Eldorado Resorts, Boyd and Penn National are extending their footprints across the nation at every new opportunity. But for the next tier up, the mega-casino companies – Caesars, Wynn, Sands and MGM – there are not enough of those opportunities to be found within the national borders. They are scouring the globe for possibilities. Japan is probably at the top of each list; everyone is interested in the island nation. But however attractive Japan might appear to be, it is very, very slow in developing. In the meantime, Vietnam and possibly the Philippines might offer some promise. However, after fifteen years of dramatic gaming expansion in Asia, the opportunities for casino developments measured in billions of dollars are also limited. At least one company, Caesars, does not want to wait for Japan, and does not appear to be excited about the Philippines. It is instead casting its net in a wider circle than the Pacific Ocean region.
The most recent announcement from Caesars concerns Mexico; the corporation intends to put a $200 million resort in Puerto Los Cabos. The resort is small by Caesar’s standards, but it serves another purpose. The Mexican resort will not have a casino, but a casino-less resort is becoming Caesars’ international strategy. It has declared an intention to expand into resorts unadorned with gambling’s glitter. The non-casino resort option opens up many countries that do not allow casino gambling, yet.
Another of the countries that Caesars is entering without a casino is Dubai. It will be joining MGM in the Bluewaters Island development. Bluewaters is a man-made island just off the coast of Dubai. So far, $2.7 billion has been invested in the development. It includes a Ferris Wheel 210 feet tall, a rope climbing platform, both the highest is the world, 15,000 planned residential units and 200 retail and restaurant outlets. The designer wants to mix tourists and residents in a unique international cultural environment. Like the resort in Mexico, the resorts in Dubai will be non-gaming. The ministry of culture wants no confusion on that point and issued a statement to that effect immediately after Caesar’s announcement of its pending opening later this year.
Dubai is reshaping its economy away from oil making tourism an important component of the country’s plan. Tourism will require some adjustments. Dubai is a Muslim country and while not as conservative as Saudi Arabia, it is far from being a secular state like Egypt, Syria or Libya. However, Dubai does make allowance for foreigners and non-Muslims by allowing them to buy alcohol and pork among other things. It is not much of a stretch to think that in time Dubai will permit gambling for non-Muslims. I am inclined to think Caesars and MGM are both making a small side-bet on gambling becoming legal. If Dubai were to legalize gambling for non-Muslims, the companies in the best position to take advantage of it would be Caesars and MGM. Caesars would also be positioned to optimize its resort in Mexico in the same way.
The importance of non-gaming revenue is the new narrative in the gaming industry. Both Caesars and MGM are working diligently to illustrate the relative insignificance of gaming revenues in the overall picture to the investment and banking community. It is true that Wynn, Las Vegas Sands, MGM and Caesars all book more revenue from the other categories than they do from gaming. But no one would deny that the gaming is important. It may not be the tail that wags the dog any longer, but gaming does produce cash flow unmatched by the hotels, restaurants or retail outlets. And yet, for Caesars and the others the only real growth and expansion opportunities that are going to exist in the near future are for resorts. If some of those resorts can have a bit of gambling later on, so much the better, but if not, the resorts will still be built.
The growing economies of India and China are also factor into the expansion of tourism resorts. Hundreds of millions of people from those countries are packing their bags and setting out on adventures. The UN World Tourism Organization reported that Chinese tourists spent $261 billion in 2016 and the number is increasing every year by double digit percentages. Recently, Dubai made visas for Chinese tourists easier to obtain. In the first nine months following the change, tourism from China grew by 49 percent. China is now fourth as a tourism source for Dubai.
Caesars and MGM are important to Dubai’s plan to reshape its economy around tourism. Caesars wants to expand into international markets and Dubai wants to attract international tourists. And it just might be at the crossroads of these plans that gambling could find a place. China is a major focus of the new economy. Chinese tourists and the famous propensity of the Chinese to gamble could help both Caesars and Dubai meet their objectives. Today Caesars Bluewaters is non-gaming, but it could just be the proverbial camel’s nose under the tent. Once the camel gets its nose into the tent, the rest of the camel is sure to follow.
