Investment bank Morgan Stanley Asia Ltd forecasts a significant increase in Macau’s gaming revenue for the fourth quarter of 2025, expecting an 8 percent rise from the previous quarter and a 17 percent increase compared to the same period last year. This growth is attributed to a strong performance in December, driven by favorable comparisons despite high operational costs and the closure of satellite gaming facilities.
Analysts Praveen Choudhary and Anson Lee of Morgan Stanley predict that December will see a 22 percent rise in gaming activity, benefiting from a low comparative base in 2024. They believe this will bolster the overall quarterly performance, despite mixed results in October and November. The analysts expect Macau’s casinos to achieve property earnings before interest, taxes, depreciation, and amortization (EBITDA) of nearly US$2.25 billion for the fourth quarter, which represents a 5.9 percent increase from the previous quarter and a 15.2 percent rise year-over-year.
Even with rising operating costs, which have exceeded 10 percent compared to last year, the analysts anticipate some margin improvements through effective cost management. They estimate that Macau’s six concessionaires will incur daily operating expenses of about US$23.5 million throughout the final quarter.
SJM Holdings Ltd, in particular, faces significant cost pressures with an expected 15 percent increase in quarterly operating spending. This is largely due to the integration of staff from closed satellite casinos, as these venues merge into the networks of major concessionaires.
The fourth quarter marks the end of Macau’s satellite casino era, with the Casino Landmark, part of the New Orient Landmark Hotel, ceasing operations on December 30 under SJM Resorts Ltd’s license. This closure signifies the completion of the transition away from third-party investment gaming models, presenting a new operational landscape for the industry.
Approximately 4,149 employees will need to be incorporated into SJM’s core operations following these closures, posing ongoing challenges in operational and cost management as major properties restructure their workforce.
In terms of player reinvestment, Morgan Stanley foresees slight increases across the sector, with Sands China Ltd expected to make deliberate reinvestments to expand its market share. These strategic financial decisions highlight the competitive dynamics as operators vie for dominance in a consolidating market.
Mass market gaming remains the primary earnings driver in the fourth quarter, with Las Vegas Sands Corp’s Sands China subsidiary and MGM China Holdings Ltd anticipated to gain the largest mass market shares. Galaxy Entertainment Group Ltd is also poised for significant gains due to favorable hold rate dynamics, particularly with elevated VIP hold rates observed in October. These dynamics offer Galaxy an opportunity to enhance its revenue share despite the broader focus on mass market gaming elsewhere.
Macau’s fourth-quarter performance reflects ongoing growth and industry transition, with satellite consolidation and concentrated operator dynamics shaping the landscape. The combination of robust seasonal demand, potential margin improvements, and shifting market shares adds layers of complexity, demanding a nuanced analysis of individual property performance within the broader industry context.
While Morgan Stanley’s outlook is optimistic, it is vital to consider the challenges that remain. The industry’s dependence on mass market gaming could be both a strength and a vulnerability, as fluctuations in consumer behavior or economic conditions could impact this segment significantly. Moreover, the successful integration of employees from satellite casinos into larger operations will be critical in maintaining cost efficiency and operational smoothness.
Despite these challenges, the overall sentiment remains positive. The holiday season typically draws increased visitor numbers to Macau, boosting gaming revenues. However, some industry insiders caution that the consolidation of satellite casinos might lead to short-term disruptions, which could temper growth if not managed carefully.
In conclusion, while the road ahead presents obstacles, the combination of strategic player reinvestment, market share realignment, and operational efficiency strategies positions Macau’s gaming sector for a robust close to 2025. As operators navigate this transitional period, their ability to adapt and innovate will likely determine their success in an evolving market landscape.
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