Sun International is betting on more than 10% market share in the online gaming industry as its SunBet platform recorded massive growth in the half year to June.
SunBet offers the group “significant and exciting growth potential”, with the added advantage of the business model being self-funding and capex light, CEO Anthony Leeming said this week.
Sun International wants more than 10% market share for SunBet by 2026.
“We are new entrants in the market and playing catch up. So far we are certainly gaining market share. We are driving more retention and believe we will continue growth momentum in the second half, although not at the same rate, but as we gain traction we will expect to see good growth. We have a unique customer proposition,” he said after the release of the group's interim results this week.
The owner of Sun City, Meropa Casino, Table Bay Hotel and Maslow Hotel said growth for the first half of the year was driven by the inclusion of traditional casino and slot games on its online platform. This helped SunBet generate record income that exceeded its five-year targets.
In the period under review, its gross gaming revenue rose to R379m from R139m. The slot games made R218m during the half year to June, while live casinos increased to R82m from R49m.
Leeming said casino games were introduced online in August and had since contributed significantly to the top-line.
SunBet's unique active players rose to 160,000 from 20,000 in the previous period. Total deposits more than tripled to R1.2bn from R375m.
SunBet also offers sports betting, which declined to R79m from R90m.
The online betting market is increasingly competitive as a growing number of people access the internet using smartphones. SunBet competes with companies such as Hollywood Bets and Betway.
The company will continue to invest in people and marketing “to significantly increase our share of the fast-growing online gaming market”, Leeming said.
The group has made significant improvements to registrations, customer deposits and withdrawal processes, as well as an overhaul of the customer contact centre.
“Our customers are now able to interact with us seamlessly and we are well positioned operationally for higher volumes of business,” the CEO added.
Muneer Ahmed, Denker Capital Equity analyst, said SunBet’s growth “is a result of investing in the right area of the online market”.
This (online betting) has been a key focus area for management and up to now they have been delivering ahead of target. We expect them to take some market share from the bigger players
— Muneer Ahmed, analyst, Denker Capital Equity
He expects SunBet's growth to continue for the rest of the group's financial year. “This (online betting) has been a key focus area for management and up to now they have been delivering ahead of target. We expect them to take some market share from the bigger players.”
Sun International is also expanding its online betting business outside South Africa. It has a 70% stake in SunBet Africa Holdings, which has online sports betting and casino licences in Ghana, Zambia and Kenya, where the hotel group has “made steady progress in preparing for the launch of operations” in those countries, “which have attractive long-term growth potential,” the group said.
“There are quite a few countries that we will be in. It's a fairly easy model to replicate,” said Leeming. It expects to be fully operational in these markets in the first half of 2024.
Sun International makes 78% of its income from its gaming businesses.
Sun Slots operates limited payout machines (LPMs) or slot machines in more than 700 licensed venues countrywide, among them pubs, clubs, hotels, taverns, bookmakers and sports clubs. But the business was impacted by load-shedding, resulting in a decline in gameplay and footfall at Sun Slots sites. This was the major contributor to lower-than-expected results during the period, with income down from R730m to R717m.
The “majority of operator sites don't effectively use their alternative power solutions, therefore operations were significantly impacted by power cuts”, Leeming said. However, he still sees an opportunity to rollout more LPMs.
Despite the difficult economic climate and increased competition, casino income proved resilient, increasing by 4.2% to R3.3bn.
The growth also comes in an environment in which consumer spending is under pressure.
Consumer pressure can be seen in the performance of casinos in smaller towns such as Worcester, Kimberley and Bloemfontein, said Ahmed, adding that “to a certain extent even [Cape Town's] GrandWest has been slow to recover to pre-pandemic levels”.
The performances of outlying casinos and Sun Slots were impacted by load-shedding, which was a concern, Ahmed said. “In the medium term, the smoking ban is probably the biggest risk facing this business,” he added.
Sun International's resorts and hotels income was up 26.9% to R1.4bn. The division has exceeded 2019 pre-Covid levels, driven by recovery in domestic leisure and conferencing events.
These and sports and events revenues continue to grow, while international leisure business recovered strongly in the review period, said Leeming.
“Conferences have come back really strongly and international visitors have also come back exceptionally well,” he added.
Occupancy has increased across its hotel portfolio, with Table Bay at 68.7%, Sun City at 63% and Maslow at 62%.
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