Macau's High Base Effect: Assessing 2026 Growth for Las Vegas Sands, Wynn Resorts, and MGM

The numbers tell a story of a market hitting a wall. In December, Macau's gaming revenue rose 14.8% year-on-year to 20.9 billion patacas, a figure that fell short of analyst expectations for an 18% increase. More telling is the context: this growth comes from a record-setting high base. The full-year 2025 gross gaming revenue reached MOP247.40 billion, a 9.1% increase from 2024 that restored the market to roughly 85% of its pre-pandemic 2019 level. The sequential decline from November's MOP21.09 billion further signals a potential softening in momentum.

This is the core challenge for 2026. The post-pandemic recovery is real, but the easy gains are over. Operators are now competing against a much larger, more mature market. The December miss, despite citywide promotions, indicates that the current trajectory may not be sustainable at the same pace. The financial markets have already registered this concern, with the Bloomberg Intelligence index tracking Macau casino operators falling 12.6% in December.

The thesis is straightforward. This underwhelming December performance is a warning sign of a potential deceleration. For Macau-focused operators, it creates a challenging backdrop for 2026 earnings and valuation. The high base effect means that even strong absolute growth will translate to lower year-on-year percentage increases. The city's own 2026 fiscal budget plan, which estimates full-year GGR of MOP236 billion, reflects a more cautious, "prudent" outlook. The path forward will require new drivers of demand, as the market's natural expansion from a low base has now largely played out.

The January Momentum: A Contradiction?

The numbers tell a story of robust early-year demand. Between December 20 and 28, a period covering key holidays, Macau welcomed 1.14 million visitor arrivals. This strong January traffic, combined with the city's already-record-breaking 2025 total of 39.41 million arrivals, confirms the market is on track to surpass its pre-pandemic annual peak. For the Cotai casino hub, the milestone was reached by December 27, underscoring the momentum.

Yet this near-term positive signal does not resolve the fundamental challenge for 2026: growing from a record base. The high base effect, as noted by economists, will be a significant headwind. With 2025's gross gaming revenue projected to land between MOP 246 billion and MOP 248 billion, even a healthy 4% increase next year would see the sector's contribution to overall economic growth decline. The expectation is that the market will continue to expand, with some analysts forecasting revenue could reach between MOP 260 billion and MOP 270 billion by the end of 2026. But the path will be one of incremental growth, not explosive acceleration.

The contradiction, then, is between the strength of the January visitor data and the structural limits of the high base. The holiday traffic is a clear indicator of resilient demand and a successful recovery. It confirms the diversification of source markets, with mainland Chinese tourists still dominant but Hong Kong and a growing Southeast Asian segment providing a wider foundation. However, it does not change the arithmetic. The market's ability to sustain its current trajectory will depend on its capacity to attract new spenders and deepen the experience for existing ones, moving beyond simply repeating last year's record. The momentum is real, but the growth story for 2026 is now one of sustaining excellence from an unprecedented high.

Operator Performance and Structural Drivers

The divergent quarterly results among Las Vegas Sands, Wynn Resorts, and MGM Resorts reveal a market in transition, where strategic positioning and operational execution are determining resilience in the face of a high base effect. The data shows that companies with a premium, diversified footprint are outperforming those more exposed to cyclical or competitive pressures.

Las Vegas Sands delivered a robust beat in Q2 2025, posting earnings per share of $0.79 against a $0.53 forecast. This significant upside was driven by strong performance across its key assets, with Macau EBITDA reaching $566 million and Marina Bay Sands EBITDA at $768 million. The company's strategic focus on premium mass gaming and high-end tourism appears to be paying off, allowing it to exceed expectations even as it navigates a challenging macro backdrop. The stock's modest post-earnings rise reflects investor confidence in this execution.

Wynn Resorts reported a record third-quarter adjusted property EBITDAR of $570.1 million, a 7.9% year-over-year increase. The standout performer was Macau, where the company achieved healthy market share and saw a significant increase in mass table drop. This operational strength in its core Asian market, combined with continued growth in Las Vegas, demonstrates the company's ability to leverage its luxury brand across multiple geographies. The results underscore the durability of its premium positioning.

In contrast, MGM Resorts presents a mixed picture. While its MGM China segment achieved a record third-quarter segment Adjusted EBITDAR and market share, its Las Vegas Strip operations are under pressure. The company's Las Vegas Strip net revenues declined 7% year-over-year, a direct hit from the high base effect and ongoing challenges like the MGM Grand room remodel. This divergence highlights a critical strategic tension: the company's future hinges on its ability to replicate Macau's success in its domestic portfolio, a task complicated by intense local competition and shifting consumer behavior.

The bottom line is that these results reveal a bifurcated recovery. Operators with a clear premium brand and a balanced, international asset base-like Las Vegas Sands and Wynn-are demonstrating resilience and growth. Those with a heavier concentration on a single, competitive market, like MGM's Strip, are feeling the strain of normalization. The structural driver here is geographic and brand diversification, which acts as a buffer against regional volatility and allows for more consistent capital deployment.

The 2026 Outlook: Momentum, Catalysts, and Risks

The forward path for Macau's gaming sector hinges on navigating a high-growth base and external pressures. The government's 2026 fiscal budget projects a 3.5% increase in casino gross gaming revenue (GGR) to MOP236 billion, a figure described as "prudent" given international economic uncertainties. This modest target contrasts with the sector's strong 2025 performance, where full-year GGR reached $30.86 billion and restored the market to roughly 85% of its pre-pandemic 2019 level. The December slowdown, with GGR rising just 14.8% year-on-year but falling short of analyst expectations, signals that momentum may be cooling after a powerful rebound.

Key risks threaten to cap this growth. First is the high base effect: even a 4% increase from 2025 levels would see the sector's contribution to overall economic growth decline. Second, regulatory pressures on VIP gamblers, a segment that has led the recovery, remain a vulnerability. Past crackdowns on junket agents have disrupted the high-roller segment, and any further restrictions could hinder recovery. Third, the ongoing property market slowdown in mainland China is a structural headwind, as weaker economic conditions there are expected to increasingly weigh on Chinese tourist spending power and visitation.

This macroeconomic pressure is reflected in broader economic forecasts. Fitch Ratings anticipates Macau's GDP growth will slow to about 4% in 2026, down from 4.6% in 2025, citing weaker conditions in mainland China. The city's economy is also expected to face challenges in stimulating local consumption and supporting small businesses, highlighting the need for deeper diversification beyond gaming.

For investors, the outlook is a mix of cautious optimism and specific catalysts. On the valuation front, a discounted cash flow model suggests Las Vegas Sands is undervalued by 48.8%, implying the market is pricing in a more cautious recovery path than the company's projected free cash flow growth. For Wynn Resorts, the key long-term catalyst is its first-mover advantage in the UAE, where its $5.1 billion resort in Ras Al Khaimah is slated to open in early 2027. Meanwhile, MGM Resorts faces a mixed analyst outlook, with a consensus price target recently revised downward as experts balance optimism for its international operations against concerns over domestic market softness.

The bottom line is that 2026 will test the sustainability of Macau's recovery. The sector's growth is constrained by a high base, regulatory overhangs, and a weakening economic backdrop in its primary market. Success will depend on the government's ability to stimulate non-gaming sectors and on operators' execution in new markets like the UAE. For now, the prudent budget forecast and cautious analyst views suggest a period of consolidation rather than a repeat of the explosive post-pandemic rally.