Macau’s gaming industry has just endured its ‘toughest’ quarter since the border reopening, with industry EBITDA forecast to fall 7 percent year-on-year to $1.92 billion in 2Q26, the lowest level since 3Q24, as the FIFA World Cup and ‘extremely unfavorable’ hold rates weighed on earnings, according to Citigroup.
The investment bank estimates Macau generated gross gaming revenue of MOP61.03 billion ($7.6 billion) in the quarter, flat year-on-year but down 7 percent sequentially, the lowest quarterly total since 1Q25. Industry EBITDA is expected to drop 12 percent quarter-on-quarter, with margins narrowing by around 1.5 percentage points to roughly 25.8 percent.
In a note published on Friday, analysts George Choi and Timothy Chau attributed the weak numbers largely to the tournament, which began in mid-June, alongside ‘some significantly unfavorable VIP hold, particularly in April’. The resulting operating deleverage from the ‘lower-than-theoretical VIP hold’ is the main driver of the margin squeeze, the report said.
Despite this, the analysts believe the negatives ‘have been largely priced in’, noting the sector is trading at 7.1 times one-year forward EBITDA, almost two standard deviations below its historical mean. With a ‘star-studded concert and event calendar’ in the second half of 2026, Macau GGR ‘should swiftly return to normal soon after the tournament ends’, per the report.
MGM China, SJM expected to gain market share
MGM China and SJM are likely to record the largest quarter-on-quarter market share improvements, according to Citigroup. MGM China benefited from the recently opened hotel suites and Masters Club VIP gaming area at MGM Cotai, lifting its share by 0.8 percentage points to 16.2 percent, while SJM’s share is seen recovering from 9.6 percent to 10.2 percent as its Peninsula casinos proved much less ‘unlucky’ than peers.
Conversely, Sands China appears to have lost the most ground during the quarter, slipping from 26.1 percent to 24.2 percent, a decline the analysts mostly attribute to the extremely unfavorable VIP hold.
Catalyst watches and lower targets
Citigroup opened a 30-day upside catalyst watch on Galaxy Entertainment, which it expects to be the largest EBITDA market share gainer of the quarter, and downside catalyst watches on Sands China and its parent company Las Vegas Sands.
The brokerage also cut target prices across the sector by 7 percent to 22 percent, raising its market risk premium by 2 percentage points. It suggests ‘building positions’ in its top picks: Galaxy, which offers the longest investment tail with Galaxy Macau Phase 4, and Wynn Macau, with a sector-high 8 percent dividend yield.
