With so much US growth making headlines at the moment, it’s an exciting time for gaming.
But the two most prominent themes from the industry's Q3 financial reports have, over the past few weeks, actually been negative ones.
While the US expands, emerging markets develop and online revenue rises in numerous markets, the gaming sector has suffered a tough Q3 in Sweden and Macau.
It is a two-pronged suffering, in that Macau’s VIP struggles have affected land-based casinos, while teething issues in Sweden’s re-regulated market have impacted online figures.
The two markets are also causing problems for gaming firms at very different stages in their lifecycles.
Zooming in on Macau, we can see a mature market struggling to hit new heights in 2019, chiefly due to falling VIP revenue. Operators have targeted the mass market but, while there has been growth in that area, it has not compensated for VIP drops and the impact of China-US tensions.
Macau’s casinos have not enjoyed a promising start to Q4 either, generating gross gaming revenue of MOP26.44bn ($3.28bn) for October, a 3% fall year-on-year. For Q3, revenue only grew during one of the three months in the period – and that growth was only 0.6% (September).
This is highlighted in the financial reports of some of the gaming sector's biggest players. MGM Resorts International’s results in Macau were a perfect summation of the situation.
MGM Macau, running for 12 years, saw a net revenue fall of 14% to $374m. MGM did see more than double its revenue at MGM Cotai, $363.7m, but this has only been running for a year; growth here was inevitable and revenue was still marginally lower than its older compatriot.
Wynn Resorts suffered a significant fall for Q3 in Macau, dragging its overall revenue down 3% to $1.65bn. Wynn Palace saw revenue fall by as much as $132.4m, while Wynn Macau generated $105.3m less than Q3 2018.
Elsewhere, due to performance in Macau, Las Vegas Sands also endured a 4% fall in revenue to $3.3bn, with net income falling by the same margin.
US operators not based in Macau, such as Penn National and Caesars Entertainment, were able to report positive revenue increases by comparison. Wynn, MGM and Sands all fared significantly better on US soil during the period.
In Sweden, results are similarly negative, though it’s a case of growing pains rather than a mature market plateauing.
The Swedish Gambling Authority (SGA) has notoriously issued a number of fines and warnings since market re-regulation on 1 January and, while it is intent on being a strict regulator from the outset, operators have argued there needs to be more leeway and guidance from the SGA.
This regulatory pressure has created a noticeable trend across the board for Q3. LeoVegas saw revenue rise 12% to €88.2m ($97.6m); but it was very much an outlier, with the firm admitting this came despite a "difficult-to-navigate environment."
By contrast, Gaming Innovation Group (GiG) generated revenue of €30.2m ($33.5m), down 19%, and was unequivocal in highlighting revenue decline in a tough Swedish market.
Kindred Group also suffered a 2% drop to £226m ($290m) and, you guessed it, attributed much of this to a difficult Swedish market.
Betsson Group's revenue decreased 11% to SEK 1.28bn ($132.7m), with Betsson AB CEO Pontus Lindwall saying: "As the conditions in Sweden have not been right for large marketing investments, activities have been reduced and reallocated to other markets where they provide better returns."
Lindwall did highlight hopes for long-term improvements in Sweden. In the short term though, the problems aren’t going away, as one final example – NetEnt – shows.
The supplier saw revenue fall 1% to SEK 443m, with CEO Therese Hillman saying: "The primary reason for the lower revenue was attributed to continued weak developments in the Swedish market."
While gaming continues to thrive overall, then, it’s clear exactly where its current pain points are.