The latest movement in the Association of Gaming Equipment Manufacturers (AGEM) Index, for the month of June, represented the largest monthly decline in 20 months, pushing the index value to 88.89 points, a level last seen more than a year ago. For comparison purposes, the broader equities markets closed down for the month, with the Dow Jones Industrial Average and Standard and Poor’s 500 Index shedding 3.6 percent and 5.4 percent, respectively.

AGEM reports that following weaker-than-expected figures on labour and consumer spending, investors took a step back to re-evaluate their positions as the pace of recovery is not moving as fast as predicted. Investment banks are doing the same with Goldman Sachs downgrading several global gaming suppliers to sell from neutral, indicating that revenue from replacement product will be relatively slow and that no material pickup in the market will occur in the near term.

Three companies that bucked the June trend were Astro Corp, Gaming Partners International and Wells-Gardner Electronics. Gaming expansion continues in Pennsylvania with the introduction of table games this month. In response, New Jersey is expected to increase its tax base to 16% on tables’ revenue to compensate for a loss of players to the neighbouring state’s casinos. Neither Delaware, which brought in gaming tables in May, nor Kentucky is planning on further gaming expansion. Delaware has postponed possible legislation for stand-alone casinos and Kentucky passed a 2-year budget last month without reference to legislation for racinos or casinos.

In Ohio video lottery terminals (VLTs) could be installed at racetracks if the courts decide that existing laws permit the gaming machines. In Massachusetts three resort casinos could become a reality if the House and Senate can reconcile differences over their respective bills allowing casino licensing. In New York a decision over the installation of VLTs at Aqueduct racetrack is expected next month. However, in the short term there is small prospect of gaming market recovery, which is reflected in the falling stock prices of most of AGEM’s 17 listed global gaming suppliers. (E-07.09.10)

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