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Peermont Appeals License Awarding for Gaborone Casino

Posted on September 21st, 2010

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Peermont, a company known to be one of the major players of the hospitality and gaming industry in South Africa, seems to be a bit lost in expanding its reign over neighboring Botswana. While it is true that Peermont does have properties already currently operating in the country (four casinos and three hotels), a recent blow has rendered Peermont virtually powerless in the area especially in comparison to its rivals. A new casino license in Botswana was what Peermont wanted, but unfortunately, that was not what they got, as the license was eventually awarded to the company’s rival group, Gold Reef Resorts. Now, Peermont is challenging this rejection of their bid to the high court of the country.

Gold Reef Resorts, in its bid to get the license, made it known that it is prepared to shell out up to R30 million in the construction of a casino. The company will have a 50 percent stake in the casino which is planned to be put up in the Masa Center development area in the capital of Gaborone. Among the partners that Gold Reef Resorts chose to beef up its bid are local businessmen Guido Giachetti of RDC, a property company and Chicks Lakalele, the partner who officially holds the license to operate the casino. The casino Gold Reef is putting up is estimated (at least by the company itself) to decrease the market share of the three casino companies currently operating facilities in the city – Peermont, Sun International and Moonlite Casinos. The three companies happen to be all based in South Africa. Gaborone is currently the only area outside the Gauteng province where all three South African companies compete for market share.

The chief executive officer of Perrmont, Anthony Puttergill, had this to say about the awarding of the license to Gold Reef: “Gaborone is a small city with only about 200,000 people and we don’t believe there is space for another competitor.”. The two other south African companies, Sun International and Moonlite have suggestively given their support to Peermont by objecting to the granting of the license by the country’s Casino Control Board to yet another company, which would now make Gaborone’s casino competition four-pronged. Peermont claimed it is “taking the matter a step further by going to the high court to have the license reviewed.” According to Puttergill, a number of irregularities can be noticed in the manner by which the Casino Control Board awarded the license to Gold Reef. In the case of which irregularities he noticed in the matter, he did not elaborate further.

On the other side, the chief operating officer of Golden Reef, Steven Joffe, also issued a statement on Friday, wherein he said that he was not aware of any action that was forwarded against the body that gave them the license, the Casino Control Board of Botswana. His company’s group is now bent on pushing ahead with its plans. Joffe adds that he believes that the new casino that his group will be building will accommodate a new market, which will be immigrants from China to the Botswana capital. The license that was just awarded to them would allow for the new casino to accommodate as many as 11 gaming tables and 150 slot machines. Gold Reef is also actually a South African company as well, and many believe that the casino license was eventually awarded to it because of its utilization of local Botswanan partners. Joffe thinks that Gold Reef’s partnership with Giachetti will be advantageous to Golden Reef’s planned expansion throughout the African continent. Gold Reef plans to be a major player in the South African casino industry as it will be merged with another South African company, Tsogo Sun Gaming.

The casino to be built will be the group’s first taste of investing in overseas properties, although its investment cannot really be classified as significant. With the rest of the three South African companies already in Gaborone, Gold Reef is not really seeing much action in their base country as there are no casino licenses currently up for grabs there. Thus, casino companies in SA have no choice but to look beyond their borders and realize more opportunities there.