Saudi Arabia's Emerging Role in the Multibillion-Dollar Gambling Industry

Author: Matthew Haynes

Whisper it quietly, but there is one country that could yet emerge in the multi-billion dollar gambling industry and become the undisputed hotspot in the world.

Armed with a war chest that surpasses the $1.5 trillion mark and with over $700 billion worth of assets under management, the Public Investment Fund (PIF) of Saudi Arabia has been one of the most aggressive global sovereign wealth funds over the last couple of years. It should be noted that this is backed by the House of Saud, the country’s royal family, which has an estimated net worth in the low trillions of dollars.

Making major plays in effectively every industry in a bid to establish the country as the worldwide epicenter, this is a nation that is not messing around.

Having already essentially commoditized sport, in addition to targeting key industries such as banking, construction, and technology, there is one other that certainly inspires intrigue.

Within the confines of power, it is understood that tentative plans are being put in place to create a Saudi Arabian gambling hub that could further help the country reach new financial heights.

Currently, gambling is prohibited in the country, though this was the case in fellow sovereign state Abu Dhabi, which is now set to emerge as the latest nation and only Islamic state to follow through on ambitious plans.

Saudi Arabia's Ambitious Bid to Lead the Global Gaming Industry

Over the last 12 months, the state has made significant investments in gambling companies and live casinos around the globe, in its attempt to become the principal country for gaming and e-games in the world.

Billions have been invested by the PIF in the latest industry that it has identified to make its mark on. The Crown Prince Mohammed bin Salman al Saud is understood to be keen on this particular niche and holds a particular personal passion for the iGaming industry.

It could well prove to be the gateway into softening the stance for gambling in the country, in the same way that happened in the US, which started by offering the ability to gamble on fantasy sports.

Then, there is also ego at stake. The size of the country’s ambition sees it want to establish itself as number one in every single industry that has potential and this has been evident by the sheer amount of billions of dollars that has been invested over the last two years.

When you consider that the predicted size and market capitalization of the US online gambling market is expected to exceed $100 billion soon, it would smart to suggest that Saudi Arabia would want to develop its own rival gambling market.

In addition, the revenue that it could generate from taxation, sponsorships and even multi-industry partnerships may become too great for the state to ignore, especially considering the natural links to gambling in other industries that the country has its eye on growing.

Furthermore, the state would be confident of generating substantial revenue; salaries and the levels of disposable income in Saudi Arabia are among the highest in the world; as such, attracting customers would unlikely be a problem.

Also, with the country having its eyes on boosting tourism, underlined by the colossal sums of money that have been plowed into advanced, futuristic construction of major developments, adding mesmerizing land-based casinos into the equation could hit a sweet spot for many future tourists.

Potential Roadblocks for the Saudi Arabian Gambling Market

The reality is that, for the moment at least, gambling is still very much prohibited in Saudi Arabia, though as we have seen over the last few years, that has not stopped multiple countries from passing gambling laws when they have seen how much they can generate in revenue from taxation.

Currently, the Ministry of Justice is responsible for implementing and imposing laws in the country that relate to all those associated with gambling.

Meanwhile, the Communications and Information Technology Commission (CITC) oversees the country’s internet, which includes restricting access to gambling websites and monitoring online activities that are associated with online gambling. Furthermore, the Saudi Arabian Monetary Authority (SAMA) keeps an eye on financial transactions that are related to gambling.

Should the House of Saud and the PIF have designs on establishing Saudi Arabia as a gambling jurisdiction, these are three hurdles that would need to be overcome.

There is also the question surrounding the demand for gambling in the country, which could cast a shadow on whether it would be an expensive investment should laws be passed. However, despite the country having an almost bottomless pit of money, minimum salaries in Saudi Arabia aren’t perhaps what many might think they are. As such, it suggests that should a law be passed, the attraction would be there - many perhaps likely to fixate on attempting to win the kind of money that allows them to afford the rising cost of living.

Could Precedent Have an Effect on Any Decision?

There are many cases in the industry and throughout the last couple of decades where influential supporters of regulating gambling have faced stiff opposition, having bids turned down and rejected on multiple occasions.

Undoubtedly, the US is the main example, namely, numerous states, with the exception of New Jersey and Pennsylvania, though, over the last four years, others have been convinced to change their stance.

Revenue generated by taxation from gambling companies has been a big motivator, though others have included well-drafted bills outlining provisos such as adhering to and promoting responsible gambling while assisting with corporate social responsibility programs that give back to people with gambling addiction.

Other countries, such as the Netherlands, have encountered similar problems, this being arguably the strictest gambling jurisdiction in the world.

Ultimately, if the PIF is convinced that Saudi Arabia could become a powerhouse in the gambling industry and is able to attract the kind of components that are helping the country become number one in other industries, then it is certainly possible to move any possible roadblocks to have gambling approved.

Impact of Gambling Legislation on Saudi Arabia

With the country having essentially been shrouded in mystery for the last couple of decades, it is only just emerging on the global stage for all to see, with the media having been key in almost rehabilitating previous conceptions of the country.

Effectively, the power brokers in the country have an opportunity to mold Saudi Arabia into their own image. It remains to be seen the effect that the introduction of a gambling bill will have on this, though, it could lead to the landscape of the country being transformed significantly.

This will especially be the case if it leads to a surge in the development of land-based casinos or if a particular region is identified to become a gambling hub. However, this will inevitably boost employment in the country, notably in the construction industry, should plans be put in place for casinos to be built.

The resort of Monte Carlo (Monaco) has become recognized as the home of the international casino jet set, known for its exclusivity, which Saudi Arabia may well adopt if a gambling bill is, indeed, passed - particularly with the amount of investment already being plowed into the country.

Unpredictability of the Gambling Industry

In this industry, you can never rule anything out due to the number of variables that can affect a decision. A decade ago, it looked highly unlikely that online gambling would ever become widespread in the US; however, it is now one of the fastest growing and soon to be the biggest markets in the world.

The likelihood is, though, that while foundations might be tentatively put in place, a gambling bill in Saudi Arabia might not pass for some time - at least, certainly not in the immediate to very short term.

Of course, should there turn out to be a valid demand for it and those in power see the benefits, this could become a serious business.