Emerald to fight for Vaal River turf
Business Report
17 March 2009

Harrah's Entertainment's Emerald Casino Resort, which owns a casino on the Vaal River south of Johannesburg, will "aggressively" challenge Gold Reef Resorts' plans to build a casino in the same area.

"We know that they have been trying to get a licence for a number of years," Emerald's chief executive, Martin Rice, said on Monday. Emerald had previously opposed an application by Gold Reef, he said, and would "aggressively oppose any application for a licence or attempt to build a casino".

Gambling has boomed since the first democratic elections in 1994, after an apartheid-era ban on the practice was lifted and more members of the black majority got jobs and adopted middle-class lifestyles.

Annual gambling revenue has nearly doubled to R15.6 billion over the past five years, according to statistics put together by the National Gambling Board.

There were 36 casinos operating across the country in the fourth quarter of 2008.

That has led to the expansion of companies such as Gold Reef and Sun International.

Gold Reef "has very advanced plans" to build a casino on the Vaal River, chief executive Steven Joffe said on Monday, adding that construction was due to begin in 2009.

Gold Reef expected that Emerald "may want to challenge" the plans for a new casino, Joffe said.

Buying Emerald might be easier than building a new casino, he said, declining to say whether a bid for the company would be made.

Gold Reef and Emerald had abandoned talks about a possible takeover about three years ago, Rice said. He declined to be more specific about the negotiations.

Closely held Emerald is 70 percent owned by Las Vegas, Nevada-based Harrah's. Harrah's also owns Caesars Palace and the Flamingo in Las Vegas, among several others.

Gold Reef might make further acquisitions, Joffe said.

The company expected "unbelievable" opportunities to present themselves as South Africa's economy contracted for the first time in 10 years, causing some companies to struggle, Joffe said.

The South African economy shrank at an annualised rate of 1.8 percent in the fourth quarter of 2008.

Possible acquisitions lay in "big hotel groups that don't have any casinos", Joffe said.

Gold Reef wanted to operate in "most African countries", including Angola and Botswana.

Many African nations preferred that operators combined hotels and casinos rather than operating only gambling houses, so Gold Reef needed "to work on our hotel development" expertise, Joffe said.

Gold Reef reported on Monday that net income had more than doubled from R146 million in 2007 to R358 million in 2008.

Gold Reef currently operates Gold Reef City Casino and the Silverstar Casino in Gauteng, and the Mykonos Casino in Western Cape. - Bloomberg

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