Local is lekker for casino operators as they concentrate on making their money in the cities, writes Justin Pearce
FORGET the tourists — it’s local money we’re after. That’s the prevailing view among prospective casino operators, with the result that no one is going to try and build another Sun City. A report by consultants Ernst and Young estimates the potential value of South Africa’s gaming industry at R3,5- billion to R4-billion, with as little as R25-million coming from tourists.
If South Africa’s first wave of casinos, built in the former homelands, were based on the plan of a large hotel and leisure complex with a casino among the attractions, the casinos to be built after the legalisation of gambling are going to be close to the cities. The typical customer will not be a weekend tripper but someone looking for a night on the town or a pastime more interesting than the afternoon soap operas.
Internationally, casinos make only 2% of their earnings from tourists.
Even Mpumalanga, a province which prides itself on its scenery and subtropical climate, is under no illusions about hordes of visitors filling its casinos.
“The majority of casino revenue comes from locals – — that’s accepted worldwide,” says Andre Wilsenach, chief executive of the Mpumalanga Gaming Board. “We are fortunate to get tourists from elsewhere, but that won’t make or break the project.”
Lazelle Krog, director of policy and legislative development in gaming and betting for the KwaZulu- Natal government, agrees: “Tourists won’t drive our casinos. They need to be situated for access by day trippers. It’s pointless to put a casino in the middle of nowhere.”
Alan Hirsch, representative of Omar Sharif International which already has an option on a site near Soweto for a casino, names Cape Town, Johannesburg and Durban as the “three key centres” for setting up casinos. He also mentions smaller urban centres, Bloemfontein, Welkom, and Pietersburg — hardly the sort of places to attract tourists.
Casinos Austria representative Christian Neuberger says his company will be looking at a mix of city- based and resort casinos, but acknowledges the majority of customers will be local.
The current enthusiasm for city-based casinos puts a question mark over how long the Sun International operations in the North West and Eastern Cape — which owe their existence to the anomaly of homeland legislation rather than to market forces — can survive, once their clients have casinos a short drive away.
“We are not worried about continued viability,” says Brand, “but that will depend on the actual positioning of the casinos.”
He uses the example of Sun International’s Wild Coast Sun, which currently draws much of its clientele from Durban, and which would be seriously affected if a casino resort were to open closer to Durban on the KwaZulu-Natal south coast. A casino in Durban itself, which is almost a certainty, would be less likely to affect the Wild Coast Sun since weekend resorts will not be in direct competition with urban casinos, Brand believes.
Brand admits “Sun City has had its heyday. We must change the direction in which that resort is developed,” he said.
Sun International is eagerly eyeing a licence for a Cape Town casino, Cape Town having the dual advantage of being both a major city and one of South Africa’s favourite destinations for big- spending tourists. Sun International is also looking at Durban as the site for a future operation.