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US-based casino operator Wynn Resorts has released new financial metrics and regulatory details for its United Arab Emirates (UAE) project, including a 15-year renewable licence and a blended tax rate comparable to Singapore.
Four days after announcing that it had secured the UAE’s first integrated resort (IR) licence for its project in the emirate of Ras Al Khaimah, Wynn Resorts CEO Craig Billings and several colleagues on Tuesday (October 8) presented forecasts pointing to strong and sustainable gaming, visitation and retail metrics.
A slideshow released after the invitation-only event at Wynn Las Vegas indicated that Wynn Al Marjan Island will enjoy a 15-year renewable licence and a blended tax rate of 10 to 12 percent, similar to Singapore’s tax blend for VIP and mass gaming.
The UAE gambling regulator, the General Commercial Gaming Regulatory Authority (GCGRA), is yet to confirm the awarding of the licence to Wynn Resorts or any associated regulatory details. Wynn Al Marjan Island is due to launch in 2027.
Wynn Resorts also updated the cost of the project from around $4bn to $5.1bn after adjusting for inflation, just short of $5.2bn it spent on the Wynn Palace in Macau.
It also confirmed 40 percent equity ownership of the joint venture, alongside local companies RAK Hospitality Holding LLC, which holds 60 percent, and developer Al Marjan Island LLC.
Wynn’s own equity contribution currently stands at $1.08bn, compared with RAK’s $1.62bn, with the remainder of the budget sourced from debt.
Wynn’s substantial management and licensing role also garners “attractive” fees from the project, mitigating downside risk, it said.
“Annual minimum fees for the first five years post-opening provide downside protection” for Wynn Resorts, it said.
The company projected steady-state gross gaming revenue (GGR) of between $1bn and $1.66bn, with a base of $1.33bn, and steady-state adjusted property EBITDAM (earnings before interest, tax, depreciation, amortisation and management fees) of between $500m and $800m, with a base of $625m.
GGR would derive from a fairly even balance of domestic, foreign and VIP foreign players, with the last of these contributing 37 percent of gaming revenue, it said.
However, the company’s projection of 34 percent of revenue sourced from domestic play may overstate the spending power of migrant workers who dominate the UAE population.
Overall, Wynn Resorts “assumes” a national market of $3bn to $5bn and 33 percent company market share.
Speaking at G2E in Las Vegas on Monday (October 7), John DeCree, head of institutional investor research at CBRE Capital Advisors, cited a higher market projection: up to $8.5bn in annual GGR.
That similarly assumes that three to four IRs will be built, however, and only one other company – MGM Resorts International – has announced a tilt for a casino licence to date.
"I think the biggest issue for the market is supply constraints," DeCree told G2E delegates. "Our assumption is that with enough gaming capacity, UAE should be a larger casino market than Singapore."
DeCree noted that there is no published legislation or regulation yet to govern casino gaming, but he suggested casinos would most likely be legalised via a similar decree to one in 2020 which authorised alcohol consumption.
It is possible that such a decree has already been adopted, he said. “It just hasn't been made public yet".
In terms of regulatory oversight, DeCree noted that the GCGRA had been staffed with renowned gaming executives, lawyers and regulators, and appears determined to establish itself as a "globally sophisticated regulatory body".
Although the GCGRA has included internet gaming and sports wagering in its initial licensing forms, it is more likely that the initial focus will be on a national lottery and IRs, DeCree said.
Still, the UAE is very focused on developing its technology sector and iGaming may fit within that broader policy objective, so internet gaming is a possibility "down the road".
"Right now, it appears everything is on the table," DeCree said.
