Gambling in S.Africa a safe bet - CNBC Africa

Gambling in S.Africa a safe bet

Southern Africa

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Young woman winning money from slot machine. PHOTO: Getty Images

“Gambling has been under pressure but people still do it, and it is an entertainment form. It is resilient but it has taken a bit of a knock,” Nikki Forster, PricewaterhouseCoopers gambling industry leader for South Africa, told CNBC Africa.

“It hasn’t seen some of the initial high growth rates, but it’s still growing.”

The gambling industry is a prominent entertainment form across the globe. As a business, however, a large portion of its costs are fixed and compliance is stringent.

South Africa has a large gambling following, and Kenya and Nigeria have been recent additions to the growth in African gambling countries.

“South Africa is an interesting market because it’s quite diverse. Casinos have been with us for more than 10 years. It’s now a mature market,” Forster explained.

“What all the casinos are now doing to attract more people is put in cinemas, ten pin bowling, upgrading the restaurants.”

Markets in Nigeria and Kenya are however significantly smaller than South Africa’s despite growing interest for them.

“Obviously the market [in Nigeria] is much smaller for a number of reasons. South Africa is a bigger economy, and it’s got a much more established gambling industry. Nigeria, for example, [gambling] is illegal. Unlike South Africa in the early days, there are unlicensed casinos and the regulatory authorities are trying to cut down on those,” said Forster.

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Breaking into the gambling industry today in South Africa is highly challenging. Nigeria and Kenya provide easier opportunity, but the level of investment needed is not always supported.

Added to the challenges of setting up shop in an already-thriving gambling industry are the tax laws and compliance requirements.

“The tax is very high. Everybody in the gambling industry pays taxes and levies to the provincial authority. That’s over and above VAT incorporation tax,” Forster explained.

“The tax burden, if you look at it, just in straight levies and taxes, is somewhere between nine and 12 per cent before you bring in VAT and income tax.”

Sports gambling is also prominently growing in South Africa, but majority of it is still on horse betting. There is however a huge increase in betting on sports events, and consumers are now betting on soccer and rugby world cups and other related sports.

“It is an industry that will grow. Overall, we expect it to grow between 27 and 28 per cent by 2017. Obviously different sectors will grow quicker, and others will grow slower,” said Forster.

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