GAMING specialist Phumelela says it will carefully examine opportunities to enter the local casino sector, reports Business Day.

Phumelela’s current gaming offering revolves around tote betting for horse racing and sports, as well as fixed-odds sports betting. But a recent proposed takeover of casino group Peermont by larger rival Sun International has raised the possibility of a number of smaller casinos being spun out of the merged entity and sold.

Speaking on Friday, after the release of interim results to end January, CEO Rian du Plessis confirmed Phumelela was aware of possible developments around smaller casinos at Peermont and Sun International.

Rian du Plessis.

“We would certainly look at such opportunities … but very carefully,” he said

Any opportunity to enter the casino sector, especially the smaller properties, should be viewed against the backdrop of intentions to award new licences for limited payout machines (LPMs).

“These LPMs are effectively mini-casinos. Smaller casinos could be harder hit by these LPM operations (mostly located in pubs and diners), which will be located closer to customers’ homes.”

Mr Du Plessis said Phumelela would definitely bid for new LPM licences, although the date for awarding such licences had not yet been set.

“There have been recommendations from gaming bodies that race courses are ideal venues for the new LPM licences,” he said,

Phumelela already has a meaningful LPM presence in its retail outlets, with the interim report showing the share of profits from this segment growing 20% to R11m.

Phumelela’s diversification away from its traditional and loss-making horse racing business continues to pay dividends. Nic Norman Smith, CIO of Lentus Asset Management, said just how smartly Phumelela could deploy its cash flows into new gaming opportunities would determine the success of its corporate re-engineering.

The interim report showed net tote betting income on soccer increased by 24% to R116m, while net fixed-odds betting income on sports other than horse racing surged by more than 200% to R17m.

Mr Du Plessis said the growth percentages showed that Phumelela’s complementary betting offerings were finding favour with customers.

The company’s Betting World brand operated through 60 retail outlets at the end of January, with 22 licence applications pending. Mr du Plessis pointed out that the number of retail outlets had grown by 50% in less than two years.

He said that efforts to diversify into complementary betting offerings and grow income from nontraditional sources would be stepped up

In this vein, he disclosed that “numbers” betting was growing rapidly and accounted for about a third of Betting World’s turnover. Net betting income derived from “numbers” increased by 37% to R31m.

Phumelela had “internationalised” South African horse racing content and betting, and Mr du Plessis said further geographic expansion was on the cards. In the interim period the company’s profit from international operations increased by 24% to R38m.

By Marc Hasenfuss on www.bdlive.co.za