The State of South Africa’s Gambling Industry

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Friday, February 24th, 2017 | Written by Adam Brown

Following the first democratic elections in South Africa back in 1994, gambling laws were passed allowing for the licensing of brick and mortar casinos. South Africans and tourists have been visiting these venues ever since, and while gambling has now become a popular past time, recent years have seen a major boom in the industry.

In fact, experts predict that gross gaming revenues will reach 30.3 billion rands (US$2.34bn) by the year 2019, which is a big increase from the 23.9 billion rands the industry generated in 2014. Furthermore, analysts estimate that the industry has grown and will continue to grow by roughly 4.8 percent per annum.

Africa’s Largest Gambling Market

South Africa, with a population of around 53 million people, has the largest gambling market in Africa, with its casino gross gaming revenues totaling 17.2 billion rand in 2014. By comparison, the continent’s most populous country, Nigeria with 183.5 million people, had gross gaming revenues significantly smaller at just 497 million rand. While casinos continue to be the largest source of gross gaming revenue in South Africa, their contribution to overall revenues are shrinking, though. In 2013, for instance, casinos were responsible for generating 76 percent of all gaming revenues, but by 2014 they were only bringing in 72 percent of revenues.

Rise of Online Gambling

The shrinking share of profits that casinos are seeing in South Africa is owed to the rise of online gambling, with online casinos now bringing about what some are calling a “Second gambling revolution” on the continent. As more and more Africans now own smartphones, online gambling sites are starting to see a surge in their traffic.

South Africa is leading the pack in terms of online gross gaming revenue, but operators in Nigeria and Kenya are also benefiting from new players discovering online casinos. Still, the smaller markets have a long way to go to catch up to the southernmost nation, and currently South Africa accounts for 90 percent of the gambling market in Sub Saharan Africa.

Other Verticals Also Growing

Online gambling isn’t the only sector of the gambling industry that is booming in South Africa. Bingo is a very popular pastime and brings in considerable gaming revenues, while South Africans are also using Limited Payout Machines at an ever-growing rate. Sports betting is another area of fast growth, and overall, trends in other African nations mirror those of South Africa but with a smaller overall industry.

Regulatory Oversight

As in Europe, African nations are responsible for setting their own regulations in order to control online and offline gambling. Many of the state-run regulatory agencies are members of the Gaming Regulators African Forum (GRAF). The forum works to establish best practice guidelines for consumer protection, security, gambler education and problem gambling treatment, and covers a number of different countries. These member nations include South Africa, Botswana, Kenya, Namibia, Swaziland, Tanzania, Mozambique, Malawi, Zimbabwe and Zambia.

Member nations agree to adhere to regulatory practices laid out by the GRAF, and as a result there is some uniformity in the laws and regulations governing gambling in many African countries. The forum was founded in 2003 to bring some order to the gambling industry in Africa, as before its founding, the laws varied dramatically, leading to confusion among visitors to African casinos.

Sports Betting Increasingly Popular

Meanwhile, sports betting appears to be one of the fastest growing gambling vertices on the continent, with some countries expressing their concerns over the potential ills that unchecked wagering can have on a society. In Ghana, for instance, Chinese run gambling businesses have been accused of exploiting lax laws to encourage people to gamble, a situation which has been exasperated by an influx of cheap mobile phones from China. As Ghanaian Member of parliament, Afenyo Markin, explained recently:

“Those Chinese who have come with their raffle joints, I want to tell them we will encourage the police to close these joints down. There are lot of raffle joints in Winneba. Properties are getting stolen because somebody wants money to go raffle.”

The Gaming Commission of Ghana is also now spearheading a campaign to shut down all those gambling centers currently operating without the proper licenses.