(Bloomberg) -- The world's gambling industry is tentatively betting that the United Arab Emirates may become the first Gulf state to legalize casinos -- a move that could see it eventually surpass Singapore as a center for gambling.

Senior government officials say there are no imminent plans to allow gambling, but casino operators, consultants and lawyers familiar with the matter say there have been early discussions and a change is being considered. Wynn Resorts Ltd., the Las Vegas-based hotel and casino operator, last week unveiled details of a planned $3.9 billion gaming resort in the country, without explicitly saying that it would involve gambling.

Other casino operators have held informal discussions with UAE authorities about gambling, according to an executive at a gaming consultant and a UAE government official, who declined to be identified because the talks are private. Some are scouting for hotels to locate casinos, according to an official at a gaming equipment supplier. 

The stakes are high. The UAE could pull in as much as $6.6 billion of gaming revenue annually and eventually surpass Singapore, home to the renowned Marina Bay Sands resort, according to Angela Hanlee, a senior gaming and hospitality analyst for Bloomberg Intelligence. 

“Dubai and other emirates have the potential to be transformed into bustling leisure-gambling markets,” she said. Casino-related tourism could emerge as an “important driver of the UAE’s economy as the country tries to reduce its heavy reliance on oil.”

Step Change

Allowing gambling would be a step change for the UAE where Islamic, or Shariah law, is the main basis for legislation. The practice is prohibited under Islam and is illegal in the country, where offenders can be fined or sentenced to two years in prison, or both. 

Still, faced with increasing competition from neighbors such as Saudi Arabia and Qatar, Dubai, in particular, has introduced a series of reforms to keep its edge as the region’s top tourism and trade hub. That’s included offering long-term visas and allowing unmarried couples to live together.

This article is based on interviews with more than a dozen government officials, lawyers, consultants and overseas casino operators.

While multiple plans appear to be under discussion, there’s so far little clarity on how serious each proposal is or who’s driving the talks, and the UAE may eventually decide not to legalize gambling. An international law firm is drafting policy that could be used at the federal level, two people with knowledge of the matter said, but it’s not clear who commissioned the work.

Mixed Messages

Officials are giving mixed messages: one in Dubai said the infrastructure for casinos is already in place, while another said there were no plans whatsoever to allow gambling. A representative for the government of Dubai said the proposed introduction of gambling was a federal matter. Representatives for the emirates of Ras Al Khaimah, Abu Dhabi, Fujairah and the federal government didn’t respond to requests for comment.

A representative for Wynn referred inquiries to the Ras Al Khaimah Tourism Development Authority. In an interview this week, Chief Executive Officer Raki Phillips declined to comment on the status of legislation or whether casino gambling was coming to the emirate. The authority last year set up a unit to regulate so-called “integrated resorts,” which will include gaming facilities.

Dubai would likely benefit the most from any push into gambling. The emirate has already seen an influx of newcomers and tourists largely stemming from its handling of the pandemic and attractiveness as a wealth haven. The introduction of casinos could further boost its tourism sector — a key pillar of the emirate’s economy — that’s been booming and escaped much of the geopolitical and economic uncertainty elsewhere in the world.Ever since Dubai opened its sail-shaped Burj Al Arab hotel just off its coast about 25 years ago, speculation has swirled that the bar on the top floor was planned as a casino and that gambling could be introduced in the emirate. A quarter century later, that has yet to happen. A representative for Jumeirah, which operates the hotel, didn’t immediately respond to an email seeking comment. 

A number of well-known casino brands already operate or are expanding in the city. Caesars Entertainment Inc. opened its first non-gaming resort on the city’s Bluewaters Island in 2018. Kerzner International Ltd. has long operated an Atlantis resort on the city’s palm-shaped islands and recently opened a second hotel a short stroll away from the original resort where the top suite goes for $100,000 a night.

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MGM Resorts International announced plans with local developer Wasl to put an MGM-operated hotel and entertainment district, as well as a Bellagio and Aria hotel on a project called The Island just off Jumeirah Beach.

Asked on a conference call May 1 if he expects gambling to be allowed in the UAE, MGM CEO Bill Hornbuckle  said he anticipates further developments in coming months.

“It’s up to Abu Dhabi and the national government to ultimately decide,” he said. “We’re hoping ‘any day,’ but I got to believe as the summer fulfills itself, we’ll hear more news on that.”

Along the coast, the Queen Elizabeth 2 ocean liner, which is permanently moored in Dubai and operates as a luxury hotel, still houses vintage slot machines that have been completely decommissioned but are available for the public to see.

Table Games

The beach-front Wynn Al Marjan Island in Ras Al Khaimah — an emirate about 45 minutes from Dubai — has already increased the planned number of rooms by 50%, four years ahead of its opening. The luxury resort will now include about 1,500 rooms, suites and villas, as well as a “gaming” area and a theater. It will be the company’s first project in the Middle East and North Africa when it opens in 2027.

Other Middle Eastern countries such as Lebanon and Egypt have casinos that operate around the clock and offer an array of gambling machines, table games and other popular live games. Malaysia, a predominantly Muslim nation, also allows gambling.

If the UAE decides to open up to gambling, people familiar with the matter expect that individual emirates will be able to decide whether to allow the practice. Sharjah — one of the more conservative sheikdoms — isn’t expected to participate even if laws change. The emirate broke ranks with its neighbors last year when they moved to a Monday to Friday week. 

Dubai, Ras Al Khaimah, Abu Dhabi and Fujairah are likely to apply for permits should the laws change, two executives said.

“I think the market could be lucrative,” said Ben Lee, a managing partner at consultant IGamiX in Macau. “It would be another component in the armory of the UAE as a tourist destination.”

--With assistance from Lisa Fleisher and Ben Bartenstein.

(Changes headline, lead; adds details on Burj Al Arab hotel.)

©2023 Bloomberg L.P.