Why Did the UAE Establish a General Commercial Gaming Regulatory Authority After Facilitating Prostitution?

On September 3, 2023, the United Arab Emirates announced the establishment of what is known as the General Commercial Gaming Regulatory Authority (GCGRA), marking a significant step towards legalizing gambling for the first time in a Gulf country.

This authority will serve as a federal authority to provide a regulatory framework for overseeing gambling and lotteries, The state-run WAM news agency.

On September 4, 2023, Reuters referred to this move as official legislation for gambling, confirming that Abu Dhabi has put an end to years of speculation regarding the potential legalization of unlawful gambling within its borders.

In April 2023, it was announced that the Emirate of Ras al-Khaimah, one of the seven Emirates, would open a $3.9 billion (approximately 14.3 billion dirhams) casino resort on a newly developed island called Marjan Island.

The Associated Press (AP) reported on September 4, 2023, that the establishment of this authority signals the UAE’s approach to officially allowing gambling as “casino giants flock to Gulf Arab nation.”

The authority is supervised by a team of world-renowned experts in the field with extensive experience in regulating and managing efficient, safe, and responsible games.

In addition to the massive gambling casino being constructed on Marjan Island in Ras al-Khaimah, reports from CasinoBeats on September 3, 2023, revealed another license for a gambling casino near Jumeirah Beach in Dubai.

Describing the authority, WAM said it would “create a socially responsible and well-regulated gaming environment, ensuring that all participants adhere to strict guidelines and comply with the highest standards.

“It will coordinate regulatory activities, manage licensing nationally, and facilitate unlocking the economic potential of commercial gaming responsibly,” it added.

What are the implications of the UAE establishing an official government authority for gambling and lotteries, marking the first time such an initiative is introduced in the Gulf, following other decisions that ease prostitution and moral standards?

 

Island for Gambling

On April 27, 2023, the Emirati newspaper Al-Khaleej disclosed that Wynn Resorts, a global developer and operator of luxury resorts listed in the United States, has chosen Marjan Island as the official name for its resort project to be developed in the Emirate of Ras al-Khaimah at a cost of 14.3 billion dirhams (3.9 billion dollars).

The aim is to create meaningful value for the emirate’s economy by supporting its tourism sector, creating new employment opportunities, and accelerating the growth of its related sectors. Wynn Resorts will feature approximately 1,500 luxurious rooms, suites, and villas.

The project is situated on 115 acres of Marjan Island in Ras al-Khaimah, UAE.

However, on May 5, 2023, Bloomberg revealed that this resort is the largest gambling casino the UAE has planned to open in Ras al-Khaimah. It could make the UAE the first Gulf country to legalize gambling as it seeks to outperform Singapore as a gambling hub.

Bloomberg cited information obtained from interviews with more than 10 government officials, lawyers, consultants, and operators of gambling halls outside the UAE.

It also mentioned that some operators have started looking for hotels to designate locations for the casinos.

Bloomberg expressed astonishment that the United Arab Emirates, as a Muslim state where Islamic Sharia law serves as the primary source of legislation, would allow gambling, even though it is prohibited in Islam.

This marks a significant change in the country under the leadership of Mohammed bin Zayed.

It stated that gambling is forbidden in Islam and is also illegal in the UAE, with laws stipulating fines or imprisonment, or both penalties, for offenders.

This raises questions about how gambling is allowed when the law punishes those who engage in it.

For this purpose, the UAE appointed Kevin Mullally as the CEO of the Regulatory Authority for Gambling and Lotteries, emphasizing that he is a world-renowned expert with over 30 years of experience in regulating commercial games at the international level.

The Emirati authorities also appointed Jim Murren as the Chairman of the Gambling Authority’s Board of Directors, and American media reported that he has extensive experience in gambling.

Jim Murren, the former Chairman and CEO of MGM Resorts International, which also operates casinos in the famous gambling city of Las Vegas, Nevada, was mentioned.

According to AP, a U.S. diplomatic cable dating back to 2004, leaked by WikiLeaks, mentioned that a 2004 U.S. diplomatic cable released by WikiLeaks speculated that Dubai’s casino plans had been put on ice due to deference to the late Sheikh Zayed bin Sultan Al Nahyan, the country’s first president after unification in 1971.

In recent years, rumors about the establishment of gambling casinos in the UAE have been increasing.

In 2018, the famous British ship Queen Elizabeth 2 was opened as a hotel in Dubai after renovations costing more than $100 million. It still houses gambling machines.

In the same year, the Caesars Hotel, which hosts gambling clubs, was opened in Dubai. Currently, construction is ongoing for various casino projects in the UAE.

 

Why Gambling?

Reuters noted on September 4, 2023, that the UAE’s decision to allow gambling comes against the backdrop of intense economic competition with Saudi Arabia over what is termed “Gulf reforms.”

It stated that this official permission for gambling followed a series of “liberal legal reforms” introduced by Abu Dhabi as part of its attempt to maintain its position as a leading commercial, tourist, and financial center in the region.

In the face of increasing economic competition from neighboring countries like Saudi Arabia, Dubai has introduced a series of so-called “reforms” to maintain its status as the top tourism and trade center in the region.

These reforms include granting long-term visas, allowing unmarried couples to live together, and relaxing control over the purchase and consumption of alcohol.

It is worth mentioning that the United Arab Emirates, composed of seven emirates, grants local rulers absolute authority, especially in social matters.

While the Emirate of Sharjah prohibits the sale of alcohol and punishes its consumers, Dubai allows it and does not penalize drinkers.

Emiratis expect that Sharjah will also not allow gambling, unlike emirates like Ras al-Khaimah and Dubai.

Experts in gambling casinos have told Western newspapers that Dubai is likely to benefit more than any other emirate if gambling is allowed there. The emirate has been witnessing an influx of new residents and tourists, positioning itself as a “wealth haven.”

They suggest that the introduction of gambling halls could boost the tourism sector, which is one of the key pillars of Dubai’s economy, according to Bloomberg.

Since the opening of the Burj al-Arab hotel off its coast about 25 years ago, speculation has spread that the bar on the top floor could be turned into a casino and that gambling could be introduced in the emirate. However, this has not happened to date, according to Bloomberg.

The UAE is known for conducting large lottery operations by buying tickets from citizens and foreigners and then conducting a draw to select winners. This is particularly common at Dubai Airport, which sees a deluge of customs duty-exempt car lottery tickets.

Bloomberg quoted its analyst Angela Hanley on May 5, 2023, stating that the UAE could earn around $6.6 billion annually from gambling revenues, surpassing Singapore, the leader in this field.

She added that Dubai and the rest of the UAE have the potential to transform into crowded markets for entertainment gambling, claiming that tourism related to gambling could be an important driver for the country’s economy as it tries to reduce its dependence on oil.

It is expected that the gambling resort will generate between $450 million and $600 million in annual cash flows, according to the Middle East Economy on April 28, 2023.

 

Money Laundering

Economic experts say that gambling casinos are a haven for laundering dirty money, which will increase the UAE’s role as an intermediary state for laundering such funds, as well as drugs, prostitution, and corruption.

On September 4, 2023, AP reported that the UAE’s move to legalize gambling can be traced back to a long-known fact that casinos and lotteries are a means of raising money in the country and are used to promote the tourism sector, especially in Dubai.

Money laundering is defined as an economic crime aimed at giving legal legitimacy to money obtained from an illegal source for the purpose of possessing, disposing, managing, preserving, investing, transferring, or transporting it, or manipulating its value.

Both AP and Bloomberg say that the casinos and large cash amounts generated by the UAE will increase the risk of money laundering.

They explained that in recent years, beneficiaries of wars, terrorism financiers, and drug traffickers subject to U.S. sanctions have used Dubai’s real estate market as a refuge for their assets.

Ras al-Khaimah found itself linked to the case of a man from Alaska in the United States who had laundered a billion dollars that had been held in South Korea for the benefit of Iran, according to APA on June 4, 2020.

Euronews reported on June 2, 2022, that Maira Martini, the director of anti-money laundering affairs at the non-governmental organization Transparency International, said that casinos often prefer to turn a blind eye to the sources of customers’ money despite the risks of facilitating the shadow economy.

She explained how money laundering works in gambling casinos, where a customer arrives with “dirty” money — money acquired from illegal activities such as drug trafficking or human trafficking — and no one will ask any questions.

From the moment the customer starts participating in the games and wins, the money becomes laundered because they can then officially declare its source.

For example, if there is an employee earning a thousand euros a month, he would not be able to justify buying a million-euro house, or else he would be suspected of receiving a bribe.

However, if he indicates that he earned this money at a casino, he can then spend this money without any problems.

If money laundering is easy, corruption becomes more tempting for individuals because they will realize that there are mechanisms for using bribes without any cause for concern.

For years, the UAE has been adapting to tax evasion laws, granting immunity to the wealthy, and protecting all types of illicit trade, including drugs, weapons, gold, and diamonds. Here, gambling comes to enhance these suspicious operations in the Gulf state.