Justin Pearce
SUN International is likely to end up with the lion’s share of South African gambling licences despite being forced to cut back operations in some provinces. Southern Sun, a company once closely associated with Sun International, is also expected to be a major player, and a third operator is headed by a former Sun International executive.
Sun International is to remain in the gaming game as part of a consortium called African Sun International, which also includes Thebe Investments, Khulani Holdings, Real Africa Holdings, Vela International and the Women’s Investment Portfolio.
According to a prediction in the latest edition of The RDP Quarterly Report, African Sun International will secure at least 10 of the 40 licences to be allocated nationally in terms of the National Gambling Bill, recently passed by Parliament.
A further 10 licences are likely to go to Tsogo Sun, a group which is owned in equal measure by Southern Sun and The Gaming Consortium. The Gaming Consortium includes black business groups Nafcoc and Fabcos, the National Council of Trade Unions, the South African Clothing and Textile Workers’ Union and a community trust.
The consortiums have been formed in line with the Act’s requirement that gambling operations not be dominated by white-owned corporations.
Another major bidder is Global Resorts, founded by Ernie Joubert who was formerly Sun International’s marketing director, with the backing of Rand Merchant Bank. Global resorts is expected to pick up about five licences.
Vienna-based Casinos Austria, which operates casinos in 15 countries, is next month to launch a consortium called Casino SA Consortium which could receive eight licences. Local partners in the consortium include businessman Reuel Khoza, chairman of Co-ordinated Network Investments and Innovative Resorts, and merchant bank FirstCorp.
Hendrik Brand, Sun International’s legal affairs director, said the company was satisfied with the provisions of the Bill.
While the bill does not permit any operator to run more than two casinos in any one province, this has been stretched to three in the case of Sun International. In the Eastern Cape and North West, where most of Sun International’s casinos survive from homeland days, the company has until May 1999 to trim its operations to the prescribed number. The Eastern Cape and North West have each been granted five licences in terms of the national plan, while Sun International currently operates seven casinos in each province. There are no legislative requirements on how quickly the group gets rid of its licences, provided it has fallen into line with the law by 1999.
Brand said the company would pay attention to “empowerment opportunities” in disposing of its licences, with a view to bringing in new investors and ensuring jobs would not be lost.
The loss of the casinos in those two provinces would leave Sun International with fewer than 16 casinos nationwide, 16 being the limit prescribed by the Bill. This would allow the company to start casinos in other provinces, Brand said. Sun International is already looking at opportunities in the Western Cape and KwaZulu-Natal.
The Bill has been sharply criticised by illegal casino operators, who face immediate closure, while Sun International has until 1999 to close down operations where required.
Brand dismissed these concerns: “The individual entrepreneur cannot be ruled out. They can come on board through the consortiums.”
Brand added the Bill’s provision for premises which could operate a limited number of gambling machines was an ideal opportunity for small investors.