MGM Resorts International CEO Bill Hornbuckle is confident that their planned resort project within the United Arab Emirates (UAE) will eventually be licensed to offer casino gaming, as the company continues to move forward with opportunities in Japan and New York.
“Originally, it was just going to be a management agreement because we wanted the stake,” Hornbuckle said. “We have told them, we will put equity in or will lease the casino in its entirety and give us the casino business. I don’t know if they are going to want to be in the casino business.”
MGM has been involved with a project with Wasl Asset Management Group in Dubai that will see the Las Vegas-based company manage a major non-gaming resort being developed, which also includes a 150,000 to 200,000-square feet space that could be used for a casino. The 1,000-room hospitality project is being built on a man-made island called Proto Island.
Since the beginning of the year, Hornbuckle has made it clear in conversations with analysts and reporters that any legalization of gaming in the UAE as a whole was up to Abu Dhabi and the national government to decide.
Hornbuckle said he ultimately expects MGM will end up leasing the casino.
“What we are not going to do is take our brand, our company, our database of customers and get an 8 percent to 10 percent (vigorish). That ain’t happening,” Hornbuckle told attendees on Thursday (September 7) at the Bank of America Securities 2023 Gaming and Lodging conference in New York.
“So, it has to be a sizeable piece of the real gaming business,” he said.
Wynn Resorts continues to build its $3.9bn resort on the man-made Al Marjan Island in Ras Al Khaimah, the northernmost emirate in the UAE, which is dominated by Dubai. It is the first resort development in any of the seven emirates to expressly include legalized gaming.
On Monday, the UAE announced it was creating its first gambling regulatory authority to oversee lotteries and potentially other forms of gaming.
“Reportedly there is a gaming degree that has been signed but not released,” Hornbuckle said. “But somewhere between all this activity, I can assure you that Wynn is not on the ground without an understanding. Each emirate has the right to do this or not.”
Hornbuckle said there may be a process in Abu Dhabi, which has expressed an interest in gaming and is “interesting because it is the heart of the government.”
“But it’s a place of value. The place has tourism today, has infrastructure, has 140,000 hotel rooms and a massive airport in Dubai.”
Hornbuckle said he “hopes and believes” that MGM together with its local partner Wasl Asset Management Group, which is owned by UAE Prime Minister and Vice President and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, “can push the project forward up to and including gaming.”
MGM’s involvement in the UAE began with a discussion of a project in 2015, long before the dialogue started on casinos, he said.
Hornbuckle also said that he was excited about his predecessor Jim Murren being named chairman of the UAE’s newly created federal General Commercial Gaming Regulatory Authority (GCGRA) but did not comment on how Murren might regulate and oversee a newly created gaming industry.
The creation of the GCGRA confirms the entry of the Muslim-majority UAE into the once-taboo gambling industry via multiple gaming segments, although it remains unclear if gambling will be available in some format in all seven emirates of the federation.
“Potentially, the country puts out its regulations, which it seems prepared to do,” he said. “We see this as a $3bn-plus market opportunity. The potential of this long term, we think, is pretty compelling.”
The UAE is only one part of MGM’s long-term growth strategy.
Closer to home, Hornbuckle noted the company received responses back to its first set of questions submitted to the New York regulator regarding new casino-resort licenses and had submitted a second batch of questions before the October 6 deadline.
“They will then respond at their choosing,” he said. “It is our hope and belief that we will have made … an actual submission for a license by the end of this year.”
MGM already operates Empire City Casino at Yonkers Raceway, a video lottery terminal and electronic table game facility it bought in May 2019 for $850m.
Hornbuckle said MGM was contemplating about a $2bn extension of the current facility, should it receive a full casino-resort license.
“I will say this, if they said so tomorrow, we could have tables in play in four to six months. The state will get its $500m immediately and we’ll be in the table games business fairly quickly.”
Hornbuckle reminded attendees that MGM already has a community agreement in place, but he expects regulators are going to give others a reasonable amount of time to get their agreements.
“What is reasonable in this marketplace given the politics, you all know better than I would,” Hornbuckle said. “If after nine months you can’t get it in play, maybe you can’t.”
Shaun Kelley, a senior research analyst with Bank of America who moderated a discussion with Hornbuckle following his keynote speech Thursday, also asked the MGM boss about the possibility of online casino games being legalized in New York and for a status update on Japan.
“It depends on the economy,” Hornbuckle said of iGaming in New York. “Is there a need for revenue? That always plays into it. As it related to New York, it would be the last thing to go, meaning everything else has been authorized.”
“They have said to us, brick-and-mortar first and then we’ll see,” he said.
In terms of Japan, Hornbuckle confirmed he would travel to the country later this month to sign the limitation agreement and the lease to get MGM's $10bn project in Osaka underway. The gaming industry in Japan is a $40bn business, and Osaka alone is $19bn of it, he said.
“That means this will open in 2030,” he said. “The scope of the project has changed but not the budget. If you think about the marketplace, we are probably going to be the only casino for a very long time in Japan.”