sector. This is due to the expected rise in material costs for slot machines, which are almost certain to be passed on to gaming operators. This inflation would likely have a ripple effect on casinos, potentially leading them to scale back their budgets for acquiring new slot machines.

If slot prices were to increase, Hogan anticipated that operators might receive compensation through stable leasing fees. He suggested that this shift could lead to a broader adoption of premium lease models as an alternative to traditional upfront product purchases. However, he also warned that the broader economic environment remained uncertain, with growing concerns about a potential recession. Despite these challenges, player wagering levels had not declined, nor had there been any noticeable changes in player behavior.

Here Are Some Numbers

ReelMetrics’s key insight was that increasing the presence of a company’s top-performing games significantly boosts revenue. According to Hogan, the top 3.6% of slot players were responsible for nearly a quarter of the total machine revenue. In comparison, the middle tier, comprising about 26% of players, accounted for 56% of the payouts. Meanwhile, the largest group, making up 70.1% of the player base, contributed just 18.8% of slot revenue.

This data shows that there’s a supply imbalance around premium games, which limits revenue potential. According to Jonas, premium games had increased from 3.25% of slot floors 10 years ago to 16.1% now. In addition, he explained that when it comes to the relative scale of manufacturers, size continues to play a significant role.

What Could the Future Look Like?

Hogan believed that among the top three manufacturers, IGT was the most vulnerable if smaller players began gaining market share—though he noted this could change depending on IGT’s strategy and execution following its move to go private. He also emphasized that the slot industry remains driven by hit titles, and a breakout game could quickly shift market dynamics, according to Jonas.

Hogan identified Light & Wonder titles as strong performers, highlighting Huff ‘N Even More Puff as the leader on the ReelMetrics Core Video Reelhot Index. Jonas added that average bets and game speeds for these titles had remained solid, although some location sensitivity was emerging—where performance would dip in certain areas but improve significantly when the machines were relocated to higher-traffic or more favorable spots.

It should be noted, however, that Light & Wonder has recently been involved in legal issues with Aristocrat over the Dragon Train slot game series. This might further complicate the already difficult state the slot machine landscape might be in.