Casinos face margin pressure as gaming commissions hit record high

Local casino operators are facing increased margin pressure as competition for high-value customers drives gaming commissions to a record share of gross gaming revenue, according to CBRE Equity Research.

Gaming commissions accounted for 20.9% of industry-wide gross gaming revenue in the June quarter, the highest level on record, analysts John DeCree and Max Marsh said in a research note. The elevated ratio reflects intense promotional activity, particularly in the premium segment, although unusually low VIP hold also contributed to the higher proportion.

In dollar terms, gaming commissions fell 5% quarter over quarter as gross gaming revenue was higher in the first quarter. CBRE expects total commission spending to increase in the second half of 2026 but sees the ratio to GGR stabilizing if gaming win rates remain less volatile.

The analysts said concessionaires continue to face limited EBITDA flow-through as customer reinvestment and operating expenses remain elevated in the competitive market.

Macau’s gaming revenue fell 1.2% year over year to MOP21.9 billion in August, according to official data. However, CBRE said improving results from June and July, together with an easier year-over-year comparison in September following last year’s typhoon disruption, could support a return to growth or help sustain the market’s top line.

Despite the pressure on margins, CBRE remains positive on the sector’s cash-generation capacity. The analysts said most concessionaires continue to generate significant cash, potentially supporting dividend-focused investors while casino stocks remain at relatively low valuations. LV