In a major business shift that may transform South Africa’s gaming landscape, big beast casino operator Tsogo Sun Gaming, TSG, is now poised to enter the online gambling market.
The move comes because the Coronavirus Covid-19 pandemic has hammered TSG’s earnings from its considerable real-world casino assets.
“We are in an advanced stage of entering the online betting industry,” confirmed TSG CEO Chris du Toit.
“It’s a natural progression for casinos to offer products online, and if done responsibly on a licensee level, we can also protect the substantial investment and jobs created by casinos.”
This signals a paradigm shift in South Africa’s big gaming world, post pandemic.
South Africa allows online sports betting. But it has yet to authorise legal online casinos, largely because of opposition until now by the country’s land-based casino sector, which has routinely urged the government to focus on eradicating illegal dark web gambling competitors.
In 2018 the government buckled to the Big Gaming lobby and amended the country’s gambling laws making it possible to punish not just unauthorised online operators but also their customers.
Last year, in a push to up the ante and improve efficiency and profits, TSG was spun off from its parent company — Tsogo Sun Holdings.
This week the casino giant reported revenues of ZAR11.7b (US$708.8m) in the 12-months ending March 31, only one per cent up from the previous fiscal year.
Although earnings rose three per cent to ZAR4b, profits fell a massive 83 per cent to ZAR277m (US$16.02m).
The drop in profit was due, in large part, to ZAR2b in write-downs on the value of its businesses due to Covid-19.
The company operates 13 casinos, 23 Galaxy Bingo sites and numerous VSlots halls–offering Limited Payout Machines (LPM)–across South Africa. It was already dealing with decreased visitor traffic when it was forced to close all its venues on March 27 due to the virus lock-down.
Casinos accounted for the bulk (ZAR7.34b, -two per cent) of TSG’s revenue in the last fiscal year 2020, with slots accounting for around three-quarters of that total.
The LPM segment was up seven per cent to ZAR1.65b. Bingo vertical produced the biggest percentage gain, rising 10 per cent to ZAR856m.
With all TSG venues currently shut, Covid-19’s impact has been even tougher in the first two months of the current fiscal year, leaving the company focused on cutting costs to the bone.
TSG has not offered a final dividend and for the moment it has cancelled all “non-essential and uncommitted” capital expenditure.
The company has not identified potential partners for its new online venture.
But the UK’s Dragonfish, a B2B division run by 888 Holdings, looks a reasonable bet.
Dragonfish and TSG signed an online technology pact a decade ago.