Gambling Market - Africa

2. t might have a reputation week. Privately-run Games World
ITJ
if its bid for a 51 % controlling stake in
for caution, but one of the
I
International, headquartered in Sharjah, the five pure gaming venues of Casinos
world's leading gaming UAE, has just opened a new casino of Mauritius group is successful. Other
and betting companies, in Mongomo City, Equatorial Guinea, operators are also prowling around
FTSE-Iisted Ladbrokes, has adding to its portfolio in Monrovia, the tourist destinations. "The taxes are
plumped for Africa to grow its business. Cameroon and Djibouti. high in Mauritius but it is a market we'd
The company has teamed up with consider;" said Koc.
African casino group KaiRo International The house always wins Elsewhere, in the largest investment
to launch an online sportsbook in South However fast online gaming grows, like in the Seychelles leisure industry, jSE
Africa. Licensed and regulated in South Africa's national lotteries and sports and NSE-listed Pinnacle Point Group
Africa, the joint venture promises to betting, it is still a minnow compared to says it plans to build one of the world's
offer punters the most reliable online traditional bricks-and-mortar casinos: most exclusive golf and casino resorts on
wager in the business and is indicative in South Africa they account for 75% the island.
of South Africa's growing betting of the total gambling sector. With no
market. Ladbrokes says it expects a new casino licences up for grabs at Too many licences
sports betting licence before Christmas. home, hotel and casino groups like Increased competition brings risks as
"This is an opportunity to capitalise on a well as opportunities. Sun International
developing market," says Ladbrokes CEO could find itself under pressure come
Christopher Bell. Operator hopefuls are December when its 10-year exclusive
prowling around Africa's right as the only casino in the Cape
Continental spin Town metropolitan area expires. The
Ladbrokes isn't the only operator vying tourist destinations provincial gambling authority has said
for a slice of the South African online it will allow another casino to open in
sports betting market, which is worth Peerrnont, JSE-listed Sun International the city although Sun is opposing the
an estimated US $86 million annually and the soon-to-be merged Gold Reef decision.
and set to grow to $122m by 2012, Resorts and SAB Miller's Tsogo-Sun are Similarly, there are now four casinos
according to global betting and gaming expanding up the continent. in Botswana's capital Gaborone, with
consultants. UK bookies Victor Chandler "South African gaming groups are a population of just 200,000. New kid
set up in June ahead of the World Cup looking at opportunities in Angola, on the block Gold Reef's plans to use
and Gibraltar-based Dragonfish, the Mauritius and Mozambique," says Charl its recently won licence to build a $4m
B2B arm of online gaming business Faurie at the Casino Association of South complex has enflamed incumbents Sun
888 Holdings, has also signed a deal to Africa. International, Peermont and privately-
supply Pumelela Gold Enterprises, the Success dovetails best with an owned Moonlite Casinos.
South African pari-mutual operator; with expatriate scene in fast-growing capital "Gaborone is a small city and we
a sportsbook product. cities. Burgeoning Chinese and Indian don't believe there is space for another
It's not surprising the gaming industry populations, as weJJ as the upwardly competitor," said Anthony Puttergill,
is starting to put its money on Africa. mobile with cash to spare, are a lucrative CEO of Peermont, in a statement.
According to research from analysts H2 market. Sun International opened "Countries like Kenya, Nigeria and
Gambling Capital, the gross gambling Lagos's biggest casino last December Botswana have credible regulatory
yield for African casinos will grow to on the ground floor of the sumptuous regimes but there are still problems
$2.73 billion by the end of 2010 and Federal Palace Hotel. and issuing too many licences is one,"
the overall gambling market, including Mustafa Koc, managing director at says Chris Fismer, ex-Chairman of South
betting, gaming and lotteries, will jump Gibraltar-based KaiRo International, Africa's National Gaming Board and
to $5.55bn by the end of 2010 and which owns and runs casinos in Dar es the government minister in charge of
$5.86bn in 201l. Salaam and Accra, explains the ethos gambling regulation under President
As the recession ravages the profits behind the business and its appeal to Mandela.
of US gaming groups struggling with the new middle class: "The idea is that It's a worry for investors in Nairobi's
large debt burdens and declining we offer a very high quality service. It bustling casino sector too. "There are
cash flows, casino operators from doesn't matter if you lose money as long around 20 licences in Nairobi. It makes
Accra, Dar es Salaam and Cairo have as you've had the very best service." the competition stiff and a bit unfair,"
shaken off the recession and are High spending tourist destinations one Nairobi-based potential investor
thriving on a new Chinese and Indian like Egypt, where a handful of the 20 told Africa investor.
clientele. Nigeria's National Lottery casinos are foreign-owned by US group Regulatory challenges and
Commission is now selling the concept Harrah's, through its subsidiary London unpredictable government policy is a
as a route to empowering people Clubs International, and Austrian common theme as governments struggle
and creating employment in states casino monopoly Casinos Austria to balance gaming investment with the
in the Muslim north. Around 20,000 International, also thrive. South African moral dilemma of casino groups reaping
hopefuls play Kenya's First Lotto every operator Peermont is waiting to hear gains from local consumer losses.
20101 NOV - DEC 165 E:! afrlcalnvestor

3. Business GAMBLING
"It took about five years for Sun
International to finalise legislation
ahead of going into Nigeria," says a
Johannesburg analyst. "Casinos need
effective and efficient regulation and
they want laws applied that stop illegal
activities. They are proud of their
reputation and they don't want to
damage them," says Faurie.
One of the most potentially damaging
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accusations against South Africa's listed 8
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and expanding casino sector would be §
any implication of a roll in cleaning ill- E
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Kenya, Nigeria and o
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Botswana have credible Z
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regulatory regimes but they ::>
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Ladbrokes and Victor Chandler will play casinos opened in Singapore, backed by
still issue too many licences pivotal roles developing the market. Las Vegas Sands and Malaysia's Genting
"Companies coming here like group.
gotten gains. South Africa has signed up Ladbrokes with a well known track Going forward, Ladbrokes sees no end
to international efforts to tackle money record are a very good thing. They have to its investment, and hopes to expand
laundering and has its own anti-money a real contribution to make," he says. its sports offering from football to
laundering laws such as obligations on For some commentators, nascent horseracing. The company is not fazed
casinos to report suspicious or large investor interest in Africa has been by the government's recent ban on
transactions. eclipsed by emerging markets in Asia. online or egaming that could stop the
"Casinos face severe penalties and "US casino groups like MGM and roll-out of future products like online
the withdrawal of their licence if there Wynn Resorts are more focused on poker or an online casino. Experts say
is any sign of money laundering," plans to legalise casino gambling in the ban is designed to stop gaming
says Faurie. Investors say it's more
Japan or the Chinese market than any companies based outside South Africa
of a worry in less developed and less African markets," says Las Vegas-based operating in the country, rather than
regulated markets and is one of the expert David Swartz. "More people licensed operators, and are confident
reasons for prudence. gamble in Asia and more people have a egaming licences will be awarded in the
"The absence of proper regulation discretionary income." future. International and local operators
does make us cautious," says Koc. This year, two new huge leisure believe Africa's forecast economic
and convention resorts based around growth makes gaming worth a punt. ~
Long-term play
Operators stress they aren't after a fast
buck but invest long-term and pump
Global gambling
money into promotion and tweaking After a tough 2009, the global gaming
their offering to appeal to Africa's industry is no longer considered recession-
different markets. proof. Figures for the industry's value in
"We put between $4m and $Sm into a 2010 are at similar levels to those of 2009.
new casino," says Koc. "We have an eye "The recovery in the world economy ro
u
on the long term and need structures is quite fragile and we expect to see ''::
in place before we can get too excited ~
continued volatility in the markets until
about a new market." various governments have their budget
High taxes in North African markets deficits under control," says Global Betting
are one problem, while analysts expect & Gaming Consultants (GBCG). It's not
it will take a while for Sun International surprising then that the gaming industry
to kick off in Nigeria. is starting to put its money on Africa. ro
.0
Once investors settle in a market their o
According to research from H2 Gambling (3
presence acts as a dramatic catalyst Capital, the African gambling market is
for improving the gaming investment looking decidedly healthy and will reach
climate, however. $S.sSbn by the end of 2010 and $S.86bn in
"We play a huge role educating Market Value US $bn
2011. According to GBGC,global gambling
regulators about fair taxation and how figures will reach $406bn by 2012.
to enable a competitive environment," .2010 • 2011
says Koc.
Source: H2 Gambling Capital
Back in South Africa, Faurie believes
!9Iffdifi!.@4i!. 661 NOV· DEC 12010