The majority of South Africa’s gambling industry is casinos. They had experienced high growths in 2012. The overall spending of consumers is supposed to rise from R257.6bn last year to R349.6bn in 2016. This report comes from the firm PwC which released the data this past Wednesday.
As of now the gaming industry makes a “significant” contribution to the economy in South Africa. The tax money from gaming and levies, except company and VAT, all help the economy by going to the local governments.
This came to an amount of R1.8bn last year, up 9.8% from 2010, stated by PwC gaming industry leader for South Africa Nikki Foster.
Finance Minister Pravin Gordhan has said that in the Feb. budget review that a 1 percent national tax according to the casino’s gross gambling revenue, would start next year. Currently there are regulations, taxes and levies on the industry which is imposed at a provincial level.
This 1% increase in taxes, which is above and beyond the provincial taxes, would bring in another 16.9% increase in taxes and levies for casinos by the upcoming year. This will be a 16.1% increase in taxes and levies paid compared to what it is this year.
The gaming industry is heavily regulated, and operations tend to exist with low margins, with profitability based on volume. Analyst stated that a weak economic environment has put strains on the industry because guests have less disposable income to play with.
Ms. Forster did say that the outlook is remaining positive and that there will be further roll-out of limited payout and bingo machines. This as well as the possibility of having online gambling will contribute to increase of revenue. Ms. Forster also went on to say that the existing casinos are renovating and upgrading in order to offer their guests a better gambling experience. The renovations will also help those guests that are not there to play but just want to take advantage of the other amenities offered by the resorts.
On the JSE all share index, the casino operator stocks have been performing well for the past 12 months, with gains near 15%.
The PwC report says that South Africans spent R257.6bn last year on gambling. This is equal to more than R8, 000 per adult in South Africa.
Next year the turnover rate is expected to go up to 6.3% per gambler, which will mean that in 5 years the nation will reach R349.6bn in 2016. The biggest increase was in casino gaming which generated R14.9bn in gross gaming revenues, which is about 80% of all gaming.
Sports’ betting is the second most popular gaming in South Africa, with gross revenue of R2.2bn last year. Limited payout machines and bingo machines have seen good growth and expected to continue to rise.
There are 50,000 limited payout machines that are going to be envailed to the country, only about 7,500 have been release in 2012, leaving a large space to grown into.
Like any industry, gambling is affected by the economy. The situation has definitely increased since the World Cup was played there in 2012. They expect to have an even steadier economic profile for the upcoming 5 years, with strong turnover growth.
There is another side that says that the projected turnover increase isn’t such a good thing because there is an increase in the operators’ costs. It’s a tough environment out there, and consumers just don’t have the extra money that they used to have.