UAE Casinos Could Post $5B in GGR, Rival Singapore, Says Morgan Stanley
According to recent estimates by Morgan Stanley, casino resorts in the United Arab Emirates (UAE) may potentially earn between $3 billion and $5 billion in gross gaming revenue (GGR) annually, possibly matching Singapore in that regard.
The number of gaming establishments required to reach $5 billion was not disclosed by the bank. Although casino gaming has not been formally permitted by UAE officials, Wynn Resorts (NASDAQ: WYNN) began construction on its Wynn Al Marjan Island integrated resort in Ras Al Khaimah (RAK) earlier this year. T hat's anticipated to be the first casino hotel in the Arab world that is regulated. MGM Resorts International (NYSE: MGM) recently announced that it would seek an Abu Dhabi gaming license.
"We benchmark RAK and its closest large international airport/city Dubai to Singapore,” noted Morgan Stanley analysts. “Bottom-line, RAK/Dubai appear to offer similar demand drivers to Singapore, which could point to outsized return on invested capital.”
The experts highlighted that Dubai/RAK has various benefits over Singapore, such as a larger population, more tourists, and a greater selection of five-star hotels.
How the UAE Casino Market Could Grow to $5 Billion
T he Morgan Stanley prediction of $3 billion to $5 billion in GGR is plausible. When it completely ramps up, Wynn Al Marjan Island, which is set to open in early 2027, may generate $1.4 billion in GGR annually, according to earlier estimates from other research firms.
That suggests that the Wynn property alone might pay for about half of the $3 billion, but other considerations are necessary to get there and beyond. These include whether or not locals are allowed to wager, the total number of gaming establishments allowed in the United Arab Emirates, and the contributions made by MGM's casino.
The actual number of gaming venues the Emirates will eventually have is unknown, according to Morgan Stanley, but it's likely that as the gaming regulatory process progresses, the UAE will eventually authorize more integrated resorts than the two in Singapore. MGM CEO Bill Hornbuckle stated last year that the number might eventually reach four.
Morgan Stanley went on to say that Europe and Southern Asia would probably account for the majority of foreign guests in UAE casinos.
Additional Singaporean Casino Comparisons for the UAE
Whether or not locals are allowed to wager at UAE casinos may be a key factor in their GGR success. Although there are fewer millionaires in the Emirates than in Singapore, the country has seen a surge in the number of ultra-high net worth individuals in recent years, according to Morgan Stanley. The Emirates are home to a significant amount of oil riches.
T he bank went on to say that casinos in the United Arab Emirates are unlikely to eat into the offerings of competing casinos in other areas, citing the opening of Singapore's two integrated resorts as an example.
“Historically, we have seen limited impact of new gaming markets cannibalising existing ones. For example, Singapore opened two of its casinos in 2010 — with 2011 GGR of US$6 billion — but Macau still saw a US$9.9 billion increase (+42 percent year-on-year) in its GGR in 2011,” wrote the analysts.
