UAE Gaming Regulations Could Emerge This Year, Says JPMorgan

Posted on: September 19, 2023, 10:22h. 

Last updated on: September 19, 2023, 06:52h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The recently announced formation of the General Commercial Gaming Regulatory Authority (GCGRA), the United Arab Emirates (UAE) first casino gaming regulator, could pave the way for gaming regulations to be introduced in the country before the end of 2023.

That’s the take of JPMorgan analysts, who, in a recent note to clients, deemed the launch of the GCGRA as a “significant development.”

We are encouraged by the GCGRA’s leadership team’s general industry expertise and ties to U.S. based gaming operators and regulatory agencies,” observed the analysts.

That leadership group includes former MGM Resorts International (NYSE: MGM) CEO Jim Murren as chairman and gaming attorney and lobbyist Kevin Mullally. Mullally, a three-decade gaming industry veteran, is chief executive officer of the GCGRA.

UAE Gaming Regulations Pivotal for Wynn Resorts

The timing of the UAE’s unveiling of the GCGRA is important, particularly to Wynn Resorts (NASDAQ: WYNN), which is aiming to open its Wynn Al Marjan Island on Al-Marjan Island in early 2027. Construction on the property recently commenced.

While the JPMorgan analysts noted the timing around the licensing of Wynn Al Marjan Island is “fluid,” the project is nonetheless viewed as the catalyst for spurring the UAE’s initial batch of gaming protocols.

“The UAE is motivated to facilitate the process given the underlying tourism and economic benefits from this project, which brings incremental demand to other projects in the market, higher employment (and taxes on higher income levels), and higher land values,” added the analysts.

For Wynn, the emergence of UAE gaming guidelines is essential. That’s because it could remove lenders’ apprehension about financing such a project in a region that’s never permitted regulated wagering. Additionally, regulatory clarity could finally compel the investment community to assign some value from the project to Wynn’s share price.

“We, and we think most other sell-side analysts, have adopted a wait-and-see approach — given this earlier skepticism on gaming in the region — and Street price targets have embedded zero equity value related to Wynn RAK,” opined JPMorgan analyst Joseph Greff.  “We think progress is being made with respect to gaming law enactment, a gaming license being issued, property level financing being secured, and partner equity contributions and construction accelerates. As such, we think investors will start to assess and ascribe the net equity value here.”

MGM Eyeing UAE Gaming Regs, Too

MGM is developing a nongaming hotel in Dubai. But the appointment of Murren as GCGRA chairman stoked speculation that the operator could reconsider its plans there if casino gaming is approved.

MGM executives acknowledged that they’re staying abreast of regulatory developments in the UAE and reserved 150,000 square feet of space at the hotel that could be turned into a casino if permitted.

On the other hand, rival Caesars Entertainment (NASDAQ: CZR) recently announced its name will be pulled from a nongaming hotel in the UAE, a move revealed after the GCGRA was formed.