MGM China Sets the Pace in Macau’s Rebound

MGM China is rapidly emerging as one of the frontrunners in Macau’s evolving gaming landscape, outpacing rivals in profitability and market share, according to a recent report by Morningstar. While gross gaming revenue in the region remains below pre-COVID levels, MGM China’s aggressive expansion and operational improvements have put the company at the forefront of the ongoing recovery.

The Operator’s Metrics Remain Robust

One of the primary factors behind MGM China’s recent success lies in its expanded table game allocation. Under the new 10-year concession agreements that began in 2023, the company added 200 additional tables, a 36% rise in capacity. These numbers contrast with the broader market, which collectively shrank 11% due to regulatory adjustments under Macau’s revamped gaming framework.

The increase in its table capacity, along with the utilization of data analytics and efficient marketing strategies, helps the firm to attract more quality customers and gives MGM China a strong market position and profitability.

Jennifer Song, Morningstar analyst

Morningstar analyst Jennifer Song credits the recovery of MGM China’s momentum to a series of critical strategic initiatives, including targeted renovations of gaming floors, refined suite offerings, and an increased focus on mass-market players. These refinements, combined with the steady shift away from the underperforming VIP vertical, have allowed MGM to cement its leadership position.

That return of capital is underpinned by a projected 3% growth in revenue and a 2% increase in EBITDA within the next four years. Analysts expect MGM China’s EBITDA margins to average 28% between 2025 and 2029, slightly surpassing the company’s pre-pandemic 27% mark. However, these projections do not account for significant market disruptions.

Cautious Optimism Contends with Looming Uncertainty

Macau’s broader gaming sector keeps its steady upward trajectory. Gross gaming revenue for April was $2.32 billion, a modest 1.7% year-on-year. While this result surpassed early expectations, it fell below February’s peak. With March’s subpar results disappointing many analysts, April’s better-than-expected performance was a welcome, if unsteady, sign of progress.

Despite cautious analyst optimism, Macau remains susceptible to looming geopolitical risks. With US-China relations strained, a worst-case scenario could lead to a phasing out of foreign concessionaires. Even without such an extreme and unlikely development, trade tensions may make life tougher for American-linked operators MGM, Las Vegas Sands, and Wynn.

Despite rising challenges, MGM China is doing its best to navigate Macau’s rapidly shifting gambling landscape and forge ahead, fueled by smart capital allocation, targeted reinvestment, and an expanded footprint. The operator has also made extensive efforts to align itself with Macau’s ongoing push toward diversification, signaling its commitment to long-term growth.