Predictions Run High for Gaming Revenue in the UAE
Casinos in the United Arab Emirates (UAE) could generate combined gross gaming revenues (GGR) of up to $5 billion annually, according to an analysis by investment bank Morgan Stanley. The bank's report points to several factors that make the UAE an attractive market for gaming, including its highly trafficked airports, a significant number of ultra-high-net-worth individuals, and a high concentration of five-star hotels, more than those found in established gaming markets like Singapore.
Dubai in the United Arab Emirates. (Source: LinkedIn)
LISTEN TO THIS ARTICLE:The estimates for potential revenues, however, hinge on key variables such as whether UAE locals will be allowed to gamble, as current restrictions prohibit most forms of gaming. In addition, geopolitical risks remain a factor that could impact the long-term viability of the casino sector in the region, according to analysts. These factors introduce some uncertainty about the exact potential of the UAE casino market but do not detract from the overall promising outlook presented by Morgan Stanley.
Related: UAE Considers Seven Casino Licenses, Dubai Plans in the AirWynn Resorts is already making significant moves in the UAE by developing a $4 billion integrated resort in Ras Al Khaimah (RAK), one of the country's northern emirates. The project marks the first major casino development in the region, and it could be a bellwether for the broader acceptance and expansion of gaming in the UAE.
In addition to Wynn's investment, MGM Resorts is reportedly eyeing a potential gaming license in Abu Dhabi, suggesting that other global operators are closely watching the market's evolution and regulatory changes, despite some analysts stating that the area might not attract US gaming operators.
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Piggybacking Off Asian Gaming Success
Morgan Stanley's analysis compares the UAE's potential gaming market to the successful casino industry in Singapore, which has emerged as a key hub for gaming in Asia. The UAE, and specifically the combination of Dubai and Ras Al Khaimah, is seen as offering similar demand drivers to Singapore, a country that has become known for its world-class integrated resorts (IRs).
Dubai and RAK have a larger population base compared to Singapore, higher visitation numbers due to the country's global connectivity, and more five-star hotels, which positions the UAE well for growth in the casino sector. While the UAE currently has fewer millionaires than Singapore, the number of ultra-high-net-worth individuals has been growing faster in recent years, adding to the appeal of the market for luxury gaming operations.
Although the UAE has not yet issued any commercial gaming licenses, Morgan Stanley indicated that the country could potentially support more integrated resorts than Singapore's two-casino model. Singapore's duopoly is governed by strict gaming regulations and taxes, while the UAE is expected to offer a more favorable tax rate for casinos, likely between 10% and 12%, although these figures are not yet finalized. The combination of lower taxes and favorable regulatory conditions could make the UAE a highly profitable market for international casino operators.
Wynn Resorts has previously indicated that it expects a return on invested capital (ROIC) of between 12% and 15% from its Ras Al Khaimah project. The Morgan Stanley report notes that Western Europe and Southern Asia are expected to be the primary feeder markets for the UAE's casinos, given their proximity and strong travel links to the country.
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