The local gambling sector has a few interesting permutations that can play out, as suggested in this week’s cover story. Clearly gaming giants Sun International and Tsogo Sun will need to play smart hands to preclude losing out on the lucrative online gaming spend.
Intriguing as these events might turn out to be, I will confess to being more inclined to committing side bets to US and Australian gambling companies than any local contenders. I’m talking Tabcorp, The Lottery Corp, Super Group, DraftKings, PointsBet, Aristocrat Leisure and the like. Other than my penchant for being an off/on investor in Hosken Consolidated Investments (HCI) — which controls Tsogo Sun — my (very, very small) long bet is on RECM and Calibre (RAC).
RAC is pretty much a pure proxy for Goldrush Group, an alternative gaming company which has a small sports betting and online gaming offering complementing its core offering in electronic bingo terminals and limited-payout machines.
The terminals and machines are as stout as one could hope for under a trading environment disrupted by load-shedding and the extra costs incurred to power up facilities. Goldrush’s gross gaming revenue from its online thrust was up more than 50% in the half-year to end-September 2023, but remains fairly small at about R57m. Hopefully there’s more momentum in the online endeavours when RAC reports its full-year results to end-March.
Another small player is Vunani Capital Partners, which is listed on the Integrated Exchange. It has a small online gaming offering spread across several African countries. Then there is unlisted Interbet, which was bought out of debt-laden Phumelela Gaming & Leisure after its delisting from the JSE several years ago. Reportedly Interbet is also doing brisk business, but it is unclear if the company intends returning to the JSE or if it would be a takeover target for a bigger gaming player.
Perhaps the most intriguing play at this juncture is Grand Parade Investments (GPI), which in recent years has fallen under the control of former investment banker and gaming sector enthusiast Greg Bortz’s company GMB Liquidity. Sun International has been keeping an eye on GPI and has even accumulated a sizeable stake in the business. This is because it is keen to buy back the minority shares GPI holds in several of its casino and gaming businesses.
There may soon be even more reason for Sun International — and Tsogo Sun, for that matter — to gallop towards GPI. Bortz famously rode to the rescue of Western Cape horse racing when he, along with Hollywoodbets (founded by local entrepreneur Owen Heffer), backed the struggling Kenilworth racecourse. The racecourse is now being transformed into an entertainment/ leisure zone, and there are apparently similar ambitions for Gold Circle in KwaZulu-Natal.
Latest gambling sector chatter suggests Bortz will not reverse Hollywoodbets Kenilworth into GPI
GPI shareholders will be hoping Bortz can breathe new life into the investment company, which revolves around significant minority investments in Sun International operations in the form of GrandWest casino in Cape Town, Golden Valley casino in Worcester and the alternative gaming business Sun Slots. Bortz clearly won’t be content to just sit back and collect the dividends from these investments, but isn’t inclined to comment yet on possible developments at GPI or Kenilworth Racing — which many punters initially believed could be reversed into GPI.
Officially, GPI — in commentary accompanying the last set of interim results — noted the executive was hard at work monitoring and overseeing the gaming and gaming-related minority investments with a focus on helping to maximise profitability at, and distributions from, these portfolio investments. The group also indicated: “The executive team is also investigating new investment opportunities in the sector, but is taking a cautious, conservative approach in this regard.”
Latest gambling sector chatter suggests Bortz will not reverse Hollywoodbets Kenilworth into GPI — but other related plans might be afoot. Kenilworth, for instance, could use its tote betting licence to offer online gaming, perhaps even utilising the historical horse racing (HHR) system to create a virtual “racino” at the racecourse.
HHR is an online gambling platform that allows players to bet on millions of replays of horse races that have already been run, using terminals that look like slot machines. The concept sounds illogical. But the location and date of the races as well as the names of the horses and jockeys are not provided. The punter, however, can access skill graph charts from a racing form that gives the jockeys’ and trainers’ winning percentages. Using this information, the player selects a projected order of finish.
I suppose it will make more sense once you actually start wagering via HHR. For the record, HHR has become a big money-spinner in the US. Leading gaming company Churchill Downs, the owner and host of the Kentucky Derby, last year bought Exacta Systems for $250m. Exacta provides technology to support HHR operations across the US.
If Bortz does intend bringing an HHR emporium with multiple betting terminals to the Kenilworth racecourse, it would be a fairly close approximation of an urban casino. This would certainly be of interest to both Sun International and Tsogo Sun — especially if the licence for such a “racino” happens to be placed in GPI.
A major online gaming precinct centrally situated in Kenilworth could be significant in terms of grabbing a share of gambling spend in Cape Town. At present Sun International is clinging to an extended exclusivity arrangement in the Cape Town market with GrandWest, with Tsogo Sun seemingly keen to transfer its Caledon casino licence to a more lucrative catchment area of Somerset West or Strand. Surely it won’t be long before Bortz hears hooves thundering towards GPI’s door?
* The writer owns shares in RECM and Calibre
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