THE ECONOMIST: Could the next big gambling destination be in the Gulf?

With its well-preserved fishing village and hilltop fort, the emirate of Ras al-Khaimah, an hour’s drive north of Dubai, provides a glimpse of bygone days in the United Arab Emirates. It now offers a view of the future, too. On its otherwise barren coast, a 350m-tall casino is under construction. When it opens next year, it will be one of the world’s largest.

Over the past few decades the UAE, in a bid to diversify its economy away from oil and gas, has built a thriving tourism industry and positioned itself as a hub for wealthy expats. Now its rulers are looking to another source of business: gambling.

Last month the country’s civil code was amended to ease restrictions on the practice. That followed the issuance in November of the first online betting licence by the two-year-old gaming regulator, which has since approved lottery operators and sports-wagering platforms.

It may seem like an odd choice, given that betting is prohibited under Islam. The change in policy might also seem inconsistent for a country that is trying to shake its reputation as a hub for dirty money. Yet it is in keeping with the UAE’s role as a place for those with cash to burn, be they from the east or west. Can it become the next Las Vegas or Macau?

There are plenty of punters to go after. The Emirates may lack the historical sites or local cuisine that draw tourists to Europe and East Asia, but it attracts plenty of visitors nonetheless. A record 19.5 million tourists passed through Dubai last year, up by about 5 per cent from the year before. Ras al-Khaimah, which welcomed 1.4 million visitors, expects that figure to reach 5.3m by the end of the decade.

And many of them spend big. The average tourist drops $US1414 per visit to the UAE — higher than for Las Vegas or Macau. Fancy resorts, high-end restaurants and extravagant shows are available in abundance.

Then there is the UAE’s growing number of foreign residents, who account for 90 per cent of its population of 11 million. Many of those are household staff, construction workers and the like. But the UAE, with its low taxes, also attracts lots of millionaires.

Nearly 10,000 of them — with a total wealth of $US63 billion — migrated there last year, more than to any other country, according to Henley & Partners, a relocation consultancy for the rich.

This explains why casino operators such as America’s Wynn Resorts, owner of the new site in Ras al-Khaimah, are betting big on the UAE. Wynn estimates that its casino will bring in gross gaming revenue (GGR, the difference between wagers and winnings) of $US1.7billion ($2.41b) annually — a third of its estimate of the potential market. It reckons the number of high-rollers betting at its tables will only grow.

In an earnings call on February 12 Wynn’s boss, Craig Billings, pointed to the “extremely aggressive” investment by the UAE in infrastructure for artificial intelligence and its potential to draw in wealthy techies.

The UAE is not just opening casinos. It is also tiptoeing into the fast-growing — and potentially even larger — market for sports wagers and online betting. In America these brought in just under half the GGR of traditional gambling last year, and are quickly gaining share. The UAE has already granted one licence, to Play971, a local online-gambling platform.

Yet building a gambling industry also presents various dilemmas for the UAE. The new industry regulator is run by former executives from Las Vegas who understand how the business works. But they are treading carefully.

Gambling companies looking to set up shop face stringent rules and high capital requirements, and are required to provide five-year business plans. A lawyer describes the licensing process as “sensitive and strict”.

The country’s rulers are particularly concerned about money-laundering. It is a touchy subject. In 2022 the Financial Action Task Force, a global watchdog based in Paris, added the UAE to the “grey list” of countries that it deems to have insufficient control over illicit flows of money. After introducing various measures to tighten oversight — and an extensive lobbying effort — the UAE was removed from the list in 2024. Following the episode, it has been trying to rebuild its credibility as a trusted financial hub.

Emirati rulers, then, face a choice. Either they can keep a tight rein on the nascent gambling industry, constraining its potential size but reducing the risk of malfeasance. Or they can roll the dice — and hope for the best.