Tsogo Sun, one of South Africa’s two major gambling operators, announced that it is interested in purchasing a 40% stake in Golden Valley Casino and GrandWest Casino in the Western Cape province. Both properties are currently managed by Sun International.
The country’s Competition Commission, however, expressed concerns that this might blunt competition in the region and it seems that the regulator will do its best to terminate the deal.
Liberty Mncube, Chief Economist at the commission, noted earlier this week that such a move would not be a good thing for competition in the area, due to the fact that Tsogo Sun would manage all five gambling venues on the territory of Western Cape. Mr. Mncube also explained that the coordination between the two operators would finally result in consumers being offered services of lower quality and asked to pay higher prices.
According to experts, the profits that the above-mentioned casinos would generate are expected to exceed those from Tsogo Sun’s The Caledon Casino and Mykonos Casino. Thus, the operator would lose its incentive to compete as aggressively as it did before.
Rafik Bhana, an advocate for the commission, explained that the acquisition deal was actually proposed so as for the two major operators to prevent greater competition, which might result from changes that are to be implemented in the current competition regulations.
Up to now, all five gambling venues on the territory of Western Cape paid certain fees that allowed them to exclusively provide their services without having to worry about competition. The exclusivity agreement, however, has expired recently and thus, other casinos will now be able to open doors in near proximity to the already existing ones.
Currently, there is only one operating casino in Cape Town – GrandWest. But Western Cape authorities have recently recommended that another gaming property can be relocated in the city, as more than 80% of all residents of the province who tend to gamble are based there.
Earlier this week, officials acknowledged that Tsogo Sun had previously expressed interest in establishing a competitor to GrandWest in Cape Town, but eventually gave up on the idea and announced its intention to buy a 40% stake in Sun International’s properties instead.
The latter company quite expectedly disapproved of the relocation of another gambling venue on the territory of the city.
Jerome Wilson, an advocate for the two operators, pointed out that the proposal for the establishment of yet another casino in Cape Town is not relevant at this point, as it might not get the necessary approval.
Recently, it was announced that Sun International had purchased the Peermont Group and its 14 properties across the country for the amount of R9.4 billion. With that said, the operator now manages more than 30 hotel and casino venues.
As for Tsogo Sun, it currently operates as many as 14 gambling properties across South Africa and more than 90 hotels in various destinations.
