Africa Investor

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Gambling Market - Africa

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  • 1. t might have a reputationweek. Privately-run Games World ITJif its bid for a 51 % controlling stake in for caution, but one of theIInternational, headquartered in Sharjah,the five pure gaming venues of Casinos worlds 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 wedThe company has teamed up withconsider;" said Koc. African casino group KaiRo International The house always winsElsewhere, in the largest investment to launch an online sportsbook in SouthHowever fast online gaming grows, likein the Seychelles leisure industry, jSE Africa. Licensed and regulated in SouthAfricas national lotteries and sportsand NSE-listed Pinnacle Point Group Africa, the joint venture promises tobetting, it is still a minnow compared to says it plans to build one of the worlds offer punters the most reliable online traditional bricks-and-mortarcasinos: most exclusive golf and casino resorts on wager in the business and is indicativein South Africa they account for 75%the island. of South Africas growing bettingof the total gambling sector. With no market. Ladbrokes says it expects anew 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 awell as opportunities.Sun International developing market," says Ladbrokes CEOcould find itself under pressure come Christopher Bell. Operator hopefuls are December when its 10-year exclusiveprowling around Africas right as the only casino in the Cape Continental spinTown metropolitan area expires. TheLadbrokes isnt the only operator vyingtourist destinationsprovincial 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 annuallyand the soon-to-be merged Gold Reef decision. and set to grow to $122m by 2012, Resorts and SAB Millers Tsogo-Sun areSimilarly, there are now four casinos according to global betting and gamingexpanding up the continent. in Botswanas 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 Reefs plans to use and Gibraltar-basedDragonfish, theMauritius 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, theSuccess dovetails best with anowned Moonlite Casinos. South African pari-mutual operator; with expatriate scene in fast-growing capital"Gaborone is a small city and wea sportsbook product. cities. Burgeoning Chinese and Indian dont believe there is space for another Its not surprising the gaming industry populations, as weJJ as the upwardlycompetitor," said Anthony Puttergill,is starting to put its money on Africa.mobile with cash to spare, are a lucrativeCEO of Peermont, in a statement.According to research from analysts H2 market. Sun International opened"Countries like Kenya, Nigeria andGambling Capital, the gross gambling Lagoss biggest casino last DecemberBotswana have credible regulatoryyield for African casinos will grow to on the ground floor of the sumptuousregimes 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 Southbetting, gaming and lotteries, will jump Gibraltar-basedKaiRo International, Africas National Gaming Board andto $5.55bn by the end of 2010 andwhich owns and runs casinos in Dar es the government minister in charge of$5.86bn in 201l. Salaam and Accra, explains the ethosgambling regulation under President As the recession ravages the profitsbehind the business and its appeal to Mandela.of US gaming groups struggling withthe new middle class: "The idea is that Its a worry for investors in Nairobislarge debt burdens and declining we offer a very high quality service. Itbustling casino sector too. "There arecash flows, casino operators fromdoesnt matter if you lose money as longaround 20 licences in Nairobi. It makesAccra, Dar es Salaam and Cairo haveas youve had the very best service." the competition stiff and a bit unfair,"shaken off the recession and are High spending tourist destinationsone Nairobi-based potential investorthriving on a new Chinese and Indian like Egypt, where a handful of the 20 told Africa investor.clientele. Nigerias National Lotterycasinos are foreign-owned by US group Regulatory challenges andCommission is now selling the conceptHarrahs, through its subsidiary London unpredictable government policy is aas a route to empowering peopleClubs International, and Austrian common theme as governments struggleand creating employment in statescasino monopoly Casinos Austria to balance gaming investment with thein the Muslim north. Around 20,000 International, also thrive. South African moral dilemma of casino groups reapinghopefuls play Kenyas First Lotto everyoperator Peermont is waiting to heargains from local consumer losses. 20101 NOV - DEC 165 E:! afrlcalnvestor

2. 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 dont want to damage them," says Faurie.One of the most potentially damagingEaccusations against South Africas listed 8.,;and expanding casino sector would be any implication of a roll in cleaning ill-E"e o Kenya, Nigeria and o~ Botswana have credibleZc:" .x:regulatory regimes but they::> >Ladbrokes and Victor Chandler will play casinos opened in Singapore, backed bystill issue too many licences pivotal roles developing the market.Las Vegas Sands and Malaysias Genting "Companies coming here likegroup.gotten gains. South Africa has signed upLadbrokes with a well known trackGoing forward, Ladbrokes sees no endto international efforts to tackle moneyrecord are a very good thing. They have to its investment, and hopes to expandlaundering and has its own anti-money a real contribution to make," he says.its sports offering from football tolaundering laws such as obligations on For some commentators,nascenthorseracing. The company is not fazedcasinos to report suspicious or large investor interest in Africa has beenby the governmentsrecent ban ontransactions. 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 onlinethe withdrawal of their licence if thereWynn Resorts are more focused onpoker or an online casino. Experts sayis any sign of money laundering," plans to legalise casino gambling inthe ban is designed to stop gamingsays Faurie. Investors say its moreJapan or the Chinese market than anycompanies based outside South Africaof a worry in less developed and less African markets," says Las Vegas-basedoperating in the country, rather thanregulated markets and is one of the expert David Swartz. "More people licensed operators, and are confidentreasons for prudence. gamble in Asia and more people have a egaming licences will be awarded in the "The absence of proper regulationdiscretionaryincome." future. Internationaland local operatorsdoes make us cautious," says Koc.This year, two new huge leisurebelieve Africas forecast economicand convention resorts based around growth makes gaming worth a punt. ~Long-term playOperators stress they arent after a fastbuck but invest long-term and pump Global gamblingmoney into promotion and tweakingAfter a tough 2009, the global gamingtheir offering to appeal to Africas industry is no longer considered recession-different markets. proof. Figures for the industrys value in "We put between $4m and $Sm into a2010 are at similar levels to those of 2009.new casino," says Koc. "We have an eye"The recovery in the world economyrouon the long term and need structures is quite fragile and we expect to see ::in place before we can get too excited ~ continued volatility in the markets untilabout a new market." various governments have their budget High taxes in North African markets deficits under control," says Global Bettingare one problem, while analysts expect & Gaming Consultants (GBCG). Its notit will take a while for Sun International surprising then that the gaming industryto kick off in Nigeria.is starting to put its money on Africa.ro .0 Once investors settle in a market theiro According to research from H2 Gambling(3presence acts as a dramatic catalyst Capital, the African gambling market isfor improving the gaming investmentlooking decidedly healthy and will reachclimate, however.$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 gamblingregulators about fair taxation and how figures will reach $406bn by 2012.to enable a competitive environment," .2010 2011says Koc. Source: H2 Gambling Capital Back in South Africa, Faurie believes!9Iffdifi!.@4i!. 661 NOV DEC 12010

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