Other: South African Gambling Business Perspectives

Gambling business in South Africa is growing. Despite the new laws being introduced that can potentially harm the business, online casinos like Springbok casino and land-based casinos like Sun City casino are deemed prospective by the experts.

This article gives a brief outline of what you can expect from the South African gambling industry.

The state of business today

As of today, legal limitations exist on what kind of gambling business is legal in the country. Legislative bodies also regulate legal companies and tax them accordingly.

The legal forms of gambling include the National Lottery that is run by a third party firm licensed by the government, land-based casinos, limited-payout machines, and horserace betting. There are minor sports betting activities like dog race betting as well.

Online gambling, unfortunately, doesn’t make it to the list of legal gambling activities. Perhaps it is because the government is concerned about an increase in gambling dependancy or losing potential tax revenue.

Nonetheless, online gambling is included in the reports that we take data from since all scholars recognize its powerful impact. However, the exact numbers of gross revenue are unknown and only can be estimated.

According to a review by the Gambling Commission, the gambling industry is a significant employer in the country’s economy. In South Africa, it employs almost 60,000 people directly, and 300,000 people indirectly. This makes for 3% of the total formal employment.

The gross revenue from this sector is growing significantly as well. In this paper by the Gambling Commission, it shows a figure of R16 billion in 2009. In another research by PwC, the figure is up to R25 billion in 2015.

South African government received R1.5 billion in taxes from the gambling industry in 2009. Since gambling licenses are issued by the provincial authorities, taxes from this business are the second largest contributor to local budgets. It is even bigger than the revenue the government earns from liquor licenses.

Economic prospects

In terms of economics, the prospects of the gambling industry in South Africa are immense. Previously you have seen that the gross revenue of this sector grew R10 billion in a span of 6 years, from 2009 to 2015.

A recent study predicts the growth is not going to stop any time soon. Starting with a sum of R25 billion in the year 2015, the study predicts it is going to go up to R35 billion by 2020.

Even though the rise is not exponential, you can see a stable growth. If the financial forecast is correct, the industry’s gross revenue is going to increase faster than the GDP of South Africa as the whole. Real GDP growth is about 1-3%, while the growth of the gambling industry is at 4-5% annually.

The lion’s share of there immense revenues is attributed to the casino industry. It is way beyond the competition of other sectors like limited-payout machines and sports betting. Casinos are also responsible for an 11% rise in tourists staying overnight to gamble.

Limited-payout machines are forecasted to see a small rise by 2020. The other two major branches of the gambling industry, bingo and betting are not as fortunate. Their revenue almost flatlines according to the research.

Legal obstacles

These two papers were made before 2018, however. With a new Gambling Amendment Bill being proposed, it is unclear how the financial predictions are going to change.

What is obvious is if the bill is finally passed, online gambling is going to become much harder in South Africa.

Previously, the government was rather lenient to this forbidden activity. Now the bill suggests a heavy crackdown on all illegal forms of gambling. Earlier this year R1 million was confiscated from people who were suspected to engage in online gambling.

In addition to making it harder to play online, the bill cuts down the number of licenses for small operators and centralizes the distribution of these licenses. This means local authorities will lose a significant income source.

Some forms of gambling are going to be made illegal altogether. For instance, dor racing is going to be outlawed, leaving thousands of people unemployed.

This bill is now under heavy criticism by the industry leaders and attorney who say it is nonsensical at best.

Final words

It seems that the gambling industry is moving towards a bright future. If the bill is passed, however, the predictions that the researchers made will be skewed.

It is unknown if the bill is going to be passed, as there are fortunes at stake and attorneys say that the parties hurt by this legislation can take it to court. Perhaps, the government will try to avoid this and declines the bill, or changes it to be less harsh.