The United Arab Emirates (UAE) stands on the brink of becoming a powerhouse in the global casino industry, with projections indicating potential annual gross gaming revenues (GGR) of US$3 billion to US$5 billion. According to multinational investment bank and financial services company Morgan Stanley, the UAE’s unique positioning, with its array of ultra-luxurious hotels and bustling international airports, sets a robust foundation for a thriving casino market that could rival established hubs like Singapore.
Market comparison and competitive edge:
Morgan Stanley has shed light on the promising aspects of the UAE’s emerging casino industry, drawing favorable comparisons with the highly successful Singapore integrated resort (IR) market. The UAE, particularly through developments like the US$4 billion Wynn Resorts project in Ras Al Khaimah and MGM Resorts’ potential ventures in Abu Dhabi, showcases strong parallels to Singapore’s market dynamics.
The UAE is composed of seven emirates, including Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah.
In its detailed analysis, the investment banking company highlights that despite having fewer millionaires, the growth in ultra-high-net-worth individuals in the UAE outpaces that of Singapore, signaling a burgeoning market with high spending capabilities. The strategic geographic location coupled with a higher population density and significant tourist influx further amplifies the potential for a robust casino industry.
The analysts point to several economic indicators that bolster The Emirates’ potential as a casino hub. The presence of more five-star hotels than Singapore and high international visitation rates provide a solid base for anticipated high returns on invested capital (ROIC). However, the ultimate success of these ventures hinges on several factors including the ability for locals to gamble and the stability offered by the geopolitical landscape.
Challenges and strategic considerations:
As Inside Asian Gaming reports, while the prospects are bright, the UAE’s casino market faces its share of challenges, chiefly regulatory and geopolitical. The absence of commercial gaming licenses currently poses a significant hurdle, with the future landscape depending on how the country in the Middle East regulates local participation and manages geopolitical risks. These factors will play a crucial role in determining the long-term viability and stability of the market.
Morgan Stanley remains optimistic about the UAE overcoming these challenges, potentially establishing more integrated resorts than Singapore’s current duopoly. They note the favorable gaming tax environment, proposed between 10% and 12%, which could further enhance the market’s attractiveness, although this tax rate is yet to be confirmed.
Impact on global gaming revenue:
According to GGRAsia, the expansion of casino operations in new markets like the UAE and Thailand is poised to make a significant impact on global GGR. Morgan Stanley emphasizes that historically, new gaming markets have not only contributed to global game yield growth but have also managed to do so without adversely affecting existing markets.
For instance, when Singapore introduced its casinos in 2010, the subsequent increase in GGR did not detract from Macau’s booming casino industry. This historical precedent supports the potential for the UAE to similarly boost the global casino market without undermining other regional markets.