The global gaming industry’s interest in the United Arab Emirates, and more specifically Dubai, has escalated as the city has grown in economic and cultural prominence. Its reputation as a haven for high rollers and global tourists has captured the attention of gaming executives looking for new markets with a proximity to wealth. But the country’s long-standing ban on gambling has made the prospect of expansion into the region little more than a pipe dream to date. Back in April 2021, the Dubai media office denied reports that the emirate was granting licenses for gambling activities.
That could be changing. A recent Reuters report indicates the UAE government will soon permit gaming in the country, opening up the possibility that the most populated city in the United Arab Emirates will become, as Chris Grove (CEO, American Affiliate) called it, “the next global destination for gambling.”
JWS’ Take: The elimination of gambling from the federal penal code would be the latest in a series of reforms issued by the UAE government designed to establish the country as the preferred tourism and business destination in the Gulf. In the last 18 months, it has decriminalized alcohol consumption and premarital cohabitation, rolled out a national lottery that complies with Islamic law, introduced longer-term visas and shifted to a traditional Monday-through-Friday workweek that aligns with the global markets (previously, weekends had been Friday and Saturday).
Back in late January, the Ras Al Khaimah (RAK, one of seven emirates) Tourism Development Authority disclosed its plan to become the first emirate to regulate “integrated resorts” (think: hotels with a casino and other entertainment offerings). On the same day, Wynn Resorts (NASDAQ: WYNN) announced plans to build a new hotel with a casino on the island. Those announcements were the first public indications the UAE government might be willing to consider giving each individual emirate the authority to decide if it will permit gambling and, ultimately, how to regulate the activity.
There is now a consensus among key stakeholders that “a general liberalization of attitudes and policy towards gambling” is on the horizon in the UAE, Grove said. But Grove cautioned that when the government inevitably flips the switch, that does not mean Dubai, considered the most open-minded of the emirates, is going to become the Las Vegas of the east overnight. Instead, look for the emirate to take more of a “tip-of-the-spear approach,” starting with retail, skill-based products, as opposed to games of chance (think: slots), and online gaming.
It is possible to envision Dubai eventually enacting mass and becoming a global gaming destination. But that does not mean the emirate “registers as anything close to a potential priority” for U.S. online sportsbook operators right now, Grove said. While they may be intrigued by the loose characterization of Dubai as a high-roller market, they also recognize that the largest opportunity for global operators in the Gulf is found in integrated resorts.
Brick-and-mortar operators naturally view the opportunity differently. Joe Asher (president of sports betting, IGT) said as long as the economic arrangements are favorable, they should find it to be an attractive market.
“What is the tax rate? What is the license fee? What are the requirements for local ownership? Local participation. Are citizens allowed to gamble? All those questions need to be answered. But you would think any major casino operator with the ability to build a world class destination would certainly be looking at the opportunity [to build in Dubai] should it arise,” Asher said.
Grove agreed. “Folks that have [a chance] to benefit from the expansion of retail and online and have a legitimate opportunity to bring their brands and expertise into the region on the retail side, cannot afford not to investigate,” he said. Remember, there are only a handful of global cities in the world, and the chance to open a new market in one of them is rare.
Grove expects several of the “major retail [casino] folks in the U.S.” will pursue gaming business in the UAE, in addition to Wynn. Caesars, whose Dubai property is its only resort globally without a casino; MGM Resorts, who is building three Las Vegas-brand hotels in Dubai; Hard Rock; Las Vegas Sands; and Mohegan are all deep-pocketed, experienced operators with global brands that could potentially operate in the country. It should be noted that MGM publicly stated gaming has not been part of its plans for those properties.
A fully mature Dubai gaming market has the potential to generate multibillion-dollar annual revenue (think: “California plus”), but Grove cautions there is not great precedent to support that prediction. Macau isn’t a relevant comparison for Dubai, since it serves as a bridge to China, and while Manila has potential for a regional retail-gambling hub, the Philippines is in a very different part of the world. Asher said the number of casinos in the market and how the local laws and regulations shake out will also be factors.
Dubai and the other emirates may offer U.S. retail operators a lucrative new revenue stream, but the Gulf markets are not expected to upset the balance of power in the U.S. “If it did, Las Vegas Sands or Wynn would be the online gambling market leader right now,” Grove said. “Having a massive overseas operation that throws off cash has not translated into a demonstrable advantage in the U.S. on face.”
That may be because there are tradeoffs with building a business in locales around the world. With the additional revenue comes focus dilution, which is already a problem for retail players in competition, with operators focused solely on building online gaming businesses stateside.
(The article was updated in the fourth paragraph to correct the day of Wynn Resorts’ casino-project announcement.)