The General Commercial Gaming Regulatory Authority (GCGRA), the first gaming regulatory body in the United Arab Emirates (UAE), accepted a lottery license for an Abu Dhabi-based company over the weekend, sparking rumors that this action may open the door for casino gambling in the Emirates.

The Game LLC was awarded a lottery license by the GCGRA, which was established in September of last year and is presided over by Jim Murren, the former CEO of MGM Resorts International (NYSE: MGM). The business, a division of privately held Momentum, is anticipated to provide lottery games under the UAE Lottery name.

According to some analysts, the lottery permission is good news for the Wynn Al Marjan Island integrated resort, which is currently under construction in Ras Al Khaimah and owned by Wynn Resorts (NASDAQ: WYNN).

The licensing of the Abu Dhabi lottery, according to CBRE Institutional Research analyst John DeCree, is a "key marker and potential sentiment-changer" that gives the UAE's gaming regulatory procedure "validity and transparency." DeCree made this claim in a note to clients on Monday. "Further alleviating skepticism in the investment community regarding legalized commercial gaming in the UAE," he continued, was the possibility of the lottery acceptance.

The UAE Lottery May Benefit Wynn

Though Wynn, a Las Vegas-based corporation, is a minority stakeholder in the project, some analysts see it as a possible long-term driver of profitability and revenue for the operator. It has been more than two years since Wynn revealed plans for the UAE casino hotel.

However, analysts have also contended that because casino gaming is not legal in the UAE, Wynn's share price does not accurately reflect the possibilities. On Monday, the shares ended the day higher by 1.09%. Despite not having received official approval from UAE officials, Wynn Al Marjan Island is now under construction with an early 2027 opening planned. It is possible that the hotel tower will be completed by late 2025. The UAE is regarded as one of the best international expansion opportunities for the sector, even in the absence of official confirmation that casinos will be permitted.

"The UAE is still the next gaming frontier. We continue to believe the UAE is one of the most attractive global gaming opportunities today,” observed DeCree. “The GCGRA is staffed by well-known and experienced gaming veterans and has been working expeditiously to craft industry-leading regulations, which are now becoming visible.”

At least two things further contribute to Wynn and its investors' attraction to the United Arab Emirates. First off, Wynn would probably enjoy a multiyear monopoly on casino gambling in the United Arab Emirates if the GCGRA were to approve casino legislation shortly, given their project is the closest to completion. Second, when fully ramped, Wynn Al Marjan Island could provide up to $600 million in yearly earnings before interest, taxes, depreciation, and amortization (EBITDA), according to information provided to investors by the operator.

Casino Licensing in the UAE May Imitate That of Las Vegas

According to DeCree, one important lesson from the lottery approval is that, should casino gaming be allowed in the United Arab Emirates, the process of renewing licenses will be "administrative in nature." This suggests that the model will resemble Nevada more than the concession model used by Macau and Singapore.

"If this is the case, we believe public investors could assign higher valuation multiples to UAE commercial gaming operations relative to jurisdictions with less predictable or more competitive renewal procedures,” added the analyst.

That would probably appeal to operators, Wynn included, since in Macau, permits must be renewed on a regular basis and the government frequently demands significant concessions with each renewal, whereas in Nevada, license renewals need little effort.