JP Morgan downgrades its 2025 gross gaming revenue forecast

JP Morgan has lowered its expectations for gross gaming revenue (GGR) in Macao, in part due to the escalating trade war being waged by the US against China. “Mounting macro headwinds compel caution,” analysts DS Kim and Selina Li said in a note published yesterday and cited by casino industry website GGR Asia.

Kim and Li modelled a 10 percent sequential decline for the fourth quarter’s GGR when compared with the first quarter of 2025. That would translate to an 8 percent year-on-year decline for the final quarter, rather than the 5 percent gain initially forecast by the investment bank.

“We believe our cut reflects a reasonable bear case,” the analysts said. In financial forecasting, the term “bear case” refers to a plausible worst-case scenario. Kim and Li added that they hoped their predictions “prove overly pessimistic” as the situation between China and the US was still evolving. 

They also noted that while what currently stands as a 145 percent tariff rate on most Chinese imports to the US may not directly impact Macao, the SAR’s proximity to Guangdong Province – the country’s main export hub – and a weakening yuan could result in “second-order impacts.” Guangdong is the biggest source of visitors to Macao.

Other observers have expressed doubts that the government’s initial forecast for 2025’s GGR, 240 billion patacas, could be met in light of the current tariff war. That will have repercussions for the government’s annual revenue, 80.5 percent of which was made up of gambling taxes last year.

On Monday, in his 2025 policy address, Chief Executive Sam Hou Fai acknowledged that there may be a need to adjust this year’s official budget in light of the situation.