Johannesburg - Money wagered at local casinos and through other forms of gambling is expected to rise from R23.9 billion in 2014 to R30 billion in 2014 according to a recent survey.
According to PricewaterhouseCoopers’ fourth survey into gambling in SA, Nigeria and Kenya, gross gambling revenues in South Africa posted their second-largest annual increase over the past five years, with casinos taking the largest share of this growth by rising 4.5 percent over the prior year.
Overall, gross gambling revenue - the amount that is wagered - in South Africa rose by R2.1 billion in 2014. South African gross gambling revenue across most sectors of the market (excluding the National Lottery), is expected to expand from R23.9 billion in 2014 to R30.3 billion in 2019, a 4.8 percent compound annual increase.
Of the three countries included in the analysis, South Africa has the largest overall gambling market. In South Africa, gross casino gambling revenues totalled R17.2 billion in 2014 compared with R497 million in Nigeria and R218 million in Kenya.
Illegal wagering
Pietro Calicchio, Gambling Industry leader for PwC South Africa, says “overall, the South African gambling industry continues to remain a vibrant and exciting sector, but is facing significant challenges, in particular a slowing economic climate and changes in regulation.
“An issue of particular concern to the casino segment is that of illegal online gambling. In addition, certain casinos are also facing competition from other gambling facilities opening up in their catchment areas.
“We anticipate slower economic growth to lead to slower growth in gross casino gambling revenues in South Africa and Nigeria, while Kenya’s casinos will face increasing competition from legal online and mobile gambling.”
Currently, gambling in SA is restricted to the real world after a 2011 decision by the Bloemfontein Supreme Court of Appeals that declared online gambling illegal. The matter was decided once and for all after Swaziland-based Casino Enterprises has lost its bid to have its operations declared legal in SA.
The landmark judgement found that gambling happens at the computer where the user is located, and not at the server. However, the Gambling Review Commission recommended several years ago that online wagering be made legal, a move that has yet to be implemented.
The local gambling market
PwC notes casinos are by far the largest component of the gambling market with casino gross gambling revenues accounting for 72 percent of total gross gambling revenues in 2014, down from 76 percent in 2013.
This, it says, reflects the maturation of this segment of the market.
Currently, a total of 38 out of 40 possible casinos are in operation.
On October 31, the Department of Trade and Industry said it would increase the set number of maximum casino licences that may be granted throughout South Africa from 40 to 41.
However, notes PwC, casinos face growing competition from other forms of legal gambling such as electronic bingo terminals, limited payout machines, sports betting outlets as well as from the increase in illegal online gambling. Casino gross gambling revenue is projected to rise to R19.2 billion in 2019 from R17.2 billion in 2014, a 2.2 percent compound annual increase.
The state reaped R2.5 billion from gambling in 2014, up 10.7 percent from the previous year.
However, notes Calicchio, although the industry is dynamic and ever-changing, it will be adversely affected in the near-term by slower economic growth.
Yet, “improving economic conditions over the latter part of the forecast period will fuel spending at a faster pace”.
IOL