The United Arab Emirates is looking to allow gambling

The world was slightly caught off guard in 2022 when the United Arab Emirates announced it was considering authorizing casinos. The news was particularly shocking since gambling is illegal in the UAE. Sharia law calls gambling Maisir and is forbidden in the Qur'an which calls gambling a sin because the goal is to let people benefit from the losses of others.

In certain Islamic countries such as Iran or Afghanistan where strict dictatorships oversee the laws, the rules for gambling are severe. Anyone caught gambling, drinking alcohol or doing anything that is contrary to Islamic law can be subject to up to 80 lashes, jail time and if a person is found guilty offenses, they could be sentenced to death. However, other Islamic countries are far less strict. While the rules disallowing gambling exists in the United Arab Emirates, the country has turned a blind eye to it in many instances when it is done in private and involves non-Islamic residents. This applies to drinking alcohol as well, which is allowed in private or in licensed hotels, although anyone caught drinking in public, including on beaches is subject to arrest and jail time. The country realizes that banning alcohol altogether will hurt tourism revenues and also would be unfair to non-Islamic residents who are often ex-pats or are working on contract.

The UAE is also not unfamiliar to activities that are often associated with gambling. The UAE has horse racing tracks in Dubai (Meydan Racecourse), Abu Dhabi and Jebel-Ali. Meydan is the largest track and is host to one of the richest horse races in the world, the Dubai Gold Cup with a purse of USD$12 million. However, while horse racing is very lucrative as a sport in Dubai, it is illegal to place wagers at the track, although people in the rest of the world do bet on Dubai racing at sportsbooks like Bet365, Paddy Power-Betfair, Ladbrokes or William Hill and betting is even legal on Dubai racing at pari-mutuel operations in the United States and Canada. It is uncertain if or how the Dubai Racing Authority receives funds to pay for purses or track upkeep, although they must have an arrangement with bookmakers to help defer some of the cost.

So, when Wynn finally received the paperwork officially granting it the first commercial gaming license to operate a hotel and casino in Ras Al Khaimah (RAK) on Al Marjan Island, it had many scratching their heads since gambling is still illegal in the UAE. The plan for the casino has been in the works for over two years after the UAE signed a deal with Wynn Resorts in 2022, which included a $3.9 billion luxury resort casino in RAK. In September of 2023 the UAE set up a federal authority to regulate gambling and hired many of the best in the industry, including former MGM CEO Jim Murren as the chairman. Nevertheless, many skeptics who felt no Islamic country would ever officially legalize gambling said they would believe it when they see it. They argued that since gambling is prohibited under Sharia law, how exactly can they justify casinos without upsetting Saudi Arabia, more strict Islamic countries like Iran, Oman or Qatar or more concerning powerful UAE citizens who do not want the UAE going down this route?

I spoke to a gambling analyst based in Australia who said that he is pretty sure they will justify it the exact same way that China justifies gambling in Macau, despite gambling being illegal in China itself.

"If I was to surmise, I would guess the authorities will designate certain places as “not officially on gulf land” and therefore not subject to UAE laws. This island in RAK, is the start and almost certainly similar locations will be created in Dubai and possibly Abu Dhabi that will be special oversights, not on dry land and therefore not subject to the same rules as gambling in Dubai or RAK directly. It’s also quite possible that they may expand the island in RAK and mandate that gambling can only take place on that island so that when MGM and other local entities get a license they will have to build their casinos on the same island and effectively it would be like Macau, i.e. an offshore oasis that is an oversight of the UAE but given special permission to offer gambling while continuing to insist that gambling anywhere else in the UAE is illegal.  The big difference you will see between Macau and the casinos in RAK or Dubai is they will not be soliciting Muslim residents via junkets and instead will try to cater almost exclusively to tourists and non-Muslim residents. No doubt Muslim residents will gamble anyways although the rulers will say that is something they have to work out between themselves and God. The Emirates realize that the potential to profit from gambling is just too grand and they are conscious that casinos help bring in tourism.

A big misconception is that Saudi Arabia will never allow it but most people don’t realize that the UAE and Saudi Arabia are not the same. They are neighbours and friends who consult on many things but while Saudi Arabia is a very strict Islamic kingdom ruled by King Salman along with The Crown Prince who have absolute authority over the rules of the land, the UAE is far more liberal constitutional monarchy. Also, while both countries have a lot of oil, Saudi Arabia is far more self sufficient in this regard and can operate for decades without concern of needing any other source of revenue whereas the UAE needs other forms of revenue to be successful. And as the world continues to pursue alternate forms of energy for homes and transportation, UAE leaders are concerned they may need tourism to help keep their country thriving."

Other countries have reformed laws to ppermit gambling

While this new casino is surprising, it is just the latest jurisdiction that has reformed gambling laws to try and build up their economy. Japan has always had strict gambling laws allowing only betting on horse racing, motorsports racing, bicycle racing, pachinko and lotteries, but just prior to the pandemic Japan decided to try and help their tourism industry by allowing various cities to take bids on a resort casino. Four cities expressed interest, although Osaka was the only one to move forward and reached a deal with MGM and Orix Corporation (a Japanese financial company) to build a $10 billion resort casino on Yumeshima – a manmade island on Osaka Bay, which will feature at least one 5-star hotel, a conference centre, museum, a ferry terminal and a helicopter pad to be completed by 2030. Japan indicated the move was necessary to help build the economy which was starting to see their GDP shrink.

Similarly, Singapore, Cambodia, Malaysia and the Philippines, which had fairly strict gambling laws until a few years back, all allowed resort casinos to be opened in their countries in the last decade and recently Germany and Kenya, which had very strict laws about online gambling have decided to create laws allowing online gambling companies to cater to their residents, with some restrictions. And of course, the United States has seen an explosion of sports betting and casinos both online and land-based after the Supreme Court struck down PASPA in 2017 and the DOJ issued an opinion which allowed online casino and poker wagering back in 2012.

In all instances the motivation is the same, trying to raise revenue without raising individual taxes. With resort casinos the hope is that the countries will increase GDP through tourism, while in the case of online gambling the hope is to build up the coffers of countries and states participating via licensing fees and taxes on gambling company profits. While many anti-gambling groups see it as a form of taxation, citizens usually view gambling as a form of entertainment, so they don’t take out their frustrations at the ballot box if they lose, the same way they would if the government raises income, property or sales taxes. Moreover, almost every country has seen their economies take a major hit as a result of the pandemic and are trying to catch up. Along with the drain on economies from COVID relief efforts, many countries took steps which have led to a large increase in inflation, so the hope by many countries, including many U.S. states, is that they can build their coffers back up from gambling revenues.

What’s next?

I spoke to analysts who believe that China may be open to a resort casino in Hainan Island, particularly as the newly elected Macau leader Sam Hou Fai has stated that he wants to diversify Macau’s economy and make it less reliant on gambling for survival. And Thailand has also recently expressed an interest in creating a resort casino after Prime Minister Srettha Thavisin introduced a bill to legalize a casino in the country where only horse racing and lotteries are legal. It is well understood that illegal gambling is rife in Thailand and finding an underground place to wager on sports or play poker isn’t hard, so the Prime Minister’s belief is that bringing it to the forefront will help boost tourism and cut down on crime that is associated with illegal gambling. And in the Americas, Mexico and Jamaica have instituted plans to open casino resorts, while in Brazil, where all forms of gambling except the lottery were illegal until December 2023, the country passed a law legalizing online casinos in that month. And, they have a bill on the table to consider land-based casinos. The bill which already was approved by Brazil’s chamber of deputies is before the Senate and MGM, Caesars and Hard Rock have already submitted plans for a casino in Sao Paulo and Rio de Janeiro in anticipation of the bill being passed. One of the Senators pushing for the bill to be passed stated the following:

"We can no longer lose this great opportunity that other competing countries have already understood and is seen to generate jobs, income and taxes, which will obviously be reversed into benefits for the Brazilian people in the most essential areas, such as health, education, social and infrastructure."

So, the UAE is set to officially legalize gambling in 2027 with a $3.9 billion resort casino by Wynn. A few years ago, this would have been deemed impossible, but the world is changing and all countries realize that resort casinos help bring in tourism dollars and provide needed revenue to their coffers to use on important projects, including infrastructure improvements. Also, resort casinos are just great places to stay thanks to the amenities and their upscale rooms. Naturally there will be some places that will never legalize gambling such as Iran, Afghanistan, North Korea or Utah, but for most of the world they realize they can simply no longer fight the tide and are prepared to move forward.

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