Lottery licence heralds UAE gaming industry growth

• $8.5bn a year potential value
• VARA may be template
• May bring tourism and investment

The issuance of the UAE’s first lottery licence and publication of a framework to regulate gaming looks set to kickstart the rapid development of the industry in the Gulf nation.

The year-old federal General Commercial Gaming Regulatory Authority (GCGRA) said over the weekend it had awarded Abu Dhabi-based The Game LLC the rights to operate the UAE’s first-ever traditional lottery as well as other gaming offerings. 

The government agency also publicly released “comprehensive” regulations for gaming that had remained private until now. 

Gambling has been strictly prohibited in the UAE.

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“The launch of the UAE Lottery is a pivotal event that not only marks the establishment of a disciplined world class regulatory framework for lottery activities but also underscores our commitment to nurturing a secure and enriched commercial gaming environment in the UAE,” Jim Murren, chairman of the GCGRA and ex-chairman and CEO of MGM Resorts International, said in a statement on July 28.

Two firms that had previously operated quasi-lottery draws in the UAE, Mahzooz and Emirates Draw had suspended operations before applying for the first fully fledged licence this year and did not make the cut.

A spokesperson for Mahzooz told industry news website iGB the firm “respected” the GCGRA’s choice and would turn its attention to “exciting new ventures,” but called the news “disappointing,” as parent company Ewings “kept our workforce at full capacity for the past seven months in anticipation of a positive decision. Emirates Draw could not be reached for comment. 

The GCGRA defines gaming as encompassing “lottery, internet gaming, sports wagering, and land-based gaming facilities”.

In a paper earlier this year, CBRE called the UAE “the next gaming frontier” adding that, if legalised, the industry could generate $8.5 billion annually, according to reports.

The new framework and first lottery licence are “poised to set the foundations for other aspects of the gaming industry” and represent “a significant step” towards the UAE further embracing it, Zana Jablan Musa, from the corporate services provider Sovereign PRO Partner Group, said.

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“Typically, in the UAE legislation can be fast evolving and proactive. Therefore, it would not be surprising should the gaming industry undergo expedited progression into a fully liberalised industry, with appropriate regulation and governance.”

Casino

Las Vegas company Wynn, which is developing a resort in Ras Al Khaimah to be opened in 2027, is widely expected to become the recipient of the first casino licence in the UAE.

Wynn’s chief executive Craig Billings said in an earnings call last summer that “there should be no concern that there is a broader legalisation process in order for gaming to occur in that property.” 

Other industry players have for a while worked to position themselves for this eventuality.

Gibraltar-based online gambling firm Lottoland has been pushing Dubai to establish the world’s first $1 billion overnight jackpot and was pursuing talks with the GCGRA last autumn.

“The UAE never does anything in halves, and its global reputation for doing things on a mega-scale can be replicated in the lotteries sector,” Lottoland’s founder David von Rosen-von Hoewel told AGBI in September 2023. 

In February, MGM Resorts International said its $2.5 billion hospitality project in Dubai would not include a casino, but chief executive William Hornbuckle left the door wide open to exploring gaming opportunities in Abu Dhabi and Dubai if and when the chance arises. 

Industry ecosystem

The GCGRA’s latest move is groundbreaking in that it prepares the UAE to harness gaming as a new vehicle to attract visitors and investment, said Niraj Jain, UAE practice lead for Indigenesis Consulting.

Nevertheless, authorities will likely still need time to smooth out regulatory wrinkles and test the efficacy of consumer protection, anti-fraud and anti money laundering guardrails, he added.

The UAE’s experience with its Virtual Assets Regulatory Authority (Vara), which oversees cryptocurrency and other blockchain firms, may serve as a template, according to Jain.

Twenty one companies are currently licensed under Vara after just over two years of the agency’s creation.

“Having these laws in place will probably create an ecosystem where you have reliable applications to go and do what you want to do,” Jain says. “People have been trading crypto for the past ten years, but now there are legitimate, safe wallets.”

Gambling is popular in the US, and accessible across the Western hemisphere. It is also popular in East Asia, particularly China, where it’s banned outside of certain basic lotteries. That has led many mainland Chinese citizens to gamble in Macau and certain locales in Southeast Asia. Similar restrictions also exist in India.

The dearth of gaming infrastructure between the West and East, “presents an opportunity for the UAE to attract international visitors, particularly those from the wider region of Asia and Africa,” attorneys with Hogan Lovells law firm in Dubai wrote in a client alert last year upon the establishment of the GCGRA.