Wynn UAE Casino Could Be Jeopardized by Dubai Rival

Posted on: June 5, 2024, 11:26h. 

Last updated on: June 5, 2024, 11:55h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Wynn Resorts’ (NASDAQ: WYNN) Wynn Al Marjan Island integrated resort project in Ras Al Khaimah, United Arab Emirates (UAE) could be hindered if Dubai decides to permit casino gaming, according to an analyst.

Al-Marjan Island
Al-Marjan Island in the UAE. The site of Wynn Resorts’ upcoming Wynn Al Marjan Island. That project could be hindered if Dubai permits casinos, says an analyst. (Image: Arabian Business)

Speaking at the recent G2E Asia conference in Macau, Seaport Research senior analyst Vitaly Umansky noted the Wynn project could be in trouble if Dubai opts to permit regulated gaming. Dubai is the prime tourist destination among the seven emirates while Ras Al Khaimah “is a small emirate, it doesn’t have a lot of competitive economic advantages,” noted the analyst.

Umansky’s comments arrived just days after he upgraded Wynn to “buy” from “hold” with a price target of $116. That implies upside of almost 26% from the June 4 close.

We see the market being able to handle two integrated resorts,” Umansky wrote in the report. “The key risk to the property would be a casino opening in Dubai (vs in Abu Dhabi which is more likely).”

Umansky added that Wynn could generate up to $300 million in annual cash flow from the UAE integrated resort. Last month, the Las Vegas-based gaming company confirmed it expects to spend approximately $900 million on the UAE venture, making it a minority partner in the scheme.

No Guarantees Dubai Will Approve Casinos

While Dubai represents a credible gaming market and the most attractive one among the emirates, there are no guarantees regulators there will sign off on casino gaming.

To date, no gaming regulations have emerged in the UAE despite the formation of a related governing body last fall. It’s expected that the emirates will approve or reject casinos on an individual basis with only Abu Dhabi and Dubai standing as logical destinations in addition to Ras Al Khaimah.

“I think there’s going to be a political agreement between all of these emirates,” added Umansky. “The smaller emirates are basically nonstarters.”

Should Dubai allow an integrated resort, the obvious beneficiary could be MGM Resorts International (NYSE: MGM), which is developing a nongaming hotel there. However, executives from the US casino giant have indicated room is being allotted for a potential casino and they could pivot to make a gaming venue happen if regulators allow it.

MGM is developing three hotels in UAE and has noted it could consider opening a gaming venue in Abu Dhabi if that emirate allows it and Dubai does not.

Wynn UAE Could Be More Las Vegas Than Macau

As has been widely noted, Wynn’s UAE property, which is slated to open in early 2027, is expected to be massive in size, but the casino floor will command a scant percentage of the property’s 5.6 million square feet.

That’s to say, the integrated resort will have more of a Las Vegas feel to it in that amenities such as plush guestrooms, fine dining, and high-end entertainment will take precedence over betting. That runs counter to the popular operating methodology in Macau — Wynn’s largest market — but it could be a shrewd move in UAE.

As Umansky noted, betting is still widely viewed as taboo in much of the Arab world and, for many Arab Muslims, there’s a big difference between wagering in Europe and the US, and “doing it next door.”