Dubai World plays down gambling link

MGM Mirage owns numerous hotels and casinos in the US and internationally, including the famous MGM Grand in Las Vegas. (Getty Images)

Dubai World is “not into gambling” and its decision to acquire a $5.2 billion stake in Las Vegas casino operator MGM Mirage is to develop hotels, its chairman Sultan Ahmed bin Sulayem said on Thursday.

“We are not into gambling, the majority of the deal is in hotels,” Sultan bin Sulayem told Arabian Business on his way back from completing the US deal.

“We are attracted not by gambling but by high-end hospitality, this is the best hotel company in the world and we are now part of it,” he added.

When asked whether the deal was against Islamic principles and the guidelines of Dubai and Dubai World as a company, however, he replied: “This is Las Vegas. Las Vegas, not Timbuktu.”

Dubai World has long owned a small stake in Kerzner International - the owner of the Bahamas Paradise Island casino.

Sultan bin Sulayem told Bloomberg on Wednesday that through its Kerzner investment, Dubai World was “already into gambling, so this [the deal] shouldn’t come as a surprise”.

However, the scale of the deal far eclipses its previous gaming involvement and Sultan bin Sulayem suggested the company would take a 20% stake in MGM once it received approval from gaming regulators.

Dubai World revealed on Wednesday that it would invest up to $5.2 billion in MGM Mirage, making the investment holding firm of the Dubai government a major player in Las Vegas, the biggest gambling destination in the US.

MGM shares jumped 10%, or $7.46, to $81.78 in early trading on the New York Stock Exchange following news of the deal.

Dubai World said it will buy a 9.5% stake in MGM for about $2.4 billion. It will also invest about $2.7 billion to acquire a 50% stake in MGM's CityCenter project, a $7.4 billion, 76-acre Las Vegas development of hotels, condos and retail outlets due to open in 2009.

Dubai World will pay MGM Mirage an additional $100 million if the project opens on time and on budget.

The investment firm will buy 14.2 million shares from MGM Mirage at $84 each, a premium of about 13% over Tuesday's closing price.

The firm will also issue a public tender for an additional 14.2 million shares at the same price. The public tender is due to begin during the week of August 27.

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