Riding a Camel to the Casino

Saudi Arabia, the United Arab Emirates, and Egypt are building, trying to reengineer and diversify their economies.

Part of the reason is based on your grandfather’s Buick, the gas guzzlers of the past. As you may have heard, the global climate is warming and forcing an energy shift. The sun, wind, and water are being harnessed to replace fossil fuels. Electric-powered cars are slowly replacing internal-combustion engines. The process is slow, but gaining momentum. The switch away from fossils fuels may be good for the planet, but not for the economies of the Gulf states and other oil-producing countries.

Saudi Arabia and the UAE are caught in a trap between two forces: the sources of fossil fuel are dwindling and the world is shifting away from its use. Fortunately for both, they have billions of dollars in oil profits to invest in the new economies. Egypt is not an oil producer; it is being squeezed by high inflation, an exploding population, and declining revenues. Tensions in the Middle East have reduced tourism to Egypt and the current war in Gaza has impacted shipping in the Suez Canal. Egypt may have different reasons from Saudi Arabia and UAE, but it still needs to reengineer its economy. All three countries want to attract new industries, technologies, manufacturing, and tourism. Each offers incentives for foreign investment.

Tourism appears to be the low-hanging fruit and the one with the most promise. All three are devoting a great deal of time and resources to creating the infrastructure needed for visitation. Egypt is aggressive in its plans to reimagine the entire country. It is creating three new cities, one for bureaucracy, one to relieve the residential pressure on Cairo, and one, Ras El-Hikma, to be a tourism center. Details are sketchy, but the Abu Dhabi Investment Authority has given Egypt $35 billion for the area. Ras El-Hikma is located on the Mediterranean coast, northwest of Cairo and near Alamein of WW II fame. The project is expected to break ground next year, with the total buildout estimated at $150 billion.

The United Arab Emirates is also investing in a tourism center that will include a Wynn resort. Wynn is estimating the resort will cost $4 billion. It is located on one of four artificial islands and part of a Ras Al Khaimah project. Ras Al Khaimah is considered one of the fastest-growing tourism markets in the region. The nearby airport in Dubai handles 80 million passengers a year. In the short term, Wynn will be the only casino in the Persian Gulf. MGM also has an opportunity to build a resort in Dubai, but it does not currently include gaming rights.

Finally, Saudi Arabia has announced it intends to add 320,000 hotel rooms by 2030. The majority of those, 220,000, are scheduled to be built in Mecca and Medina. The total cost is estimated at $100 billion, $70 billion of that for Mecca and Medina. The 320,000 rooms are twice the number in Las Vegas. However, it will be a different business model. Las Vegas can expect to fill its rooms on all major holidays and weekends, while Mecca and Medina would only fill their rooms twice a year during the pilgrimages. But like Egypt and the UAE, Saudi Arabia expects to become a world tourism center; it is targeting 150 million tourists a year by 2030. Saudi Arabia would like to be a universal tourism destination, not an exclusively Islamic destination.

Lots of amenities in those projects will include grand luxury hotels, museums, theme parks, water sports, skiing, shopping, adventure sports, and in time even gambling. Thus far, Wynn Resorts is the only casino in any of those plans. That is likely to change. By 2030, for any region to be an international resort destination, a casino-resort will be an essential part of the mix. It has become an expectation. Twenty years ago, it was unthinkable to have gambling in a Muslim country, although both Egypt and Lebanon had casinos. However, that is another change taking place. In Egypt, UAE, and Saudi Arabia, religion is being separated from politics and political control. It will be a long process and, for the most part, will happen silently.

Those three countries are planning nearly $500 billion in investment in tourism infrastructure. That will be more than any destination in the world. It dwarfs Macau, Singapore, the Philippines, and Las Vegas. If the region achieves its goals, there will be 300 million visitors a year. That is many multiples of the number of tourists Las Vegas gets. Still, Las Vegas will not be displaced as the capital of American gambling cities. Nor will Macau be displaced as the capital of Chinese gambling. But there will be new and very intense competition for international tourists, who will have many more options. By 2030 or so, tourists will be able to put visiting pyramids, swimming in the Persian Gulf, riding a camel, and spending the evening in a glamorous Middle Eastern casino on the list of