Macau's toughest quarter since reopening, GGR falls 7%: Citi
Macau’s gaming industry is expected to report its weakest quarter since the post-pandemic reopening, with Macau 2Q26 earnings before interest, taxes, depreciation and amortisation (EBITDA) forecast to decline 7 per cent year-on-year to $1.92 billion, according to Citigroup.
The investment bank said the combination of the expanded FIFA World Cup and exceptionally weak VIP hold rates created significant pressure on casino earnings during the quarter, resulting in lower profitability across the sector despite stable revenue performance.
Macau 2Q26 EBITDA forecast points to weakest quarter since reopening
Citigroup estimates that Macau generated gross gaming revenue (GGR) of MOP61.03 billion ($7.6 billion) during the second quarter of 2026. While revenue was broadly flat compared with the same period last year, it fell 7 per cent from the previous quarter, marking the lowest quarterly GGR total since the first quarter of 2025.
Industry EBITDA is projected to decline 12 per cent quarter-on-quarter, with EBITDA margins narrowing by approximately 1.5 percentage points to around 25.8 per cent. In a research note cited by Asia Gaming Brief, analysts George Choi and Timothy Chau described the period as the industry’s “toughest” quarter since Macau reopened its borders.
The analysts said the FIFA World Cup, which began in mid-June, combined with “significantly unfavourable” VIP hold rates, particularly in April, weighed heavily on earnings. Lower-than-expected VIP hold reduced operating leverage and was identified as the primary reason behind the deterioration in industry margins.
FIFA World Cup impacts Macau GGR and casino demand
The FIFA World Cup has emerged as a major headwind for Macau casino operators in 2026, with several investment banks revising forecasts lower as the tournament affects gaming activity among premium customers. Macquarie recently reduced its outlook for both third-quarter and full-year Macau GGR growth after June gaming revenue fell more sharply than expected.
The brokerage now forecasts Macau GGR growth of 2 per cent year-on-year in the third quarter, down from a previous estimate of 6 per cent growth. It also cut its full-year 2026 Macau GGR growth forecast from 7.7 per cent to 5.4 per cent.
Analysts believe the tournament’s expanded format has amplified the impact on casino spending. The 2026 FIFA World Cup features 104 matches, significantly more than the 64 matches played during the 2018 tournament, increasing competition for consumer entertainment spending.
June data from Macau’s Gaming Inspection and Coordination Bureau showed gross gaming revenue fell 12.1 per cent year-on-year to MOP18.52 billion ($2.30 billion). Revenue also declined 18.1 per cent compared with May’s MOP22.61 billion ($2.80 billion). The June result marked Macau’s first year-on-year monthly gaming revenue decline since January 2025.
Premium mass and VIP segments show signs of weakness
Concerns have been growing around Macau’s premium customer base, which remains a key driver of gaming revenue growth and profitability. Citigroup previously reported that premium mass wagers fell 38 per cent year-on-year in June, with both player volumes and average bet sizes declining during the World Cup period.
Morgan Stanley has also warned that Macau GGR growth could remain under pressure through July before improving after the tournament concludes. The premium mass segment has become increasingly important for Macau casino operators since the pandemic recovery, generating higher margins than traditional VIP gaming while attracting affluent regional customers.
MGM China and SJM expected to gain market share
Despite the challenging operating environment, Citigroup expects several operators to outperform their peers. MGM China is forecast to record one of the largest market share gains during the quarter, benefiting from newly opened hotel suites and the Masters Club VIP gaming area at MGM Cotai. The company’s market share is expected to increase by 0.8 percentage points to 16.2 per cent.
SJM Holdings is also projected to improve its position, with market share rising from 9.6 per cent to 10.2 per cent as its Peninsula casinos experienced less adverse gaming hold than competitors. In contrast, Sands China is expected to report the largest decline in market share, falling from 26.1 per cent to 24.2 per cent. Citigroup attributed most of the decline to exceptionally weak VIP hold performance during the quarter.
Citigroup cuts Macau casino sector targets
Although earnings expectations have weakened, Citigroup believes much of the negative news has already been reflected in share prices. The bank noted that the Macau gaming sector is currently trading at 7.1 times one-year forward EBITDA, nearly two standard deviations below its historical average valuation.
Citigroup has initiated a 30-day upside catalyst watch on Galaxy Entertainment Group, which it expects to be the largest EBITDA market share gainer during the quarter. It also placed downside catalyst watches on Sands China and its parent company, Las Vegas Sands. Target prices across the Macau gaming sector were reduced by between 7 per cent and 22 per cent after the brokerage increased its market risk premium assumptions by two percentage points.
Despite the revisions, Citigroup continues to favour Galaxy Entertainment Group and Wynn Macau, citing Galaxy Macau Phase 4’s long-term growth potential and Wynn Macau’s sector-leading dividend yield of approximately 8 per cent. While analysts expect near-term volatility in Macau gaming revenue, the broader recovery story remains intact. Citigroup believes Macau GGR should recover quickly after the FIFA World Cup concludes, supported by a strong calendar of concerts, entertainment events and tourism activity in the second half of 2026.
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