Operator News
South Africa – South African gambling to reach $1.93bn by 2021
By Phil - 28 November 2017
South Africa’s Gross Gaming Revenues (GGR) will reach US$1.93bn by 2021, according to a report by auditing firm PwC.
The research predicts that the country’s GGR will reach R35bn in 2021, increasing at a five per cent compound rate from R27bn this year.
Pietro Calicchio, Southern African Leader for PwC’s Hospitality and Gaming Practice, said: “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.”
Mr. Calicchio added: “Although the gambling industry overall continued to grow from a revenue perspective in 2016, the growth rate was significantly lower than increases experienced during the past couple of years. Casino gross gambling revenues declined for the first time since 1997 reflecting the tough economic conditions and the impact of illegal gambling. The other segments continued to show growth in 2016.
“Gross gambling revenues for casinos, limited payout machines, bingo and betting totalled R27 billion in 2016, a 3.9 per cent increase on the prior year, with casinos retaining their majority share of the market with gross gambling revenues of R17.9bn. We continue to see the increase in popularity of betting which resulted in the betting industry’s gross gambling revenues increasing by 14.3 per cent over the prior year. There continues to be investment in the industry, additional roll out of gaming positions and we are forecasting a 5.3 per cent compound annual increase in gross gambling revenues over the 2017 to 2021 period with gross gambling revenues reaching R35bn in 2021.”
Gross gambling revenues for casinos, limited payout machines, bingo and betting totalled R27bn in 2016, a 3.9 per cent increase on the prior year, although casinos fell by 1.7 per cent over the last year. The report states that this was partly due to illegal casino gambling. It predicts that casino gambling will recover and could be worth R21.2bn ($1.52bn) by 2021.
The Tsogo Sun Group is the largest casino operator in South Africa with 14 casinos, followed by Sun International with 13 and Peermont Global with eight. These three companies account for 35 of the 38 operating casinos in South Africa. Caesars Entertainment, Desert Palace Casino and Leithlo Resort have one each.
The report stated that land-based illegal games such as Fafi, dice and illegal LPMs totalled an estimated R678m, which had an economic impact of R1.4bn in lost GDP. Illegal online gambling, which is growing rapidly as smartphone penetration increases, cost South Africa R587m in lost GDP. The total impact of illegal land-based and illegal online gambling resulted in R1.9bn in lost GDP, and a loss of 3,785 jobs.
Betting, consisting of fixed-odds bookmaking on sporting events, pari-mutuel wagering on horse racing and taking bets on the outcome of lotteries, rose by 14.3 per cent in 2016, raising its share of total GGR to 19 per cent from 17 per cent in 2015. A key driver behind the increase in betting was the hosting of major international tournaments in South Africa in recent years, including the FIFA World Cup, Rugby World Cup, and the European Championships.
Gross lottery ticket sales increased in 2016 and contributions to the NLDTF from ticket sales rose by 27.9 per cent in 2016 to R1.37bn.
The report highlighted that bingo was the fastest-growing market with a 36 per cent increase year-on-year whilst accounting for five per cent of the country’s total GGR in 2016.
