Strong growth expected in South African gaming sector over next five years

The latest PwC gaming outlook report paints a rosy picture of the industry in South Africa, with the sector expanding by 3.9% in the last year (2016), and analysts expect that trend to continue for the next five years.

Each form of gambling is predicted to grow over the next few years, with researchers predicting strong growth in casinos, sports betting (highstreet and online), limited payout machines (LPMs), the national lottery, and bingo. Online sport betting, in particular, is expected to see huge growth in the coming years. The activity accounted for less than a third of total betting in 2012, but is expected to be more than two-thirds of the market by 2021, with users betting on everything from international football to more local sports like morabaraba or kgati.

Online casino gambling, however, is left out of their growth charts as online sports betting is strictly regulated on a provincial level, and there is no legal online casino in South Africa under the current legislation. Nonetheless, whilst it may be illegal, many young South Africans do choose to gamble online, with a variety of well-established online operators specifically targeting South African users and internet cafes routinely promote online gambling as a benefit of using their services.

According to PwC, illegal online gambling has grown rapidly due to the market penetration of smartphones and broadband in recent years, and costs South Africa around R587m (£6.4m / $8.2m) in lost GDP as well as thousands of jobs. Authorities have tried to crack down on illegal online gambling, and the Department of Trade and Industry (DTI) have widely publicised recent confiscation of R1.25m in illegal gambling winnings in an effort to deter users.

However, with the advent of cryptocurrency gaming available at some of the best betting sites, policing users that chose to ignore the laws and gambling with online casinos based outside South Africa’s borders is only going to become more difficult in the future.

In fact, whilst South Africa currently maintains some of the world’s most stringent anti-online gambling laws, politicians are closely watching how legalisation and taxation of the industry performs elsewhere. The government recently raised taxes on land-based casinos, and the possibility of new revenues from regulating online gambling in the same way is starting to look increasingly attractive.

Photograph by Alexas Fotos