According to the latest analysis by CBRE stock research, Macau's total gambling revenue in 2026 is expected to grow by 8.3% year-on-year, exceeding the market's general expectation of 6%. This optimistic forecast is based on a strong start in the first quarter—with GGR reaching 65.87 billion Macau patacas in the first three months, achieving a double-digit year-on-year increase. Analysts point out that current market forecasts may underestimate the expansion speed. They state: "Macau's GGR should exceed the market consensus for the full year of 2026." They added that if it were to align with consensus expectations, the remaining time's growth rate would need to slow down significantly to 3.5%, which they believe is "unlikely to happen." Frankly speaking, with double-digit growth already achieved in the first quarter, it is indeed unrealistic to reduce it to 3.5% in the remaining three quarters.
Chinese Economic Support and Non-Gambling Investment in Macau Driving Growth
The expected growth in gambling revenue is closely related to the overall economic situation in mainland China. Authorities have set a GDP growth target of 4.5% to 5.0%, and analysts believe this will positively impact consumer spending. They state: "With China's GDP growth target set between 4.5% and 5.0%, we expect Macau's GAGR to exceed GDP, as Chinese consumers continue to benefit from targeted stimulus measures." This macroeconomic backdrop is expected to support Macau's visitor numbers, especially the basic midfield segment. Analysts emphasize that this market segment has not fully recovered yet, and there is still room for further growth as travel demand improves. Investments by Macau gaming concession companies in non-gambling attractions will also play a role in maintaining visitor growth, these efforts aim to enhance the destination's appeal, encourage longer stays, and thereby support gambling activities. "Macau's ongoing investment in entertainment should attract more visitors, especially the not yet fully recovered basic midfield segment," analysts say.
Market Concerns Persist: Rising Costs and Stock Price Divergence
Despite the optimistic revenue outlook, the stock market has not reflected the operational performance of Macau's gambling industry. So far this year, stocks related to Macau casinos have fallen, with US-listed operators down about 14%, and Hong Kong-listed peers down about 10%. This financial performance gap with market valuations is attributed to concerns about growth sustainability and profit margin pressures. Rising operating costs and intensified competition among operators have led to investor caution. By the end of 2025, promotional activities and operating expenses had significantly increased. In the fourth quarter, industry-wide commission expenses grew by 21% year-on-year, accounting for 19.2% of GGR. During the same period, non-tax operating expenses grew by 8.6%. Analysts point out that the increase in promotional spending is mainly driven by a few operators aiming to recapture market share, such as the Las Vegas Sands Group adopting a more aggressive strategy in the high-end midfield. However, cost-related concerns may ease over time. "We expect promotional activities to remain high but stabilize throughout 2026, and operating expense growth should also normalize, as many franchise-related operating expense investments have now been incorporated into the cost structure."
Profit Outlook and Operator Performance
The strength of revenue growth at the beginning of 2026 also affects profit expectations. Analysts state that the first quarter's performance is sufficient to support the continued growth of EBITDA for most operators, even those who may sacrifice some market share for profitability. Among individual operators, Melco Entertainment is listed as a company with potential upside. Despite facing challenges due to rising operating costs at the end of 2025, the company's EBITDA in Macau properties recorded significant growth, outperforming the broader market. Analysts believe that Melco's current valuation reflects market caution rather than fundamental performance, and its stocks remain "oversold." They also note that the company's ongoing efforts to reduce leverage may help improve shareholder returns over time. Looking ahead, China's economic stimulus measures, continued investment in Macau's tourism industry, and the stabilization of cost pressures are expected to support further growth in the region's gambling industry. For more Macau gambling market dynamics, continue to follow PASA official website.
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This article is from "PASA-Global iGaming Leader" gambling news channel: https://t.me/pasa_news
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