The Western Cape gaming landscape has undergone a major change in the last month.
The key development is that Tsogo Sun, controlled by Cape Town-based empowerment company Hosken Consolidated Investments (HCI,) now has a hand in all five Western Cape casino licences – a 40% stake in the GrandWest casino in rival Sun International’s Goodwood and the Golden Valley in Worcester as well as its own controlling stakes in the Garden Route, Mykonos and Caledon casinos. How this transpired was that another Cape Town based empowerment company Grand Parade Investments (GPI) sold back its minority holding in GrandWest (housed in Sunwest) and Worcester to Sun International. In a related deal Sun International also bought a 70% stake in GPI’s Limited Payout Machine (LPM) alternative gaming operations – which includes a very profitable presence in the Cape Town market. Sun International, in turn, sold a 40% stake in the GrandWest and Worcester casinos to Tsogo in deal worth almost R2,2bn. The bigger picture is that Tsogo now owns (or part-owns) a mega casino in each of SA’s ‘powerhouse’ provinces – Montecasino in Johannesburg, Sun Coast in Durban and GrandWest in Cape Town. More locally the reshuffle might have much to do with the long awaited decision on whether to allow an existing Western Cape casino licence to be transferred to the Cape Town Metropole. Talk around the poker tables is that if the second casino licence scenario plays out then Tsogo is unlikely to press too hard for transferring one of its existing Western Cape casino licences to Cape Town – which would obviously be to the detriment of its major investment in the cash spinning monopoly that is GrandWest.
If there is enthusiasm to transfer a casino licence then the Worcester casino, where both Sun International and Tsogo Sun have major stakes –would offer a chip that can be played without conflict. While it seems Sun International has made a sacrifice by selling off part of its crown jewels in form of the GrandWest casino, there is significant comfort to be taken in its deal to acquire outright control of GPI’s LP Moperations. GPI’s latest financial results for the half-year to end December 2013 showed considerable form in the LPM operations with Gross Gaming Revenue (GGR) up 19% to almost R275m. Grandslots, which operates in the Western Cape market, accounted for a chunky R160m of GGR.
By Jenni McCann