South African gaming and entertainment business Tsogo Sun has struck a deal move into the country’s sports betting market through the acquisition of a 50.1% stake in local land-based and online operator Betcoza.
Its Tsogo Sun Alternative Gaming Investments subsidiary will pay ZAR49m (£2.1m/€2.4m/$2.8m) in cash for its stake in the company behind the Bet.co.za online sportsbook.
As part of the transaction, it will also acquire an indirect interest in Betcoza’s retail sports betting licences, covering the provinces of Gauteng and Limpopo.
The operator described the deal as “a strategic opportunity for Tsogo Sun Gaming to enter the online betting space via an existing developing business”.
The deal is classed as a small related party transaction under the Johannesburg Stock Exchange’s listing requirements, as the stake is being acquired from a wholly-owned subsidiary of Tsogo Sun majority shareholder Hosken Consolidated Investments.
The 51% holding is valued at ZAR36.7m, and for the year to 31 March 2020, a loss of ZAR3.5m was attributed to the assets.
News of the deal comes after Tsogo Sun said in June that it was at an “advanced stage” of entering the online sports betting market. Following the “devastation” to its core hotels and land-based gaming businesses caused by the novel coronavirus (Covid-19) pandemic, the operator explained that it was searching for new sources of revenue.
This, it added, made offering online casino games a “natural progression”, despite the vertical currently being prohibited in South Africa.
In April this year Betcoza became SBTech’s first South African client, after it struck a deal to launch the DraftKings-owned supplier’s sports betting and igaming platform, supported by a tailored trading and risk management strategy for the market.
This will also facilitate an expansion of Betcoza’s lottery offering, through an integration with BetGames.TV, allowing players to bet on live dealer games and live lottery draws.