The United Arab Emirates (UAE) is set to become a powerhouse in the global gaming industry, with an expected annual Gross Gaming Revenue (GGR) of between 3 to 5 billion USD. Morgan Stanley, a multinational investment bank and financial services company, states that the UAE, with its numerous ultra-luxury hotels and busy international airports, has a unique positioning that lays a solid foundation for a thriving gaming market, comparable to established gaming hubs like Singapore.
Market Comparison and Competitive Advantages:
Morgan Stanley reveals the prospects of the emerging casino industry in the UAE and makes a favorable comparison with the highly successful Integrated Resorts (IR) market in Singapore. The UAE, particularly through developments like the $4 billion Wynn Resorts project in Ras Al Khaimah and potential investments by MGM Resorts in Abu Dhabi, shows strong similarities to the market dynamics in Singapore.
The UAE consists of seven emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah.
The investment bank emphasizes in its detailed analysis that despite having fewer millionaires, the growth rate of ultra-high-net-worth individuals in the UAE surpasses that of Singapore, indicating that the UAE is a strong emerging market with significant consumer power. Its strategic geographical location, coupled with a high population density and a large influx of tourists, further enhances the potential for a booming gaming industry.
Analysts point out that several economic indicators strengthen the UAE's potential as a casino hub. The UAE has more five-star hotels than Singapore and a large number of international visitors, providing a solid foundation for the anticipated high Return on Invested Capital (ROIC). However, the ultimate success of these investments depends on several factors, including the local population's gambling capabilities and the stability of the geopolitical landscape.
Challenges and Strategic Considerations:
According to Inside Asian Gaming, despite the bright prospects, the casino market in the UAE also faces numerous challenges, mainly regulatory and geopolitical. Currently, the lack of commercial gaming licenses is a significant obstacle, and the future outlook depends on how this Middle Eastern country regulates local participation and manages geopolitical risks. These factors will play a crucial role in determining the market's long-term viability and stability.
Morgan Stanley remains optimistic about the UAE overcoming these challenges and potentially establishing more integrated resorts than the current duopoly in Singapore. They note that the UAE's gaming tax environment is very favorable, with expected tax rates between 10% to 12%, which could further enhance the market's attractiveness, although this rate is not yet confirmed.
Impact on Global Gaming Revenue:
According to GGRAsia, the expansion of casino businesses in new markets like the UAE and Thailand will have a significant impact on global gaming revenue. Morgan Stanley emphasizes that historically, new gaming markets have not only boosted global gaming revenue growth but have also done so without adversely affecting existing markets.
For example, when Singapore opened its casinos in 2010, the subsequent growth in gaming revenue did not affect the thriving casino industry in Macau. This historical precedent suggests that the UAE has the potential to similarly drive the global casino market's development without harming other regional markets.
