Macau’s three US operators could see their 10-year concessions terminated or not renewed when they expire in 2032 under a “worst-case scenario”, while more plausible would be pressure to sell their Macau casino stakes should US-Sino relations further deteriorate, according to ratings agency Fitch.
While both outcomes are deemed highly unlikely, the agency outlined its concerns over recent tensions related to the tariff war which could result in retaliatory measures against US gaming companies in Macau – namely Las Vegas Sands, MGM Resorts and Wynn Resorts.
“China has targeted foreign companies following diplomatic disputes in the past, and these actions typically involved increased regulatory scrutiny rather than outright bans,” Fitch said. “Consumer boycotts are also possible, but they tend to be short-lived.
“Termination or non-renewal of these operators’ Macau gaming licenses in 2032 would be a worst-case scenario, which Fitch views as highly unlikely. A scenario where US operators are compelled to sell their Macau operations could become more plausible if US-China relations deteriorate further in the medium term, but that is not envisaged in the forecast horizon.”
It is noted that all three operators have material exposure to Macau, which contributed 63% of Sands’ 2024 consolidated revenues, 52% for Wynn and 23% for MGM. The existing impact of the trade tensions and China’s generally weaker economic outlook are already expected to pressure Macau gaming earnings in the short-term.
Working in the operators’ favor is the vital role they play in propping up the Macau economy given that gaming contributes around 80% of tax revenues – more than half of that from the three US companies. All have also pledged significant investment into non-gaming over the course of their current 10-year concessions.
And while the short-term earnings outlook for Macau gaming remains hazy, Fitch noted that healthy balance sheets and ratings headroom mitigate some of the risks for Fitch-rated issuers.
“LVS has ample rating headroom at current levels, with projected leverage ratios near positive rating sensitivities,” the agency said. “Liquidity is abundant, supported by high cash levels and strong projected FCF despite dividend payments, share repurchases and capital spending projects. MGM and Wynn also have adequate rating headroom at current levels.”
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