SOUTH AFRICA – Tsogo Sun Hotels, a gaming and entertainment business, 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 ZAR49 million (US$2.8m) in cash for its stake in the company behind the 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 acquisition represents a strategic opportunity for Tsogo Sun Gaming to enter the online betting space via an existing, developing business,” the company said in a statement to shareholders.

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.

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.

Rival Sun International has been bolstering its online gambling platform Sunbet with its recent introduction of bet games and live games from July.

Tsogo Sun operates in a sector that has been struggling to survive as the coronavirus lockdowns forced hoteliers to shut their doors or operate within strict limitations. It recently bought more shares in its subsidiary Hospitality Property Fund (HPF) and is placing its bets on the recovery of SA’s hotel sector.

In 2019, Tsogo Sun was broken into two parts: Tsogo Sun Hotels and Tsogo Sun Gaming, its gambling business. The two entities are listed separately on the JSE.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE