All bets on hold in Africa’s gambling industry


According to the PWC’s third annual report, Raising the stakes in Africa: 2014-2018, gross gambling increased by only 4.3 per cent due to a slowdown at casinos, which accounts for 76 per cent or 16.5 billion rand of the market.   

Some casino operators believe the slowdown in certain regions is due to the growing competition from electronic bingo terminals, limited payout machines (LPMs) and sports betting shops.

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South Africa, the largest gambling market in Africa, reported gross land-based casino gambling revenues of 16.5 billion rand in 2013, compared with only 428 million rand in Nigeria and 195 million rand in Kenya.

 “The South African gambling industry is a vibrant and dynamic sector, but is facing the challenges of a slow economic climate and a changing regulatory environment.  In particular the casino sector is facing increasing competition from other gambling facilities,” said Nikki Forster, PwC hospitality and gambling industry leader for South Africa.

“We expect slower economic growth to lead to slower gross casino gambling revenues in Nigeria and Kenya and continued slow growth over the next two years. We then look for a pick-up in growth in each country as economic conditions improve.”

In South Africa, casino upgrades and expansions to existing facilities are expected to boost revenues.

On the other hand, bingo, the smallest category in the industry, continues to the be fastest growing category in 2013 with gross gambling revenues rising by 67.5 per cent due to the introduction of bingo in Mpumalanga, the North West and the Eastern Cape.

LPMs and sports betting increased by 17.8 per cent and 18.5 per cent respectively, compared with 4.6 per cent growth for horse racing.

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 “Gross gambling revenues as a whole are expected to expand from 21.8 billion rand in 2013 to 29.5 billion rand in 2018, a 6.2 per cent compound annual increase,” said Forster.

South Africa’s national lottery remained the slowest growing category in the industry. Gross gambling revenues are projected to rise from 2.4 billion rand in 2013 to 2.5 billion rand in 2018, a 1.2 per cent compound annual increase. A new operator however is set to take over in 2015.

In Nigeria, PEC said that most forms of gambling remain illegal other than skill- based card games, backgammon and the national online lottery.

While casino gross gambling revenues have grown at double-digit rates over the past three years including a 19.4 per cent increase in 2013, the Ebola outbreak in the country as well as an economic slowdown is expected to have an adverse impact on tourism, resulted in a slower growth in the industry.

(WATCH VIDEO: Sports betting in Nigeria)

Growth is expected to drop to five per cent in 2014 and 4.5 per cent in 2015 with revenues projected to expand at a 7.7 per cent compound annual rate to 58 million US dollars in 2018.  

Kenya’s gross gambling revenue rose 7.6 per cent, compared to 5.6 per cent in 2012 but well below the double digits gains reported from 2009 to 2011 due to concerns about terrorism after the Westgate shopping mall attack in September last year.

Revenue growth is expected to drop to 4.9 per cent in 2014 and 4.1 per cent in 2015 following the imposition of a withholding tax on gambling winnings and slower economic growth. Revenue growth is set to average 6.8 per cent on a compound annual basis from 18.4 million US dollars in 2013 and 25.6 million US dollars in 2018.

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PWC said that in order for casinos to gain a competitive edge, they need to create 24/7 virtual open networks in the form of free WI-FI spots that connect people on the floor to casinos, as well as adopt a scientific approach to their marketing and customer service strategies.

 “Overall, the gambling industry is vibrant and dynamic. However, as a business the margins are low, a large portion of the costs are fixed, regulatory compliance is stringent and profitability depends on volume,” concluded Forster.

“On the whole, the outlook for the industry is positive, with the further rollout of LPMs and electronic bingo machines in the pipeline that will further contribute to the expected growth in revenues.”