Amid Robust Growth, South Africa Must Remain PragmaticPublished November 2, 2018 by Lee R
Success in South Africa requires robust gaming revenues to provide greater economic benefits.
While South Africa continues to feel the effects of the unforgettable economic crisis that gripped the country's economy from 2008-2009, the gaming market remains robust.
The robustness is underscored by estimates that commercial gaming revenues could reach as high as R30 Billion by the end of 2019, which would place South Africa as one of the most lucrative markets for casinos and gaming operators.
Three years of continuous growth provides the basis for the optimism: 2015-2016 saw R18.15 Billion in revenues; 2016-2017 saw R17.83 Billion; and 2017-2018 saw R18.45 Billion in total market earnings. Prognosticators further estimate 4.8% compound annual growth rate for this year, bringing forecast calculations to R30 Billion by the end of 2019.
South Africa's gaming revenue at this point comes primarily from land-based casinos, with prominent brands such as Caesars Entertainment, Tsogo Sun, and Peermont Global maintaining a significant presence. Those casinos are expected to contribute 19.2 Billion to the R30 Billion revenue goal.
Contributions of smaller revenues include takes from limited payout machines, bingo terminals, and sports betting outlets. The only struggling vertical in South Africa at this point is proving to be the National Lottery, currently projected 1% YOY growth to R2.33 Billion in 2019.
As far as geographical distribution of contributions, the northern province of Gauteng generates the highest gambling profits (R8.01 Billion) of any district in the South Africa, as home to 23 of the country's 38 casinos in South Africa.
Gauteng is followed by coastal provinces KwaZulu-Natal‚ Western Cape, and the Eastern Cape, with each hosting five casinos bringing in less than the R5 Billion in revenues.
Economic Struggles Overall
At the same time, the South African economy continues to fall apart.
The recently drafted Control of Tobacco Products and Electronic Delivery Systems Bill led to an 18% drop in the Gross Gaming Revenue (GGR) this year. Chief Executive of the Casino Association of South Africa (CASA) Themba Ngobese cautions that the figure could increase and lead to drops in gaming revenues, while indirectly affecting up to 4000 jobs.
In an economic landscape characterized by restrictive legal requirements, steep taxation hikes, and economic slowdowns, the South African gaming industry will do well to protect itself from fluctuations, while also finding ways to reinvest effectively in the general economy and social programming to stabilize the economy in the face of the aforementioned challenges thereof.