GGRAsia – UAE, Thailand could add at least US$7bln in global GGR: MS

UAE, Thailand could add at least US$7bln in global GGR: MS

Sep 27, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck, World

Large new gaming markets “are attractive and additive” to global gross gaming revenue (GGR), with the United Arab Emirates (UAE) and Thailand likely to generate at least US$7 billion in GGR if casino gaming is legalised in the two jurisdictions.

So said investment bank Morgan Stanley in a Thursday report titled “Global Gaming: cyclical bottom, attractive return, new markets”.

“We estimate circa US$3 billion to US$5 billion GGR each for Thailand and UAE,” stated the institution. “Return on invested capital could be attractive for lower tax, but final returns still have many moving parts,” it added.

The report said large new gaming markets “are attractive based on historical returns,” tending to “provide the lure of growth for several years”.

It noted: “Markets like Japan, Thailand and UAE could potentially add tens of billions of [U.S.] dollars of GGR, in our view.”

It further stated: “Historically, we have seen limited impact of new gaming markets cannibalising existing ones. For example, Singapore opened two of its casinos in 2010 – with 2011 GGR of US$6 billion – but Macau still saw a US$9.9 billion increase (+42 percent year-on-year) in its GGR in 2011.”

In July, the website of the UAE gambling regulator – the General Commercial Gaming Regulatory Authority (GCGRA) – went live to the public, and the body has also announced the country’s first-ever lottery licence.

“We think the UAE could generate GGR of US$3 billion to US$5 billion a year based on its visitation traffic and population. Yet this depends on whether locals are allowed into casinos,” noted Morgan Stanley.

It added: “We see potential for the UAE as it has one of the highest air arrivals [volumes] in the world, more 5-star hotels than Singapore, and rapid growth of ultra-high-net-worth individuals.”

According to the bank, major feeder markets to a UAE casino industry “would be Western Europe and Southern Asia, though geopolitical risk could be a key risk to growth and valuation”.

The UAE, however, “could eventually have more integrated resorts (IRs) than Singapore,” although the overall number of licences “has not been decided yet,” noted the institution.

Projects in the pipeline

Global gaming operator Wynn Resorts Ltd – parent of Macau casino operator Wynn Macau Ltd – is currently developing a casino resort project, Wynn Al Marjan Island (pictured in a rendering), in Ras Al Khaimah, one of the UAE’s emirates.

The project – scheduled to open in 2027 – has been described as US$3.9-billion venture involving local partners, with Wynn Resorts as a 40-percent equity investor.

The UAE is composed of seven emirates. They are: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah.

Bill Hornbuckle, chief executive of U.S.-based MGM Resorts International, told an investment forum recently that the group had applied for a casino licence in Abu Dhabi.

MGM Resorts, the parent of Macau casino operator MGM China Holdings Ltd, is already developing a hotel project in Dubai. The site for that scheme is at Porto Island, Jumeirah, a land reclamation site just north of the iconic Burj Al Arab building.

MGM Resorts’ chief financial officer, Jonathan Halkyard, said this week that the Dubai project does not include a casino, but has an area of “roughly 200,000 square feet” [18,580 sq. metres] in the podium reserved for either “retail, conventions and meetings, or conceivably gaming”.

MGM Resorts is also developing a casino resort in Osaka, Japan, due to open in 2030. The group has also flagged interest in investing in a casino project in Thailand, if that Southeast Asia nation legalises casino gambling.

If realised, such investment would be done via MGM China, according to Mr Hornbuckle.

The most pursued market

If legalised, a casino industry in Thailand could have “more attractive terms,” and be one of the “most pursued markets,” suggested Morgan Stanley.

“Thailand could be a US$4 billion to US$6 billion market in annual GGR,” it stated.

The institution observed: “Thailand has been one of the most pursued markets by gaming companies for its good infrastructure and for being one of the most popular tourist destinations globally.”

It added: “We think casino spend per visitation could be below Singapore but better than South Korea and Malaysia. Locals are allowed to enter casinos but subject to entrance fees, and average spend per adult could be below Philippines and Malaysia.”

According to the bank, terms on the gaming licences in Thailand “look attractive at this point, with one of the lowest gaming tax levels in Asia (17 percent), a US$3 billion required investment size for each Bangkok integrated resort project, and 30+10 years licence duration”.

The report suggested that the Thai government was “contemplating up to seven IRs nationally, and three of them in Bangkok”.

A number of casino brands have shown interest in investing in Thailand, including Macau-based operators.

Morgan Stanley expects the first casino resort in Thailand “to open by 2030, with the casino law to be passed in 2025”.

While the number of licences “has not been finalized yet”, the institution believes there “could be five potential venues for IR projects including two in Bangkok and one each in the Eastern Economic Corridor – Chiang Mai and Phuket, and Chonburi (Pataya)”.