THE
latest figures due out from SA’s listed casino
groups are likely to show that growth in gaming
revenues will most likely have peaked after a decade
of strong growth.
The economic downturn, as well as the fact that
there are few new casino licences up for grabs, is
likely to put the brakes on revenue growth in the
sector.
The Casino Association of SA’s (Casa’s) 2008 survey
of casino entertainment shows that gross gaming
revenue grew from R6,22bn in 2001-02 to R15,618bn in
2007-08. Gauteng, with its seven casinos, was by far
the biggest in terms of revenue generation, grossing
R1,405bn in the last quarter of last year, followed
by Western Cape with R567m in the same period.
However, the figures show a levelling off in growth
during last year. In Gauteng this was particularly
evident, where casinos grossed R1,487bn in the
second quarter, 5,5% higher than in the last
quarter.
“As in all sectors, the casinos came under increased
pressure in the past few months due to the economic
turmoil. Gaming is essentially a form of
entertainment and will be affected when people start
tightening their belts,” Derek Auret, chairman of
Casa, said.
There is little prospect for growth with the
National Gambling Act restricting the number of
licences in SA to 40 — 37 of which have already been
awarded. Three licences — one each in Mpumalanga,
Limpopo and Eastern Cape — are still on offer.
The limited growth opportunities are likely to lead
to consolidation in the sector and analysts expect
that Tsogo Sun’s audacious bid for Gold Reef Resorts
in 2007 would not be the last attempt by key players
to acquire a larger slice of the gaming pie.
“There is bound to be some sort of cannibalisation
in the next year or so and it is possible that the
five main players will become four,” Chris Gilmour,
an analyst with Absa Asset Management Private
Clients, said.
Industry giant Sun International is due to release
its interim results later this month. The group said
in a trading statement in November that in the first
quarter it achieved overall revenue growth of 3%
over the previous comparable period, which was
reflective of the economic environment. Casino and
rooms revenues were 1% and 13% ahead of last year.
Sun International CEO David Coutts-Trotter commented
on the trend back in August at the release of the
group’s six-month results to June last year, when he
said Sun’s casino revenue would remain under
pressure while a relatively buoyant international
tourism market would aid hotel revenue in the year
ahead.
However, the attention is likely to be on the
group’s first major foreign foray, the Monticello
casino project in Santiago, Chile, which partly
opened last October.
Gold Reef Resorts is also expected to report its
full-year results to December soon. The results will
be the first glance investors will get of
Silverstar’s first full-year performance and it will
be interesting to see how Silverstar, Gauteng’s
seventh and last casino, will affect the performance
of the group’s flagship resort, Gold Reef City.
Interim results from Grand Parade Investments are
also expected imminently.
City
Club