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CAPE TOWN’S SECOND CASINO

EXACTLY where deliberations on a final decision to award – or rather trans-fer – a second casino licence to Cape Town stand is not exactly clear.

Authorities have played their cards close to their chests of late. And neither current Cape Town casino operator Sun International (via the superbly profitable GrandWest) or likely second casino licence recipient (Tsogo Sun, which owns three Western cape casino licences) have been able to offer any clarity on proceedings in respective financial reports released recently.

Presumably the Western Cape government is seriously weighing up a second casino licence as a means to generate additional revenues (via taxes) to its coffers.

Of course, one has to have some empathy for Sun International, which saw its exclusivity agreement ending at the end of 2011. If one was mischievous one might speculate whether local government’s mulling of a second Cape Town casino licence is not designed to push Sun International (which spent R1bn on GrandWest alone) to fork out – via additional job creating and tax generating capital expenditure or perhaps additional tax charges – for the pleasure of holding an exclusive licence agreement.

Whatever the case, the recently released Casino Association of SA (Casasa) annual report offers some fascinating statistics on the Western Cape gaming market in terms of regional as well as national comparisons.

Gauteng , which has seven casino licences (three of which are in the wider Johannesburg area), generated gross gaming revenue of some R6bn in the 20011/12 financial year.

Levies paid to government were a hefty R561m. The casinos collectively attracted 24 million visitors during the period.

By contrast, the Western Cape – which has five casinos (four of which are in smaller centres like Saldanha, Caledon, Mossell Bay and Worcester) – generated R2bn in gross casino revenue.

Levies paid to government in the 2011/12 financial year totalled R275m.

The number of visitors to casinos during the period under review was 7.9 million, but the bulk of these visitors (6.194 million to be exact) strolled through the security entrances at GrandWest in Cape Town.

A comparison between Gauteng and the Western Cape is probably not entirely fair…the former boasting heavy population densities around casinos and relying more heavily on tourist footfalls in its smaller gaming venues.

But even KwaZulu-Natal appears to be reaping more rewards than the Western Cape from casino operations, which number five (but does – importantly – include two rival casinos in the Durban area in Sun International’s Sibaya and Tsogo’s sprawling Suncoast).

Gross gaming revenue from KZN casinos was R3bn – a R1bn more than the Western Cape. Levies paid to government topped R300m, and visitors to the casinos numbered 14.3 million – almost double that of the Western Cape.

If the Western Cape government are indeed thinking of capitalising on additional levies, boosting employment creation and finding a productive fillip for the local economy it must be tempting to contemplate allowing the shifting one of smaller casino licences to a more bustling Cape Town.

Smart money suggests that Tsogo’s Mykonos casino near Saldanha or its Caledon casino would be the best bets for a licence transfer to Cape Town.

The main considerations for moving a licence would be a disruption to surrounding economies in terms of job losses and potential investment. There would almost certainly need to be compensatory investments in leisure and entertainment to compensate for the loss of a casino.

Casasa statistics show Caledon only attracted 223 086 visitors in the 2011/12 financial year – which is less than the much newer Worcester casino (which saw 426 197 visitors). The relatively few footfalls would make Caledon – which employs over 400 people permanently, on an outsourced and on a casual basis – a favourite for shifting its licence to Cape Town. But one must remember that a not insubstantial R175m was invested in facilities.

Capital expenditure at the Mykonos casino was only R74m and there are only 268 employees, but the venue did attract almost 795 000 visitors.

Still, the bottom line is that an ‘urban’ casino in Cape Town – even if it is a relatively small, upmarket venue squeezed into a remaining space on the V&A Waterfront – would easily double the combined footfalls and revenues generated by Mykonos and Caledon. The knock-on effects in terms of the local economy – new property investment, employment, tourism attractions – would be significant.

With this in mind, unless Sun International can present a compelling reason for retaining its exclusivity, a second casino seems a dead certainty.

Source: Cape Business News