UAE Approves First Lottery, Could Set Stage for Wynn Casino
The first gaming regulatory body in the United Arab Emirates (UAE), the General Commercial Gaming Regulatory Authority (GCGRA), awarded a lottery license for an Abu Dhabi-based company over the weekend, fueling rumors that the action would open the door for casino gambling in the Emirates.
The Game LLC was awarded a lottery license by the GCGRA, which was established in September of last year and is chaired by Jim Murren, the former CEO of MGM Resorts International (NYSE: MGM). It is anticipated that the business, which is a division of Momentum, which is closely controlled, will provide lottery games under the UAE Lottery name.
The lottery decision, according to some experts, is good news for Wynn Resorts' (NASDAQ: WYNN) under-construction Wynn Al Marjan Island integrated resort in Ras Al Khaimah.
John DeCree, an analyst at CBRE Institutional Research, wrote in a note to clients on Monday that the approval of the Abu Dhabi lottery is a "key marker and potential sentiment-changer" that adds "validity and transparency" to the UAE's gaming regulatory process. He went on to say that the lottery's approval might "help allay investment community concerns about legalized commercial gaming in the United Arab Emirates."
The UAE Lottery May Benefit Wynn
Although Wynn, a business located in Las Vegas, has been a minority stakeholder in the project for more than two years, some analysts see it as a possible long-term source of earnings and income for the operator.
However, experts have also contended that because casino gaming has not been authorized in the United Arab Emirates, Wynn's share price does not accurately reflect the possibilities there. On Monday, the shares ended the day up 1.09%. Wynn Al Marjan Island is currently being built with an early 2027 opening date in mind, despite the fact that UAE officials have not formally allowed casino gaming. As early as the end of 2025, the hotel tower might be completed. The UAE is generally regarded as one of the greatest worldwide expansion opportunities for the sector, even in the absence of official confirmation that casinos will be permitted.
"The UAE is still the next gaming frontier. We continue to believe the UAE is one of the most attractive global gaming opportunities today,” observed DeCree. “The GCGRA is staffed by well-known and experienced gaming veterans and has been working expeditiously to craft industry-leading regulations, which are now becoming visible.”
At least two things further contribute to the UAE's appeal to Wynn and its investors. First, since Wynn's project is the closest to completion, it would probably have a multiyear monopoly on casino gambling in the United Arab Emirates if the GCGRA were to approve casino laws soon. Second, when Wynn Al Marjan Island is completely scaled up, the operator previously told investors that it may produce up to $600 million in annual earnings before interest, taxes, depreciation, and amortization (EBITDA).
Casino Licensing in the UAE May resemble Las Vegas
According to DeCree, one lesson from the lottery approval is that, should casino gaming be allowed in the United Arab Emirates, the process of renewing licenses will be "administrative in nature," meaning that it will resemble Nevada more than the concession model used in Macau and Singapore.
"If this is the case, we believe public investors could assign higher valuation multiples to UAE commercial gaming operations relative to jurisdictions with less predictable or more competitive renewal procedures,” added the analyst.
Operators, including Wynn, would probably find that appealing because, in Macau, permits must be renewed on a regular basis, and the government frequently requests significant concessions with each renewal, whereas in Nevada, license renewal requires little work.
