MGM Resorts (MGM) Q2 2026 earnings review
Las Vegas Table Hold Masks Underlying Room and Margin Softness
MGM posted record Q2 consolidated revenue of $4.45B (+1% YoY), but the quality of the beat is poor. The top-line preservation was heavily reliant on an abnormally high 29.6% table games win percentage on the Las Vegas Strip. Without this luck factor, Las Vegas would have likely contracted, as room rates (ADR) fell 4%. Furthermore, underlying profitability is reversing: Consolidated Adjusted EBITDA dropped 6% YoY to $610M, and Adjusted EPS fell 25% to $0.59. MGM China, previously the company's primary growth engine, saw its EBITDAR plunge 15% due to volume declines and increased intercompany fees.
🐂 Bull Case
MGM Digital revenue accelerated 20% YoY to $196M, driven by international interactive gaming. Meanwhile, the BetMGM venture continues to yield positive operating income ($23M in Q2).
Excluding the disposition of Northfield Park, same-store Regional Operations revenue grew 3% to $904M, showing that domestic drive-to demand remains remarkably stable.
🐻 Bear Case
Las Vegas ADR dropped 4% to $242 and RevPAR fell 4% to $224. The leisure consumer is pushing back on pricing, confirming warnings from previous quarters regarding lower-end softness.
MGM China Segment Adjusted EBITDAR fell 15% YoY. Main floor table drop declined 7%, indicating potential market share losses in Macau's highly competitive premium mass segment.
⚖️ Verdict: 🔴
Bearish. Management points to record revenues, but a deeper look shows falling room rates, declining Macau table drop, and shrinking EBITDA margins. A lucky table hold in Vegas is doing the heavy lifting.
Key Themes
High Table Hold Bails Out Las Vegas
Las Vegas Strip casino revenue surged 17% YoY, but this was entirely driven by luck. Table games drop actually fell 2% to $1.52B. However, an abnormally high table games win percentage of 29.6% (compared to 22.9% in the prior year) drove a 27% increase in table games win. This is a severe red flag: underlying gaming volumes are shrinking, and the segment's 3% overall revenue growth is artificially inflated by volatility.
Las Vegas Hotel Metrics Softening
Despite management's positive narrative regarding luxury offerings, core hotel metrics are decelerating. Room revenue fell 2% YoY to $717M. While occupancy remained flat at 93%, ADR dropped 4% to $242, and RevPAR fell 4% to $224. This signals that MGM is having to sacrifice rate to maintain occupancy levels, pointing to a weakening pricing environment for the Las Vegas leisure customer.
MGM China Profitability Reverses
After multiple quarters of record performance and market share gains, MGM China is reversing course. Segment Adjusted EBITDAR fell 15% YoY to $257M. Part of this decline is structural: a new branding agreement increased intercompany license fees by $21M. However, even excluding this fee, operational volumes are down, with main floor table games drop shrinking by 7% YoY to $3.81B.
Digital Expansion Execution
Digital operations remain a bright spot. MGM Digital (which includes LeoVegas and other international interactive subsidiaries) saw revenue accelerate 20% YoY to $196M. While the segment still operates at an adjusted EBITDAR loss of $31M due to investment in new markets like Brazil, the unconsolidated BetMGM North America venture continues to deliver, contributing $23.1M in operating income share to MGM this quarter.
Relentless Capital Returns
MGM's financial engineering remains a core pillar. The company repurchased 4 million shares for $164 million during the quarter. While this helps buffer EPS, Adjusted EPS still fell 25% YoY to $0.59, highlighting that buybacks cannot fully outrun the current margin compression. The company has roughly $1.4 billion remaining under its April 2025 authorization.
Other KPIs
Decelerating. Down 6% YoY from $648 million in 25Q2. This indicates negative operating leverage, as general and administrative expenses rose 4% YoY to $1.26B, significantly outpacing the 1% growth in consolidated revenues.
Reversing. Despite an aggressive share reduction program, Adjusted EPS fell 25% from $0.79 in the prior year. This was heavily impacted by a $14 million income tax expense resulting from an increase in the valuation allowance on foreign tax credits, combined with weaker underlying property-level flow-through.
Key Questions
Normalized Las Vegas EBITDAR
Las Vegas Strip casino revenue was heavily supported by a 29.6% table games win percentage. What would Las Vegas Segment Adjusted EBITDAR have been if hold had normalized closer to the historical 22-24% range?
Las Vegas Room Rate Pressures
With ADR and RevPAR both down 4% year-over-year, are you seeing increased pushback on pricing from the leisure segment, or is this primarily driven by a shift in mix between group and transient business?
MGM China Volume Declines
Main floor table drop in Macau declined 7% year-over-year. Does this reflect market share losses to peers who have increased promotional activity, or are you seeing a broader macro slowdown in the premium mass customer base?
MGM Digital Profitability Timeline
MGM Digital revenue grew an impressive 20%, but EBITDAR losses widened to $31 million. What is the timeline for this segment to inflect to positive EBITDA, and how much of current losses are ring-fenced for the Brazil rollout?