South Africa Gross Gambling Revenue Expected To Soar By 2021

While punters in the UK have long-since enjoyed the perks of living in one of the world’s most mature gambling markets, this is far from a universal reality.

Players around the world, even today, are still subject to a number of restrictions and limitations, either in how they are personally allowed to gamble by the state, or by the number, type and availability of legal licensed operators in their jurisdiction.

With the market well established for gambling in the UK, there are still further predictions of growth in underlying gambling revenues. So when the focus shifts to jurisdictions like South Africa, the growth potential is arguably even bigger.

In practice, South Africa remains a much less developed gambling market, with somewhat lower gross gambling revenues than other countries. However, it has been identified as a growth market for the years to come, particularly as more operators look to leverage the opportunities presented by the South African market.

A new report by professional services firm PwC has been released this week, examining the state of the South African gambling market in its current form, as well as attempting to forecast forward to 2021. The firm’s sixth edition of its Gambling Outlook for South Africa report, which is published annually, has projected gross gambling revenues of up to 2.45 billion over the next five years, reflecting a strong trend towards growth in the African economy.

At present, the report highlighted total earnings of just 1.89 billion in 2016, of R27 billion in local currency. According to their forecasts, this is set to rise consistently over each of the next five years, reaching a total of R35 billion by 2021.

The news will be seen as a validation of earlier optimism around the South African gambling market, with much of the growth projected to flow from physical casino outlets around the country.

This was reflected in projected gambling tax revenues, which are expected to rise to R3.5 billion over the same period. The majority of growth in revenues is expected to come directly from the casino sector, followed by the betting sector, which contributes about a third as much.

However, while physical casinos are responsible for the bulk of the revenue volume, the report identified a downwards trend in revenues from casino growth, as opposed to other forms of gambling. In particular, the report identified bingo as the largest growth market in South Africa, with the game becoming increasingly popular across the nation. As a result, bingo revenues in particular are expected to double over the period.

According to the report, PwC identified a broader economic slowdown as being responsible for the decline in gambling revenues.

“A contributing factor to the drop for casinos and the slowdown in overall growth is the current economic climate. Added to the current economic conditions, illegal gambling continues to be a problem in South Africa.”

Pietro Calicchio, PwC’s gambling industry lead in South Africa, described the projection of the gambling industry over the period.

“The gambling industry in South Africa will continue to be adversely affected in the near term by slower economic growth, but improving economic conditions over the latter part of the forecast period will aid growth. The industry remains an important contributor to the economy through the creation of jobs, continued capital expansion and the payment of taxes to both provincial and national government.”

The news will be taken as a positive sign for gambling operators in South Africa, and confirmation of a market that is continuing to increase in significance and market shares. With state revenues also expected to take a boost from underlying growth, the gambling industry looks set to become an even bigger contributor to state coffers in future.