Macao’s gaming fatigue takes the roar out of MGM China

Once a favorite of investment banks for its strong post-pandemic performance, MGM China’s business started to contract in the first quarter of 2025

Key Takeaways:

• MGM China’s revenue fell 3% in the first quarter, as Macao’s post-pandemic rebound lost momentum
• Revenue from the casino operator’s VIP rooms plummeted by 50% during the quarter, far worse than a 10% decline for rival Sands China

By Lau Chi Hang

After smiling on Macao for the last two years after China ended its strict pandemic restrictions, Lady Luck has found better places to cast her gaze these days than Asia’s leading gambling enclave.

The city’s gaming revenue began to slow down notably this year as the rebound faded and China’s slowing economy further dampened demand, hurting business for its casino operators. MGM China Holdings Ltd. (2282.HK), previously an investor favorite, has become the latest to get dragged into the slowdown, reporting year-on-year revenue and profit declines its latest first-quarter results.

The company’s revenue slipped 3.2% to nearly HK$8 billion ($1.02 billion) in the three months to March, while its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) sagged 5.5% to HK$2.37 billion, according to the report released earlier this month. The company blamed the revenue drop on a decrease in bets on main floor table games.

MGM China operates two casinos in Macao: the MGM Macao on the Macao Peninsula, where main floor table games bets decreased by 7.4% year-on-year during the quarter to HK$13.37 billion; and the MGM Cotai on the Cotai Strip, where main floor table games bets fell by nearly 4% to HK$14.85 billion.

VIP business plunge

While gaming was off on its main casino floors, the situation was even worse for its VIP business catering to high rollers. At MGM Macao, VIP turnover plunged by nearly half from HK$12.15 billion in the first quarter of 2024 to HK$6.24 billion in the first three months of this year. MGM Cotai’s VIP turnover also halved from HK$53 billion to HK$26.27 billion over the period, suggesting that high-rollers weren’t being as free-spending as they were during headier times when China’s economy was booming.

While MGM China did not specify why its VIP business fell so sharply, rival Sands China (1928.HK) reported a much milder 10% year-on-year decline in its VIP revenue during the quarter. That seems to show that MGM China’s VIP business plunge owned not only to lower traffic from China’s high-rolling crowd, but also from competitors stealing its business.

Beyond its core gaming business, MGM China’s hotel operations also sagged. Despite maintaining average occupancy rates of over 93% during the quarter, on par with a year earlier, the company’s revenue per available room (revpar), which also factors in room prices, fell sharply. MGM Cotai’s revpar dropped by 21% from HK$2,631 in the first quarter of 2024 to HK$2,066 in the latest period, while MGM Macao’s revpar tumbled by an even higher 23% from HK$3,061 to HK$2,346 over that time.

Falling citywide revenue

While its VIP business is clearly facing company-specific issues, MGM China’s bigger challenge – being faced by all in the market – is the broader Macao gaming market slowdown. All casino operators have also struggled to adjust following big changes in Macao’s gaming regulations several years ago.

Those changes saw a ban on outsourcing VIP room operation, and limited junket operators to collect flat commissions from business they brought in without any profit-sharing. Meanwhile, China’s own crackdown on marketing of cross-border gambling has further pressured the operators. Those factors, combined with the more recent economic slowdown, make it unlikely that Macao will ever return to its peak of 300 billion patacas ($37.4 billion) in annual gaming revenue.

The city’s gross gaming revenue last month edged up 1.7% year-on-year to 18.86 billion patacas, but was down 4.1% month-on-month, marking a second consecutive sequential decline, according to the Macao Gaming Inspection and Coordination Bureau. That weakness is overshadowing the entire industry.

Macao’s government estimated at the end of last year that gaming revenue would reach 240 billion patacas in 2025, up 11% year-on-year. To reach that figure, monthly gaming revenue would need to average 20 billion patacas. However, in the first four months of 2025, monthly gaming revenue has consistently fallen short of that amount, casting doubt on whether the annual target is attainable.

A lose-lose trade war

The U.S.-China trade war has also cast a shadow over Macao’s gaming industry. While Macao doesn’t conduct much direct trade with the U.S. and relies heavily on gaming for 80% of economic activity, the trade war is dragging down the whole global economy that supplies the gamblers who come to the city. Slowdowns in the Chinese and other global economies mean lower budgets for travel and consumption, which is likely to reduce the number of visitors to Macao, as well as their gaming budgets.

Macao’s top government official Sam Hou Fai previously said escalation of the U.S.-China trade war would have limited direct impact on the city. But he also acknowledged that Macao could be affected indirectly by falling interest in the local tourism and gaming industries.

The economic impact of the U.S. tariff hikes has yet to clearly manifest itself, since the major increases occurred just last month. But many expect the effects to start showing up in the next six months to a year, with some countries like to report slipping into recession. Consumer sentiment is likely to weaken as that happens, further dampening demand for leisure travel.

When Macao’s six major casino operators renewed their gaming licenses in 2023, MGM China was feted as the biggest winner, as the government boosted the company’s licensed gaming tables by 36% to 750. That briefly made it an investor darling, as many bet the company would put those added tables to good use during the city’s rebound. But with the industry now slowing, and pressure mounting on MGM China’s VIP business, the casino operator, known for its lion logo, may rapidly be losing its roar.

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