Record-breaking Revenue Surge in U.S. Commercial Gaming Sector in May 2023

The Evolution of Gaming in the USA: Bouncing Back and Looking Forward

The U.S. gaming sector is showing no signs of slowing down, smashing records with a staggering $5.49 billion in revenue in May 2023 – a whopping 6% jump from the previous year. This marks the 27th consecutive month of growth, as per the American Gaming Association (AGA). However, as the industry transitions towards a post-pandemic landscape, state market performance is starting to diverge from the COVID-influenced years.

Buckle up, folks, because we're on track to shatter all-time highs! The industry has already surpassed last year’s record pace by 12.4% in the first five months, with a mind-blowing total of $27.59 billion by May's end. The resilience of this dynamic industry is undeniable, as it granulates its way through ever-changing conditions.

Although the yearly expansion rate has remained robust in May, the speed of revenue growth has gradually lessened over the past four months. This is an indication that the industry is transitioning into a steady, sustainable growth trajectory, freeing itself from COVID's lingering effects on year-over-year growth measurements.

So, what's driving this impressive growth? The rise and roar of online gaming has been the primary force. Meanwhile, land-based gaming's revenue – encompassing casino slots, table games, and retail sports betting – has slightly dipped (-0.6%) compared to the previous year. Conversely, online gaming has surged an astounding 43.4% year-on-year. The legalization of online sports betting across various states, coupled with the continuous expansion of iGaming in legalized jurisdictions, has played a significant role in this triumph.

Last year, 24 out of 33 operating commercial gambling jurisdictions reported yearly revenue gains. However, nine states stumbled, including Delaware, Florida, Iowa, Indiana, Louisiana, Missouri, Nevada, and Oregon. Slowing revenues were attributed to traditional casinos and the decline of sports betting in certain areas.

Traditional casino slot machines and table games continue to fuel commercial gaming revenue. In May, these segments raked in a combined $4.12 billion – a modest 0.3% decrease from the previous year. Slot machine revenue climbed 1.3% to reach $2.98 billion, while table game revenue dipped 4.8% to $834.3 million.

On the other hand, sports betting and iGaming revenue have been skyrocketing, both generating their highest May revenue ever. Combined revenue for land-based and online sportsbooks across 28 jurisdictions totaled $864.1 million, representing a breathtaking 41.5% increase from May 2022.

The iGaming sector has been on a roll as well, with cumulative income from operations in Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia shooting up 22.4% year-on-year to $497.4 million. Year-on-year increases in iGaming revenue were reported in all six markets, fueling the industry's continued success.

On the Horizon: Consolidation, Mobile, and the Metaverse

The gaming industry is undergoing some seismic transformations at the moment. Here are a few key areas to keep an eye on:

Consolidation and Acquisitions: The acquisition of Activision Blizzard by Microsoft Gaming in 2023 signaled a significant consolidation in the industry. This $68.7 billion deal bolstered Microsoft's grip on the gaming market by adding iconic franchises like Call of Duty, World of Warcraft, and Candy Crush to its roster. Such large-scale acquisitions indicate a trend towards consolidation, which can enhance revenue growth through expanded offerings and improved operational efficiencies.
Mobile Gaming Market: After a correction in 2022 and 2023, the mobile gaming market has stabilized. Despite not reaching pre-pandemic peaks, mobile gaming remains the most profitable gaming sector, charts hovering above PC and console gaming. The use of AI in game development is gaining momentum, expediting production times, and enabling customized content – elements that could drive growth by offering more captivating user experiences.
Online and Metaverse Gaming: The Metaverse, a realm of virtual worlds and immersive gaming experiences, is growing at a spectacular pace. With a projected value of $1.1 trillion by 2030, driven by advancements in VR/AR technologies, blockchain integration, and investment from tech titans, this sector has the potential to significantly reshape the future of online gaming, opening up new revenue streams through virtual economies and immersive experiences.
Land-Based Gaming: Competition for casino licenses in New York remains fierce, underscoring the enduring demand for physical gaming venues. Successful operators like Empire City Casino generate significant revenue for states, highlighting the continued economic importance of land-based gaming.

Resilience, Adaptation, and the Road Ahead

Major players like Microsoft have witnessed substantial growth in gaming revenue, partly thanks to strategic acquisitions and the rise of subscription services. As the market grapples with economic challenges, the adaptability and resilience of the gaming industry suggest potential for sustained growth in the future, with new technologies and business models leading the charge. The U.S. gaming industry is set to keep evolving, with the blossoming Metaverse likely to be a significant driver of revenue growth in the next few years.

The industry's impressive growth can also be attributed to the legalization of online sports betting across various states and the continuous expansion of iGaming in legalized jurisdictions, which has contributed significantly to the breakthrough.
In the post-pandemic landscape, while traditional casino slot machines and table games continue to fuel commercial gaming revenue, the revenue from online gaming has surged, highlighting the industry's transition towards digital platforms.
As the gaming industry shifts into a steady, sustainable growth trajectory, it's worth keeping an eye on areas such as consolidation and acquisitions, the Metaverse, and mobile gaming, as these trends could shape the industry's future and open up new revenue streams.