Casinos in the United Arab Emirates could generate combined gross gaming revenues of between US$3 billion and US$5 billion a year according to investment bank Morgan Stanley, citing the country’s busy airports, high number of ultra-high-net-worth individuals and the fact that it boasts more 5-star hotels than Singapore.
However, such figures are dependant on whether locals are permitted to gamble, while geopolitical risk remains a long-term consideration, analysts stated in a note.
Taking a deep dive into the UAE opportunity, Morgan Stanley outlined a raft of positive indicators for the emerging market, where Wynn Resorts is currently developing a US$4 billion integrated resort in Ras Al Khaimah (RAK) and MGM Resorts eying a possible license in Abu Dhabi.
According to Morgan Stanley, the UAE compares favorably to the hugely successful Singapore IR market, with Western Europe and Southern Asia expected to become the major feeder markets.
“We benchmark RAK and its closest large international airport/city Dubai to Singapore,” the analysts wrote. “Bottom-line, RAK/Dubai appear to offer similar demand drivers to Singapore, which could point to outsized ROIC.
“Dubai/RAK have a larger population with higher visitation and more 5-star hotels than Singapore. While the number of millionaires is lower, the growth in ultra-high net worth individuals has been higher in recent years.”
Although no commercial gaming licenses have yet been issued, Morgan Stanley added that the UAE could end up with more IRs than Singapore’s duopoly and with a favorable gaming tax of between 10% and 12%, albeit not yet confirmed.
Wynn Resorts has stated previously it expects ROIC of between 12% and 15%, with market wide GGR estimates topping out at US$5 billion pending the number of IRs and other factors.
