U.S. Dollar on Downward Trek – What Does This Mean for the Gaming Industry?
When measured against other major currencies, the U.S. dollar has declined almost 7% since the new administration took the reins of the economy. Although many reasons for this shift have been postulated, perhaps the most plausible is a reallocation of reserves away from treasuries as U.S. economic policy has become less predictable and the rule of law less certain. Additionally, ballooning U.S. debt and deficits and poor governance may be making investors skittish.
Some of the potential impacts a weaker U.S. dollar could have on the gaming industry include:
A weaker dollar makes U.S. exports cheaper – this could be positive for regional markets like the Midwest where manufacturing is responsible for a larger share of the economy.
Interest rates should stay elevated with a declining dollar – this is good for savers and / or individuals with a lot of liquidity and could encourage these individuals to spend some of their extra interest income on entertainment services like gambling.
A declining dollar makes it more expensive for Americans to travel abroad and less expensive for foreigners to vacation in the U.S. – destination gambling markets can take advantage of this by messaging to travelers that their money will go further in the U.S., including in Las Vegas (what’s spent in Vegas, stays in Vegas?).
Capital flows to the U.S. will be harder to come by, the cost of capital will rise, and large projects will be more expensive to finance. In this scenario, gaming growth could sputter in the medium and longer term and possibly create an impetus for states to pass online casino expansion over the next few years to plug budget gaps and because it would be a much less capital intensive opportunity to grow gaming revenues and tax receipts.