South Africa’s biggest hotel operator, Tsogo Sun, is doubling down on its strategy to grow its already bulging online betting business, launching about 1,000 new games in November alone and considering acquisitions to bulk up the segment.
The group on Thursday warned shareholders that its online betting growth plans and the investment it will plough into that endeavour might lead to short-term profit pain for long-term gains.
“Bet.co.za launched over 1,000 new games in November 2025, now offering a product suite in line with playTsogo. The business is exploring the launch of a new platform by the end of the 2026 financial year, providing different payment gateways and product integration options,” the group said on Thursday.
“Based on the priority to create a larger online betting business, and to expedite growth, this division may need to sacrifice a portion of its profits generated in the short term for the required investment.
“Even though acquisitions are not the preferred growth method for this division, opportunities that present appropriate scaling, systems and a business fit will be considered. Touchpoints for online betting across the group’s entire portfolio of assets are being developed to maximise opportunities for accessing the platform.”
Tsogo Sun reported that its online betting division has turned profitable since August, with net gaming revenue up 15% and core earnings rising 40% for the six months ended September.
Tsogo’s planned expansion might be complicated by National Treasury moves to tax online gambling activities, proposing a 20% tax to disincentivise harmful betting, with online betting having become a favourite pastime.
If the Treasury has its way, it will demand that local suppliers of online betting register and provide the SA Revenue Service (Sars) with similar information to that currently provided to the provincial gambling boards to collect provincial gambling tax revenue.
The department says in a consultation paper that the proposal is not fixated on revenue raising but on addressing the negative effects of online gambling on society.
However, the proposed tax is still expected to raise more than R10bn in revenue.
Sun International CEO Ulrik Bengtsson has warned that the Treasury’s proposed online gambling tax could drive South African gamblers to illegal offshore platforms, costing the country billions in lost revenue.
According to an independent Yield Sec report cited by Sun International, more than 2,000 offshore gambling sites are targeting South Africans, with an estimated R55.1bn flowing out of the country in 2023/24 — equal to 62% of national online gross gambling revenue.
Sun International argues that offshore sites, many operating from tax havens, provide no local jobs, invest nothing in South Africa and undermine responsible gambling efforts. Bengtsson said more focus on shutting down the offshore market would increase revenue for the government and provincial gambling boards.
“Instead of adding taxes that will push players offshore, Treasury should work with the industry on a sustainable, stable regulatory framework,” he said.
Tsogo cut its interim dividend by half, even though the company’s earnings grew in the first six months of its 2025 financial year.
The hotel and gaming group on Thursday announced it will pay shareholders 15c per share for the six months to end-September, down from 30c last year.
This comes as the company works to tighten its cash and strengthen its balance sheet. While business held up, the results have shown pressure on revenue and profits.
Tsogo Sun earned R5.56bn in income for the period, slightly lower than last year. Adjusted earnings before interest, taxes, depreciation and amortisation (ebitda), a key measure of operating performance, fell 3% to R1.72bn. Operating costs were flat at R3.9bn.
It reduced net debt by R386m, bringing the total down to R6.8bn. Its debt-to-earnings ratio also improved to 2.01 times from 2.09 times in March, it said.
Tsogo Sun said it is reshaping parts of its business to improve performance. The company has begun selling smaller, noncore assets, including its remaining stake in hotel group City Lodge and certain outlying properties, to free up cash and refocus on its main operations.
It has already sold 50-million City Lodge shares for R200m after the reporting period and plans to dispose of the final 3.2% stake within the next year. The company said the proceeds will go towards reducing debt or buying back more shares.
The group is proceeding with investments that it believes will boost long-term growth.
It is upgrading several casino and hotel precincts, rolling out new restaurant and entertainment offerings, and continuing development at the Emerald Resort and Casino.
It has received approval to build a casino in Somerset West, a project expected to cost about R1.29bn over two years. The company said the new property will broaden its reach in the Western Cape and strengthen its presence in the greater Cape Town market.
Tsogo is also facing other legislative headaches via the National Gambling Amendment Bill, which the department of trade, industry & competition and the National Gambling Board are pursuing.
“The regulators are trying to impose even more costly and unnecessary requirements on land-based casinos and are still not providing reprieve for limited payout machine operators by retaining maximum bets of only R5 each, and prizes are still at 1996 levels, regardless of 30 years of inflation,” Tsogo said.
“It is also disappointing that there is no initiative in this bill to assist the casino sector to offer its products online, while allowing betting operators to offer casino-styled products online.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.