Morgan Stanley notes that Thailand and the UAE’s gaming sectors could significantly enhance global gross gaming revenue (GGR), with estimates suggesting that both could contribute between $3 billion and $5 billion in GGR each.
In a report analyzing the global gaming industry, the investment bank highlights the UAE’s gaming market, where Wynn Resorts is leading the charge with plans to open the country’s first casino by 2027.
The US-based gaming operator announced its joint venture development with RAK Hospitality in January 2022. This integrated resort will be located on Al Marjan Island, a man-made island in Ras Al Khaimah, UAE.
The UAE is viewed as a high-potential market due to its rapidly growing population of high-net-worth individuals and the limited supply of gaming venues. The market size is projected to reach between $3 billion and $5 billion annually in GGR, and the country’s favorable tax environment could result in attractive returns on investment.
Wynn’s early mover advantage in the UAE positions it well to capture market share and drive significant revenue growth. The UAE’s affluent population, combined with an increasing influx of international tourists, provides a solid foundation for the development of a thriving gaming market.
Furthermore, the market’s lack of direct competition from other regional gaming hubs, such as Singapore and Macau, ensures that Wynn could establish itself as a dominant player in the region.
Thailand
Thailand is another market identified in the report as having significant growth potential, with estimates suggesting it could generate between $4 billion and $6 billion in annual GGR. The country’s well-developed infrastructure and established position as a leading tourism destination in Southeast Asia make it a prime candidate for gaming expansion.
However, much will depend on regulatory developments and the Thai government’s approach to licensing and taxation. If Thailand adopts a favorable regulatory framework, it could quickly become one of the largest gaming markets in Asia, rivaling more established markets like Singapore and the Philippines.
Macau
Macau, as one of the key gaming markets in Asia, has shown remarkable resilience, even as China’s consumer spending and retail sales faced downturns. Gaming revenue in Macau has proven more stable than in other sectors, partly due to significant entry barriers and limited market overcapacity.
Macau’s gaming revenue has recovered to about 77 percent of 2019 levels, with the mass gaming sector even exceeding pre-pandemic levels by 114 percent in the second quarter of 2024. This trend contrasts with other consumer sectors in China, such as retail and luxury goods, which have struggled to regain momentum post-COVID. Macau’s unique positioning, characterized by limited competition and high margins, makes it a standout performer in the broader Chinese economy, suggesting further growth potential.
The report emphasizes that return on invested capital (ROIC) remains a key metric for assessing the health and potential of gaming markets. Historically, global gaming has maintained ROIC levels above 15 percent, even during economic downturns. In established markets like Singapore, ROIC has already returned to pre-COVID levels of 20 percent, supported by a strong rebound in VIP gaming.
Similar trends are expected in emerging markets like the UAE and Thailand, where lower tax rates and carefully managed capital expenditures could drive attractive returns. Macau’s ROIC has been lower post-COVID, hovering around 12.7 percent in 2023, but it is expected to improve to 14.8 percent by 2024 as the market stabilizes.
This is still below its 2019 levels, partly due to the downturn in VIP gaming and increased gaming taxes. However, Macau’s market structure, with its limited competition and high entry barriers, ensures that it will remain a highly profitable market in the long term.
For gaming operators in the region, the brokerage believes that the focus will likely shift toward capital allocation, balancing investments in new markets like the UAE and Thailand with returning capital to shareholders through dividends and buybacks. As more details emerge about the regulatory frameworks in these new markets, gaming companies will need to carefully assess their strategies to maximize returns while minimizing risks.
