Macau’s gaming industry is set to experience a ‘very modest growth’ in 2025, prompting gaming operators to reshape their strategies to adapt to evolving market dynamics, according to a report by CLSA.
The investment bank forecasts the sector’s gross gaming revenue (GGR) to grow by 4 percent year-on-year, reaching $29.3 billion in 2025. It emphasizes that expanding market share will be pivotal in navigating this subdued growth environment.
These modest growth projections are coupled with strong visitor arrival forecasts for 2025, with CLSA predicting that Macau could see 36.4 million visitors next year.
In this landscape, CLSA notes that, in addition to market share competition, China’s ongoing measures to stabilize the property market—including local government debt swaps—will be crucial for Macau’s GGR growth in 2025. Whether this growth will re-accelerate depends on consumer-centric fiscal stimulus, with CLSA analyst Fan Yang expecting more support in 2025. Historically, China’s fiscal easing packages in 4Q08 and 2Q15 led to significant GGR growth in Macau.
After China’s RMB4 trillion package in 2008, Macau’s GGR per day grew by 32 percent, from MOP277 million ($34.6 million) to MOP450 million ($56.3 million) by January 2010, continuing a 33 percent year-on-year rise through January 2011.
In 2015, following further easing measures, GGR per day resumed growth, rising 26 percent year-on-year to MOP666 million ($83.3 million) in June 2017 and increasing another 13 percent year-on-year to MOP750 million ($93.8 million) in June 2018.
Macau’s GGR per visitor correlates with China’s Consumer Confidence Index, which stood at a 34-year low of 85.7 in September 2024. This trend aligns with Macau’s plateauing GGR in 2024, however the brokerage expects consumer confidence to recover when property prices stabilize in the second half of 2025.
2024 GGR still resilient
Regarding the current year, analysts Jeffrey Kiang and Leo Pan report that Macau’s gaming revenue has remained resilient, with GGR per visitor staying flat year-on-year at MOP6,544 ($818), despite challenges such as a high base in 1Q23 and the criminalization of illicit money exchange. The highest GGR since 2023 was recorded in October, totaling MOP20.8 billion ($2.6 billion). However, GGR remains 23 percent below 2019 levels, indicating a bottleneck to further growth.
In the investment memo, daily GGR in 2024 ranged from MOP575 million ($71.9 million) to MOP671 million ($83.9 million), recovering to 70-81 percent of pre-COVID levels. This gap is partly attributed to the decline of junkets, but fiscal support from China is expected to help close it. The recovery has been visitation-driven, with GGR per capita stabilizing between MOP5,409 ($676) and MOP7,499 ($937), still below pre-pandemic averages.
Despite limited growth in 2025, CLSA projects an acceleration in GGR growth in 2026, driven by improving consumer sentiment and economic stabilization.
In terms of financial performance, CLSA has slightly revised its GGR forecasts for 2024, 2025, and 2026, adjusting projections up and down by 1 percent. It has also lowered its EBITDA forecasts for 2025 and 2026 by 2-4 percent due to rising operating cost assumptions, despite higher non-gaming revenue. Sector EBITDA margins are expected to remain steady at 27-28 percent during this period.
Dividend payouts and investor returns
Given the projected modest growth, analysts at CLSA believe that gaming operators will need to increase their dividend payout ratio to reflect current market conditions. ‘A higher dividend payout ratio is justified in 2025, as our forecast dividend payout (from free cash flow) is 36 percent in 25CL (compared to 91 percent from 2016 to 2019),’ the report states.
This marks a significant adjustment from the high payout levels observed in the years leading up to the pandemic, reflecting the changing dynamics of the sector.
Additionally, CLSA notes that despite limited GGR growth, companies like Galaxy, MGM China, Wynn Macau, Melco, and Paradise Entertainment (a satellite casino manager for SJM) have increased dividends or repurchased shares (Melco in particular) in 2024.
This trend signals a more shareholder-friendly approach, as operators prepare for moderate GGR growth ahead. Such actions are expected to positively impact the return on equity ratios of these companies. Year-to-date in 2024, the six Macau gaming concessionaires are on track to return $992 million to shareholders through dividends and buybacks, including the final dividends for 2023, declared in 1Q24.
Satellite casinos
Another significant development in 2025 will be the evolving role of satellite casinos. According to the latest update, the Macau government has not yet begun discussions with satellite casino operators regarding future developments. Based on the current situation, Macau’s satellite casino operators may need to transition to purely management companies, as they will no longer be allowed to share gaming revenue from 2026.
CLSA notes that while the locations and number of satellite casinos will be under scrutiny, ‘only the remuneration mechanism will change (for casino managers) after December 31st, 2025.’ This change is expected to reshape how casino managers are compensated, impacting the operational structure of these satellite properties, but without altering their overall role in the sector.
It remains unclear how the ‘management fee’ for casino managers will be determined after 2025. However, as a viable solution for both concessionaires and managers, CLSA believes the fee will be based on satellite casinos’ performance in 2025, with certain step-up terms possibly linked to inflation.
