Macau's Growth Plateau: Assessing the 2026 Outlook for Las Vegas Sands, Wynn Resorts, and MGM

The numbers tell a story of a market hitting its stride and then stumbling. In December, Macau's gaming revenue grew 14.8% year-on-year to MOP20.9 billion, a solid but disappointing result that missed analyst expectations of an 18% increase. This marks the first monthly miss in a year, a notable shift after a prolonged recovery. The full-year picture is still positive, with 2025 revenue reaching 247.4 billion patacas, a 9.1% rise that returns the market to 85% of its 2019 pre-pandemic level. Yet the December shortfall suggests the easy growth phase may be ending.

The miss is attributed to a high base and unmet expectations for year-end promotions. Analysts had anticipated a stronger finish, betting that the city's push for year-end entertainment events and casino perks like free hotel suites would drive premium player spending. That spending failed to materialize at the expected scale. The data shows the recovery has been heavily reliant on affluent mainland Chinese consumers, with premium players growing 6% and betting 6% more in 2025. When these high-spenders don't show up, growth slows.

This points to a potential ceiling. The market is returning to near pre-pandemic levels, but the mechanics of that recovery are changing. Past regulatory crackdowns have already disrupted the VIP sector, and any further restrictions on high rollers or travel curbs could hinder momentum. The underlying demand from mass and premium players remains resilient, but the growth rate is now constrained by a high base and external pressures like China's economic slowdown and trade uncertainty. The December miss is less a sign of weakness and more a signal that Macau's rapid expansion is transitioning into a more mature, and potentially slower, phase.

The New Macau: A Mass-Driven, Premium-Focused Market

Macau's recovery is no longer about the old VIP junket model. The structural shift is clear: the market is now driven by mass and premium-mass players. This is the new engine of growth. In 2025, the number of premium players grew 6% from the year before, and each of these gamblers wagered 6% more, according to a Citigroup survey. This dual expansion in player count and betting volume is the key metric defining the current cycle.

This shift fundamentally favors operators with strong high-end products and service positioning. As UBS notes, these firms are expected to outperform the wider market as reinvestment trends normalize and premium-segment activity remains resilient. The bank forecasts full-year gross gaming revenue (GGR) will grow 6% in 2026, still 11% below 2019 levels, but driven by this mass and premium focus. The message is that success now hinges on creating a compelling "total experience" for affluent mainland Chinese consumers, not on managing a network of VIP agents.

The government's regulatory stance ensures this new structure is here to stay. For 2026, authorities have affirmed the maximum limit on licensed junkets at 50, the same cap that has existed since last year. This means no expansion of the traditional VIP agent network. Individual operator allocations remain unchanged, locking in a controlled, smaller ecosystem. This policy, which took away junkets' core function of extending credit, has rewritten the rules of the game.

Viewed another way, this is the re-engineering of Macau. The city is aligning itself with China's regional vision, moving from a post-pandemic bounce to a more stable, mass-driven expansion. The focus is on the Greater Bay Area middle class and the premium-seeking traveler. For investors, the path forward is clear: the winners will be those positioned to capture this new, higher-quality earnings cycle.

Operator-Specific Catalysts and Risks: The Royalty and Dividend Divide

The re-engineered Macau is not a level playing field. For investors, the new landscape is defined by a stark divide between operators burdened by rising royalty payments and those positioned for shareholder-friendly returns. The most acute pressure is falling on MGM China, where a fundamental shift in its parent relationship is cutting deeply into its earnings forecast. The company has announced a sharp increase in license fees payable to its US parent, MGM Resorts, doubling the rate from 1.75% to 3.5% of monthly net revenues. This change, effective from 2026, is a major headwind. Investment bank CLSA has already lowered its earnings forecasts for MGM China by more than 6 percent for both 2026 and 2027, projecting a corporate adjusted EBITDA contraction of over 6%. Morgan Stanley estimates this will cost the company HKD 1.2 billion annually, compressing margins by 220 basis points and pushing its royalty burden to roughly 15% of EBITDA-more than double prior levels and far above peers.

This royalty hike directly threatens MGM China's dividend capacity, a key metric for investors. While CLSA maintains its dividend forecast, the brokerage notes that risks on dividend forecast remain on the upside as the company grapples with this new cost structure. The stock's reaction has been severe, plunging over 17% on the downgrade news. The bottom line is that MGM China is now paying the highest royalty rate in percentage terms versus revenue among Macau concessionaires, a structural disadvantage that will persist for years.

Contrast that with Galaxy Entertainment and Sands China, which face a much lighter royalty burden. Galaxy pays no royalties to its parent, while Sands China's fee is a modest 5% of its EBITDA. This creates a clear shareholder-friendly divide. As Morgan Stanley notes, this leakage is much less for Galaxy and Sands, making them more efficient vehicles for returning capital. Galaxy's upgrade by JP Morgan, citing its zero royalties and net cash balance sheet, underscores this dynamic. For investors, the choice is becoming a trade-off between a high-growth market and a high-cost operator.

Wynn Resorts presents a different risk profile. The company shows strong operational momentum, with its Macau property, Wynn Macau, posting healthy market share and a significant increase in mass table drop year over year in Q3. However, its financial health is a concern. The parent company carries a notably negative debt-to-equity ratio of -32.96, placing it in the distress zone according to its Altman Z-Score. This high leverage and weak balance sheet pose a material risk, especially if Macau's cyclical demand softens. The company's recent earnings growth has also slowed, adding to the caution.

The bottom line is that the new Macau is a story of diverging fortunes. While overall demand shows signs of recovery, the financial benefits are being unevenly distributed. Operators like Galaxy and Sands are positioned to capture more of that growth for shareholders, while others like MGM China face a structural drag that will test their ability to deliver on promises of capital return.

The 2026 Outlook: Scenarios for Growth and What to Watch

Macau's casino sector is transitioning from a post-pandemic rebound to a more stable expansion phase, setting the stage for a pivotal 2026. The government's official projection calls for gross gaming revenue (GGR) to reach MOP236 billion, representing a modest 3.5% increase from the revised 2025 target. This baseline assumes a measured continuation of current momentum. However, some analysts see a more optimistic path. UBS estimates the city's GGR could reach around 89% of 2019 pre-Covid levels by 2026, supported by annual growth of roughly 6% over the next two years. Other industry forecasts suggest the sector could even exceed the government's target, with one analyst estimating GGR could reach between MOP 260 billion and MOP 270 billion by year-end.

The critical watchpoint for the entire outlook is monthly performance. The government has established a clear fiscal benchmark: monthly GGR needs to consistently exceed MOP 20 billion to meet its revenue targets and avoid a budget deficit. The first half of 2025 averaged just below this threshold, at MOP 19.2 billion per month. For 2026 to succeed, operators must not only grow revenue but also stabilize it at a higher, more predictable level.

The sector's trajectory hinges on three interconnected factors. First, it is deeply tied to the pace of China's economic recovery and the stability of the Greater Bay Area consumer, which has become the core market. Second, the success of the government's push for non-gaming diversification-through investments in MICE, sports, and cultural events-will determine whether Macau can reduce its fiscal vulnerability and create a more resilient, premium-focused economy. Third, the broader narrative is one of a re-engineered Macau, aligned with Beijing's regional vision. As one analysis frames it, the new Macau is a mass-driven, premium-focused market for the Greater Bay Area middle class, moving beyond the old VIP model.

For investors, the setup is clear. The government's conservative 3.5% growth target provides a floor, but the real story will be whether the sector can consistently clear the MOP20 billion monthly hurdle. This will depend on sustained visitor demand from mainland China, the execution of diversification plans, and the ability of operators to manage a shift toward higher-quality, non-VIP revenue. The path forward is less about a simple return to 2019 and more about building a new, more sustainable model.