Things are not looking that bright for the gaming industry in the United States of America, and some of the gaming firms based in Las Vegas even saw a 30% year-on-year decline in stock values. Several factors influenced the decisions made by investors, and the two most important are the fear of recession and the trade war with China that has been going on for the past year. The Las Vegas Review-Journal newspaper issued a report on Monday with the figures that made the casino owners and the investors alike worry about the future of the gaming industry in the US.
According to the newspaper, the Dow Jones United States Gambling Index has decreased by 33% during 2018. This is the worst performance by the gambling industry ever since the great recession happened ten years ago. Compared to some other industries, the gaming industry has a much greater decline. For example, the Dow Jones Industrial Average Index is down by just 5.6% year-on-year.
Scientific Games Corporation Shares Went Down
The company to reach the top of the ‘local losers’ list was reportedly Scientific Games Corporation. Its shares went down by 65% which is a huge drop on the year-to-year basis. The next one to follow is the company that creates gaming machines – International Game Technology (IGT). IGT has seen a drop of 43% in their stock value during 2018.
Things looked bright for the casinos in Las Vegas at the beginning of 2018 since President Donald Trump made cuts on the corporate income tax for the gaming industry. Some of the casino corporations such as Wynn Resorts Limited and Las Vegas Sands Corporation saw an instant upwards swing and had immediate benefit thanks to the cuts. This was a great start in 2018, and everyone projected that there would be a great economic growth that would speed things up.
The President wanted to help the casino industry but the trade war with China had a much deeper negative effect on the US economy. Trump’s administration has imposed import duties on goods that were made in China. However, the Chinese government did not remain silent and responded with an identical action. There was a huge problem for American casino operators as many of them already had casinos in Macau, which is one of the biggest casino markets in the world.
The two main targets were Wynn Resorts and Las Vegas Sands since they relied on Chinese casinos as one of the most important sources of income. The result of the trade war was immediately applied to the stock market, and Las Vegas Sands saw a decline of 22% in their stock value, while Wynn Resorts Limited lived up to see a depressing 41% decline. Another company that was heavily affected by the trade war was MGM Resorts, as they have two very successful casinos in Macau – MGM Cotai and MGM Macau. MGM’s stock value declined by 26% over the period of last twelve months.