BUSINESS

Phumelela takeover of Gold Circle okayed; Tsogo Sun casino profit rises 34%

TAGs: gold circle, horseracing, Phumelela, South Africa, Tsogo Sun Gaming

phumelela-south-africa-tsogo-sunSouth Africa’s Competition Tribunal has approved the takeover of the Western Cape operations of horseracing/tote betting outfit Gold Circle by rival operator Phumelela. BD Live reports that the deal calls for the Western Cape racing assets to be sold to Kenilworth Racing, which is controlled by horse owners and members of the Western Province Regional Racing Association. Those Kenilworth shares will then be punted on to the Thoroughbred Horseracing Trust, a non-profit group whose sole revenue comes from a 35% stake in Phumelela.

The South African competition watchdogs had blocked the deal in March over concerns it would “significantly lessen competition” in the country’s horseracing market, the dominant form of wagering in South Africa. Since then, the tribunal determined that such a lessening of competition was unlikely in that punters tend to stick with their local racing options, and since each province holds a monopoly on its own racing operations, the deal amounts to one monopoly being exchanged for another. However, the deal must still be approved by the Western Cape Gambling and Racing board and is contingent upon there being no further mergers or consolidation in the market for the next two years. Assuming nothing goes wrong, Phumelela will now control tote betting in eight of the country’s nine provinces.

South African casino operator Tsogo Sun Holdings reported a 34% rise in net profits to ZAR 743m (US $$83.9m) in the first half of its fiscal year. The Johannesburg-based company operates over 90 hotels across the continent, as well as 14 casino properties in six of South Africa’s provinces, including its flagship Montecasino operation in Gauteng province. Revenue rose 10% to ZAR 4.8b ($542m) for the six month period ending Sept. 30. Tsogo’s shares rose 3.2% on the day and are up 50% this year, outperforming the 16% raise in the STSE/JSE Africa All Share index.

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