Gaming company Supreme Ventures Limited (SVL) is investing J$100 million to set up a gaming lounge tentatively called 'The Secret Room', which seeks to leverage traffic from the popular restaurant Usain Bolt Tracks & Records and Fiction nightclub.
The two operations will be linked via annex at Marketplace in Kingston.
KLE Group Limited, which operates UBT&R and Fiction, will provide restaurant services for the gaming operation. It's one of the areas of expansion noted by the entertainment company in its prospectus ahead of last week's successful initial public offering.
The high-end, 125-seat lounge should open in December subject to arrival of imported equipment.
The lounge will allow seamless access to KLE's clientele by breaking out the walls separating the venues. "We think it is a good synergy for us," Brian George, president and CEO of SVL, told Wednesday Business on Tuesday.
SVL will invest in and operate the facility while KLE will provide food, beverage and marketing. It will allow both parties to focus on core activities, George said.
"SVL benefits from brand exposure, social media marketing, [reduced] infrastructure costs and focusing on core functions," said George, who explained that the partnership frees him from having to invest in kitchen construction and avoid food staff costs.
In addition to its food contract with SVL, KLE will earn a seven per cent take of The Secret Room's net winnings - that is, money remaining in gaming machines after winnings are paid out, George said.
"The facility will be state of the art and the investment will be in the order of J$100 million," said the SVL boss. "The returns for both parties should be good."
The deal extends the partnership between the two companies. SVL is a 3.4 per cent owner of KLE Group, diluted from 4.76 per cent as a result of the IPO.
SVL earned the bulk of its J$506 million six-month net profit from lottery games but wants increased earnings from sports betting and lounges.
It currently operates lounges in Barbican, Kingston; Portmore, St Catherine; May Pen, Clarendon, and Montego Bay, St James.
The lounges have offered challenges to SVL, especially in relation to non-core food activities, and are still churning out losses, including a loss of J$37 million at half-year June 2012.
They lounges also face increasing competition.
The newest market entrant is the Chinn family-operated Macau lounge in Kingston, but the strongest rivalry may come from Sizzling Slots, which aims to establish 25 betting shops across Jamaica, costing owners Gassan Azan and Adam Epstein about J$2 billion.