Islamic investing

In the international market of investing it's not always easy to insure that the company you are investing in engaged in a business that is consistent with your values. But sometimes it is easy to know. Dubai's investment in Las Vegas casinos may tell us a lot about Dubai's values, its revealed preference.

The Kippreport's analysis:

Dubai World is set to pay as much as $5.1bn for a slice of MGM’s leisure and gambling business. The deal will see the government-owned investor take an initial 9.5 per cent share of casino firm MGM Mirage and create a joint venture with MGM on CityCenter Holdings, a resort developer. Dubai has an option to raise its stake in MGM to 20 per cent.

The deal will immediately ask questions of Dubai’s moral right to invest (and profit) from gambling, outlawed under Islamic law. Dubai World's chairman, Sultan Ahmed bin Sulayem, brushed aside questions about the apparent conflict of attitudes by pointing out that the company had long owned a stake in Kerzner International - the owner of the Bahamas' Paradise Island casino (4,500sqm, 850 slots, 78 gaming tables the largest casino in the Caribbean).

"Through our Kerzner investment we're already into gambling, so this shouldn't come as a surprise," he told the newswire service Bloomberg. Terry Lanni, chairman and CEO of MGM Mirage said Dubai had “already crossed the Rubicon” as far as investing in gambling.

True, but the scale and profile of the MGM put morals front and center in terms of Dubai’s investment strategy. Dubai may argue it is investing in a legal business and has no intention of bringing casinos to the UAE. Critics will point out, unless the deal is a Trojan horse, intended to destroy the North American gaming industry, Dubai is now in the business of encouraging people to gamble. What next? Selling marijuana in Amsterdam or prostitution in Sydney is both legal and profitable.

At least Dubai is not allowing itself to be intimidated into altering its investment strategy to suit the preferences of others. And I do not have in mind U.S. politicians concerned that Dubai will take over the U.S. gambling industry as in the ports controversy.