Tsogo Sun, a leading hospitality and gaming group, has expressed frustration over what it describes as “disappointing” regulatory delays in the Western Cape, South Africa, which have stifled its plans to expand casino and hotel operations in the region. The company has been eager to invest in Somerset West and Strand for over a decade, but its development projects have been delayed due to the provincial authorities’ failure to process its application for new developments.

Regulatory roadblocks old back economic growth:

The company has heavily criticized the ongoing red tape surrounding its projects, which are seen as key to driving economic growth in these two popular tourist destinations. Somerset West and Strand, known for their stunning beaches and warm waters, are considered prime locations for tourism development. However, Tsogo Sun argues that without new investments in these areas, the growth potential of the region is being blocked.

In a sharp critique, Tsogo Sun highlighted the monopolistic conditions within the Western Cape casino market, particularly the dominance of a rival operator that controls a significant portion of the market. Tsogo Sun points out that the competitor holds an 81% share of the province’s casino revenue, despite its exclusivity agreement having expired long ago. This market concentration has raised concerns about competition and has led Tsogo Sun to argue that the region’s economic development is being stifled.

Tsogo Sun’s delay is more than just a business setback—it has broader implications for the region’s economy. The company emphasizes that land-based casinos generate substantial infrastructure investments and provide significant employment opportunities, both directly and indirectly. The absence of such developments has hindered job creation, tourism growth, and regional economic progress in the areas of Somerset West and Strand.

The company’s application for the new casino and hotel resorts, which would contribute to the tourism sectors in the Helderberg and Overberg regions, has been bogged down by bureaucratic hurdles. “The significant delay in finalizing the application by the regulatory authorities and provincial government has been disappointing,” Tsogo Sun stated, underlining the missed opportunities for growth. The frustration felt by the company is compounded by its observation that areas like Somerset West and Strand, which have been deprived of proper casino and hotel development for over a decade, are now at risk of losing out to other regions that have successfully attracted investment.

Tsogo Sun’s financial strength and future plans:

Despite the regulatory roadblocks, Tsogo Sun has shown impressive financial resilience, posting R11.2 billion ($604.8 million) in revenue for the past year. The company continues to push for its planned expansion in the Western Cape, insisting that it could provide a much-needed boost to the local economy. However, as long as the provincial government and regulatory authorities fail to act on its proposals, the company warns that the region’s potential will remain untapped.

The group’s frustration also stems from the broader context of the gaming industry in South Africa, which has faced challenges in other regions. Tsogo Sun pointed out the tough financial year its Gauteng casinos have had, particularly Gold Reef City, and the broader decline in adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) across several regions, including Mpumalanga and the Free State. These challenges highlight the volatile nature of the casino business in South Africa, with regulatory hurdles further complicating future growth.

According to BusinessLive, despite these challenges, Tsogo Sun has continued its commitment to sustainability. It has made strides in green energy initiatives, including expanding solar power installations at Montecasino and Gold Reef City. These efforts are aimed at reducing operational costs and improving energy efficiency in its properties.

Tsogo Sun’s management remains optimistic about the future. With projects like the refurbishment of the Emerald Resort and Casino, including an upgrade to the Fun Dome entertainment area and Piazza, the company anticipates better financial results starting in 2027. However, it remains clear that without the cooperation of regulatory authorities in the Western Cape, the company’s potential in this region will remain constrained.