Nevada Casino Operators Seek Middle East Expansion

May 10, 2023
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Some of the largest U.S. gaming companies are investing in the United Arab Emirates as part of a long-term strategy for international growth, with Wynn Resorts expecting healthy returns from the planned $3.9bn integrated resort it will manage in the country.

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Some of the largest U.S. gaming companies are investing in the United Arab Emirates (UAE) as part of a long-term strategy for international growth, with Wynn Resorts expecting healthy returns from the planned $3.9bn integrated resort it will manage in the country.

“We think the resort will generate between $450m and $600m of steady EBITDA,” Craig Billings, CEO of Wynn Resorts, told analysts on Tuesday (May 9) during a first-quarter earnings conference call.

“The combination of our 40 percent equity ownership in the project along with our management and license fees will drive a very healthy [return on investment] for Wynn Resorts shareholders,” Billings said.

Wynn, which first announced the project 17 months ago, last week unveiled more detailed plans for an integrated-resort development on the man-made Al Marjan Island in Ras Al Khaimah.

Construction work began in March.

The resort is expected to open in early 2027 and construction has already begun on what the company believes will be one of the world’s largest casinos. In its announcement, Wynn unveiled several renderings of the resort on April 27 that included a 1,000 foot tower, a 1,500-room hotel and 24 restaurants, as well as an events center and theatre.

Wynn has partnered with RAK (Ras Al Khaimah) Hospitality, a developer based in the UAE, and will provide about a third of the project’s funding. Its other partner is Marjan, a Dubai-based developer.

The property’s casino will encompass just 4 percent of the property’s overall footprint of 5.6m square feet. The company noted a blended gross gaming revenue (GGR) tax rate of 10 percent to 12 percent, which “incentivizes investment.”

UAE citizens would also not be allowed to enter the casino because gambling is prohibited in Islam.

Wynn executives believe the UAE resort will further diversify its portfolio, which currently includes casino-resorts in Las Vegas, Boston and Macau. Analysts estimate a UAE resort could add $10 to $14 a share prior to opening in 2027.

“The market in Dubai, from a non-gaming perspective, is incredibly healthy,” Billings said. “We think the more time we spend there … this business is much more akin to our Las Vegas business than it is to say to Macau or Boston, which are primarily gaming-centric markets."

Billings said he believes the Wynn Al Marjan would offer a mix of gaming and non-gaming that will “provide a very full and high quality experience and generate very healthy returns.”

Wynn is not the first Las Vegas-based casino company to move into the Middle East.

Caesars Entertainment currently manages two resort properties, including Caesars Palace Dubai, on a man-made island off the coast of Jumeirah Beach in Dubai through a partnership with the locally-based holding company Meraas. Both properties opened in 2018 and were the first non-gaming properties in the company’s portfolio.

Another non-gaming integrated resort is also being developed by MGM Resorts International. The development includes two branded hotels under the MGM Grand and Bellagio names and a collection of MGM Signature villas along the coastline of Dubai.

MGM CEO Bill Hornbuckle confirmed last week the project continues in the development process.

“We are the managers, but the owners, yet again, want to upgrade the property I think with gaming in mind,” Hornbuckle said to analysts during a first-quarter earnings conference call on May 1. “But, you know, it’s up to Abu Dhabi and the national government to ultimately decide.”

Hornbuckle said MGM has stationed company executives in Abu Dhabi since the start of the year, trying to understand the opportunity. He stressed that MGM was focused on Dubai, and given the nature of the project it would be ideal for a potential casino.

“There happens to be 150,000 to 200,000 square feet of space that could be converted into such a thing. But time will tell,” Hornbuckle told analysts.

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