Earnings outlook subdued as Macao casino margins tighten

Macao’s six casino operators are set to report combined earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$1.85 billion for the second quarter, down 8.6 percent year on year, according to a Friday note from brokerage CLSA.

Analysts Jeffrey Kiang and Evan Wan pointed to soft VIP win rates and rising reinvestment costs as the main drag on margins. CLSA’s channel checks found below-usual VIP win rates in 7 of 9 data sets tracked for the quarter, ranging between 2 and 3 percent. The brokerage estimates reported EBITDA will represent 24.3 percent of the sector’s gross gaming revenue for the quarter, down from 26.8 percent a year earlier.

[See more: Macao’s gross gaming revenue hits 18.52 billion patacas in June, down 12.1 percent year-on-year]

Gross gaming revenue for the quarter slipped 0.1 percent year on year to 61.03 billion patacas (US$7.56 billion),, according to data from the city’s Gaming Inspection and Coordination Bureau. Average daily receipts fell around 8 percent from the first quarter, as the FIFA World Cup drew gambling demand away from Macao’s casino floors through May and June.

CLSA also cut its full-year 2026 GGR growth forecast to 2 percent, down from its earlier projection, and now expects July revenue to fall 12 percent year on year, matching June’s decline. The brokerage sees a possible rebound from mid-July, coinciding with the end of the World Cup on 19 July.

Despite the softer quarter, CLSA noted one exception, GGR per overnight visitor rose 7 percent year on year to 15,836 patacas (US$1,962) across April and May, suggesting premium patrons kept spending even as overall margins came under pressure.