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WINNING MARKET SHARE

Diversity in the ownership of SA’s casino industry – which had seven operators six years ago – has diminished to the point where one gaming conglomerate now accounts for more than half the visitors to local casinos.

Statistics published in the latest survey by the Casino Association of SA (Casa) show Tsogo Sun, which last year finalised a merger with rival Gold Reef Resorts, has emerged as by far the dominant player in the local gaming market.

Casa’s 2010/2011 survey shows visitor numbers topped 31m at Tsogo’s 15 casinos, comfortably ahead of rivals Sun International (21,7m) and Peermont Global (7,2m). SA’s fourth casino operator, London Clubs International, holds a single licence in the form of the Emerald Casino Resort in Vanderbijlpark.

The total number of visitors to SA casinos during the 2010/2011 period was around 61m. This means Tsogo attracts more than 50% of local casino patrons.

This is not totally surprising since Tsogo Sun owns SA’s two most popular gambling destinations: Montecasino in Johannesburg (which alone attracted 9,5m visitors) and the Sun Coast casino complex in Durban (which drew 8,2m visitors).

If anything, Tsogo’s dominant position could be greatly enhanced in coming years if a proposal to “reassign” an existing casino licence in the Western Cape as a second Cape Town casino operator comes to fruition.

Sun International is the biggest player in the Western Cape as the operator of the GrandWest casino in Goodwood (which attracts over 6m visitors a year), but Tsogo — which holds three Western Cape-based casinos — appears to be the favourite in getting the nod to shift an existing licence to Cape Town.

Logically, Tsogo would probably look at shifting its Club Mykonos licence from the West Coast to an upmarket venue for high rollers that many believe will be in or around the Cape Town Waterfront.

A second casino operation in Cape Town makes sense not only in terms of upping lucrative tax flows to government, but also to add a geographic balance to local casinos.

Gauteng is by far the biggest gaming centre, with R6bn generated in gaming revenue in 2010/2011. This is more than 40% of the annual gross gaming pot and around three times higher than the respective spins from casinos in KwaZulu Natal and the Western Cape.

In fact, the Gauteng market is almost twice the size of the combined annual take from casinos in Limpopo, the Free State, Eastern Cape, North West and Northern Cape.

Though provincial revenues in Gauteng are imposing, the profitability of individual casinos may lag those in other provinces due to the intense competition among the “big four” casinos — Montecasino, Carnival City, Emperors Palace and Gold Reef City Casino.

Certainly Casa figures reinforce the idea that the Gauteng market is tough.

If one compares this year’s survey with the 2009/2010 survey it’s reasonable to suggest that Tsogo Sun has enjoyed considerable success in driving additional footfalls at Montecasino — probably at the expense of its own and rival casinos in the province.

Casa shows Montecasino registered around 9,5m visitors in 2010/2011, compared with about 8,8m in the previous period. That’s a marked shift in business, and puts Montecasino close to its record figure of 9,7m, notched up in the “boom” year of 2007/2008.

Gold Reef City Casino and Silverstar (on the West Rand) — both owned by Tsogo Sun — showed relatively static visitor numbers. However, both Sun International’s Carnival City (dropping from 3,15m visitors to 2,6m visitors) and Peermont Global’s Emperor s Palace (down from 4,65m visitors to 4,3m visitors) were noticeably weaker.

Interestingly, the value of refurbishments in the Gauteng casino market for 2010/2011 was less than R9m. This may be surprising considering the competitive nature of the Gauteng market, but it should be pointed out that a hefty R538m was spent on refurbishments (including parking facilities) in the period previously surveyed.

Source – Financial Mail – Marc Hasenfuss