The 11th Annual J.P. Morgan Slot survey was conducted over two periods: first in July to collect data points, and again this month to determine a trend line for the period to early October. We focused on COVID-19 implications and impacts in addition to standard performance questions from years’ prior. Findings are split into four categories:

1) COVID-19 observations and new trends

2) slot market headwinds & tailwinds

3) competitive landscape

4) company-specific analysis

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Venue operators were generating 48% of 2019’s revenue in July; in our October survey we saw a material step up to 72% of 2019’s revenue.

  • In July, 48% of operators expected revenues to take “12 to 24 months to recover”; sentiment has now improved where only 21% of operators believe it will take that long… due to 42% of respondents expecting normal revenues in “less than 6 months” (up from only 6% in July).
  • No change to current staffing levels/employed (remaining ~77% of 2019 levels) across our July and October surveys. This could represent the rough percentage for fit-to-fight staffing in the new-normal. However…
  • Improving expectations for returning staff levels. In July, 32% of operators expected staffing levels to take “12 to 24 months to recover”. This has improved to 17% in October, due to 31% now expecting “6 to 12 months” in October (versus only 20% in July).
  • Average venue visitation levels in July were between 72-77% on weekdays & weekends, respectively; we were surprised by the decline to 55% on average in October, despite the VIC lockdowns.
  • Venue operators believe attracting new customers has become a bigger challenge with 47% of respondents in July increasing to 62% in October.
  • 62% of slots were “on” in October, this has trended down from 71% of venue operators saying 50% or more of slots were active in July.
  • We’ve seen a significant step in COVID-19 safe plans implemented across venues in October. “Signage-use” increased 33% and “EGMs re-arranged/moved” increased 27% vs July. Gaming floors are prepared.
  • Venue operators expect 58% of normal conversions and 43% of normal replacements relative to last year. Operators are remaining cautious on spend due to restrictions and cash flow management.
  • 55% of casinos and pubs estimate spend per customer has increased (+18% vs 2019). This is consistent with our views in our previous note and press articles here and here discussing slot spend trends being significantly higher due to pent-up demand from COVID-19 restrictions.
  • Aristocrat products occupy ~56% of venue floors. ~77% of operators noted Aristocrat’s game library had improved or remained stable.

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