South African casino operator Tsogo Sun Gaming (TSG) is looking to enter the online gambling market as its land-based venues deal with COVID-19 shutdowns.
This week, TSG, which was spun off from the hotel operations of Tsogo Sun Holdings last year, reported revenue of R11.7b (US$708.8m) in the 12 months ending March 31, up a mere 1% from fiscal 2019. Earnings rose 3% to R4b but profits fell 83% to R277m.
The profit decline was largely due to R2b in write-downs on the value of its businesses due to COVID-19. The company, which operates 13 casinos, 23 Galaxy Bingo sites and numerous VSlots halls – offering Limited Payout Machines (LPM) – across South Africa, was already dealing with decreased visitor traffic when it was forced to close all its venues on March 27.
Casinos accounted for the bulk (R7.34b, -2%) of FY20 revenue, with slots accounting for around three-quarters of that total. The LPM segment was up 7% to R1.65b while the bingo vertical produced the biggest percentage gain, rising 10% to R856m.
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 also failed to declare a final dividend and cancelled all non-essential and uncommitted capital expenditure.
With land-based options dormant, CEO Chris du Toit said TSG was “in an advanced stage of entering the online betting industry.” The company apparently believes “it will be a natural progression for casinos to offer products online, and if done responsibly on licensee level, can protect the substantial investment and jobs created by casinos.”
While South Africa has authorized online sports betting, it has yet to authorize legal online casinos, largely due to opposition by the country’s land-based casino sector (ahem), which has routinely urged the government to do more to eradicate unauthorized gambling competitors. In 2018, the government complied by amending its gambling laws to punish not only unauthorized online operators but also their customers.
TSG didn’t identify which company may be assisting it in establishing its new online presence, but TSG inked an online technology pact with UK-listed 888 Holdings‘ Dragonfish B2B division about a decade ago. That pairing may not have amounted to much but perhaps TSG sent 888 a ‘u up’ text a while back and things progressed from there.