Wynn Resorts’ UAE Casino to Capitalize on Favorable Demographics and Tax Benefits

Wynn Resorts' upcoming integrated resort in the United Arab Emirates (UAE) is set to benefit from a combination of appealing demographics and a favorable tax structure, according to JPMorgan analysts.

In a report led by analyst Joseph Greff, JPMorgan highlighted the potential of Wynn Al Marjan Island, the resort being constructed in Ras Al Khaimah (RAK). Wynn officials noted during a recent investor event in Las Vegas that the casino hotel is only a 50-minute drive from Dubai International Airport, positioning it within an eight-hour flight for 96% of the global population. Greff and his team refined this assessment, pointing out that the core target markets represent approximately "25 percent of the world’s population, 20 percent of global GDP, and nearly 20% of the world’s millionaires."

The Wynn venue, which will be the first regulated casino hotel in the Arab world, is currently under construction and slated for a 2027 opening. With the UAE’s oil wealth, a growing number of ultra-wealthy individuals, and Dubai’s reputation as a luxury destination, Wynn Al Marjan Island’s appeal becomes clear. Analysts are even comparing the UAE’s developing casino market to Singapore’s, highlighting its potential.

At the investor event, Wynn revealed that the budget for its UAE venture has increased to $5.1 billion, with Wynn’s expected capital contribution totaling $1.1 billion. Looking ahead, Wynn projects that the UAE casino hotel will generate adjusted property earnings before interest, taxes, depreciation, and amortization (EBITDA) between $390 million and $570 million, based on expected sales of $1.38 billion to $1.88 billion.

The forecasts for free cash flow, ranging from $170 million to $350 million, and an anticipated return on invested capital of 9.8% to 15.7%, are in line with analysts' expectations. Greff noted that these projections are not overly optimistic, and the UAE’s regulatory framework for gaming is considered favorable.

“The regulatory framework compares favorably with some of the largest IR markets in the world, sporting a 10 percent to 12 percent tax rate on gross gaming revenue (GGR),” Greff added. This tax rate is significantly lower than the 40% rate imposed in Macau, where Wynn operates two casino hotels. Furthermore, Wynn Al Marjan Island has been granted a 15-year permit, compared to the 10-year licensing period for its Macau properties.

While MGM Resorts International (NYSE: MGM) has expressed interest in pursuing a casino license for its current non-gaming hotel complex in the UAE, Wynn Al Marjan Island is likely to maintain a substantial head start over other potential competitors in the region. Moreover, UAE regulators are expected to be selective when issuing new gaming permits.

“We think this market [UAE], which will likely be license-constrained and focused on the high-propensity-to-spend luxury consumer in the region, has the potential to have similar characteristics as the attractive and high return-on-investment Singapore IR market,” Greff said.

He also suggested that the estimated size of the UAE’s gaming market, valued at $3 billion to $5 billion, could prove conservative over time. The Wynn property is expected to hold a monopoly on casino gaming in the UAE “for at least a couple of years.”

By fLEXI tEAM