In South Africa, if the Western Cape Provincial Parliament approved a second casino in metropolitan Cape Town, an existing casino license would have to be transferred from Mykonos, Garden Route, Worcester or Caledon. Sun International, owner of the GrandWest casino in Cape Town, owns the Worcester casino; Tsogo holds the licenses for the other three.
Last year Tsogo proposed acquiring a 40 percent stake in the Sun International controlled SunWest, but the deal was cancelled because of time limitations. However, in the release of its financial results, Tsogo said relocating one smaller casino was “an opportunity for the group should the provincial authorities allow such a process.”
Meanwhile, Sun International sued to overturn the Western Cape Government’s ruling allowing the relocation of an outlying casino to the city. Revenue at Sun International’s GrandWest from June 2014 to June 2015 was 7 percent ahead of the same period in 2012 to 2013 at $13 million and profits increased 10 percent to $54.9 million.
Observers said Sun International’s Worcester casino would be a good candidate to move. It generated revenue of $9.78 million in fiscal year 2015 but had only $1.56 million in profit. But moving the Worcester license
would give Sun International control of both casinos in Cape Town.
On the other hand, there’s no clear choice if Tsogo is selected to transfer an existing Western Cape license to Cape Town. The company reported strong performance of the leisure markets in the areas of the Caledon Casino, Garden Route Casino in Mossel Bay and Mykonos Casino in Langebaan, reporting respective growth of 13 percent, 18.4 percent and 6.9 percent.
The Garden Route topped the list with income up 16 percent to
was the star performer, with income up 16 percent to $5.82 million on a margin of nearly 40 percent.
As a result, the licenses most likely to be transferred would be Caledon or Mykonos. Caledon is slightly larger with income in the six months to the end of September of $4.74 million, but its margin is only 25 percent. Mykonos’ interim income was $4.38 million with a margin of 42 percent following the renovation of the casino floor, completed in August 2015.
Observers said if the second casino transfer is allowed, Tsogo could shift the Mykonos license to Cape Town with minimal infrastructure disruption. However, it might make more sense for Tsogo to move the Caledon license, although it would require a large investment to update the property’s spa and hotel facilities.
