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Tsogo Sun look to iGaming
Prior to the recent phased opening of casinos in South Africa, Tsogo Sun has indicated a strong pivot toward online gaming.
TSOGO SUN Gaming said it lost an estimated ZAR400m (£18.9m/€21.0m/$23.9m) in revenue as a result of the novel coronavirus (Covid-19) pandemic disrupting operations in its fiscal year ended 31 March, 2020.
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The crisis has prompted the business to look beyond land-based gaming into new channels, with chief executive Chris du Toit revealing the business is at an “advanced stage” of moving into online sports betting. Online gaming was therefore a “natural progression” for the business, du Toit said.
For the year ended 31 March, Tsogo revenue grew marginally, rising 1% year-onyear to ZAR11.69bn, with a 5% rise in the first half of the year to ZAR5.0bn partially offset by a 3% decline in the second half.
Gaming revenue accounted for the majority of revenue in the year, rising 0.3% to ZAR9.85bn, of which casino contributed ZAR7.3bn, down 3% year-on-year. This broke down into ZAR5.5bn from slots, with the remaining ZAR1.8bn coming from table games.
Tsogo Sun’s Galaxy Bingo hall chain, on the other hand, saw revenue grow 10% to ZAR856m, while revenue from limited payout machines hosted in its VSlots network was up 7% to ZAR1.7bn.
Revenue from hotel rooms remained flat at ZAR490m, as did food and beverage revenue at ZAR647m, while the operator received a ZAR110m dividend from its 20% stake in Sun International’s Western Cape casinos. Other revenue amounted to ZAR593m, up 4% year-on-year.
Looking ahead, Tsogo Sun said Covid-19 had continued to cause “devastation” of the business. Since the year end on 31 March, it claimed to have lost an estimated ZAR2bn in revenue, with debt increasing to ZAR12bn.
This, du Toit said, meant the business needed to resume operations “as a matter of urgency” to avoid further losses.
Once this happens, the operator said it was confident that it could return to profitability rapidly, by reducing cost structure, with a more efficient casino business a particular focus.
“We are also in an advanced stage of entering the online betting industry which is a separate segment of the market,” he explained.
Much of this return to growth will be driven by technology, Tsogo Sun continued. Du Toit said it would step up efforts to leverage smartphone penetration to allow for better interactions with customers, as well as through offering its products via these devices.
“[If] done responsibly on licensee level, [this] can protect the substantial investment and jobs created by casinos,” Tsogo Sun said.
The Galaxy Bingo business, meanwhile, would continue its expansion into other markets, and generates ZAR1bn annually when operating at full capacity, and the LPM division, including the VSlots halls, was on a strong growth curve.
