Looking to South Africa’s growing gaming market
REGULATION IS COGENT WHEN investors are considering an offshore investment. Without a strong and virile regulation, investors are vulnerable to charlatans who will cash in on the opportunity. Due to its potential, which is based on the size of its population and the resulting revenue that is available across the continent, Africa could easily become the next big area of course over the next few years when it comes to the gaming industry. The fact that the gaming industry in African countries is growing helps explain why sky is the limit as far as gaming and Africa goes. Possessing the potential and having the frameworks in place to explore it are two different things.
Your local partner must know the local laws, processes and how to acquire the necessary license needed and must also possess the necessary knowledge, connections and experience to help navigate the gaming industry in your jurisdiction of choice.
South Africa’s gaming market is propelled by a very dynamic gaming board which can rival the most sophisticated gaming board anywhere in the world. Aside from horse racing which existed as a sporting activity, all other forms of gaming were officially banned by the Gambling Act of 1965; however, gambling in South Africa has been restricted since 1673. With the restoration of democratic rule in 1994, all forms of gambling were legalized. The National Gambling Board (NGB) was established in 1996, and is responsible for the oversight of regulation in the gambling industry throughout the country and also mandated to preserve the integrity of South Africa as a responsible global citizen.
The National Gambling Act of 1996, which established the National Gambling Board, provides for the regulation of gambling activities and promotion of uniform norms and standards in relation to gambling throughout the country. The National Gambling Amendment Act 2004 replaced the 1996 Gambling Act. Licenses are issued by the nine provinces that make up South Africa with each having its own gaming board and supervised by the National Gambling board. Established in the year 2000, the South African National Lottery has an average transaction of five million per week with revenue projected at R2.33 billion in 2019.
Western Cape Gambling and Racing Board (WCGRB) is the largest provider of online bookmaker in South Africa and you must obtain a license from one of the gambling boards in the province to offer online betting. The gambling boards in Guateng, Eastern Cape, Free State, Kwazulu Natal, Mpulanga, North West, Limpopo and North Cape have the prerogative to issue licenses in their regions. National license is generally reserved for those applying as a manufacturer, supplier, and maintenance supplier or for those wanting to work within the gambling industry. Both licenses may be issued through the provincial gambling boards and can be done visiting the appropriate website.
PwC, a global auditing firm in its sixth annual edition of gaming industry titled ‘Gambling Outlook for South Africa: 2017-2021’ review gambling industry with detailed forecast and analysis. Based on information and data received from the National Gambling Board and the Casino Association of South Africa, gross gambling revenues (GGR) in South Africa are forecast to expand from R27 billion in 2016 to R35 billion in 2021, representing a 5.1 percent compound annual increase. With gambling taxes and levies experiencing a 5.2 percent compound annual rate of R3.5 billion by 2021.
Sport betting is the second largest gaming category in South Africa behind casinos. Sport betting grew by 21.3 percent in 2016 to R2.9 billion, more than three times the R847 million in 2012. Sport betting includes betting on the outcome of lotteries and similar games which have grown in popularity and also aided the growth in sport betting GGR. Aside from the regular scheduled sports events, major international tournaments such as the FIFA World Cup, the Rugby World Cup and the European Championships further boost the volume of betting. For the forecast period as a whole, sport betting GGR is projected to increase at a 12.3 percent compound annual rate to R5.2 billion in 2020.
The South African gaming industry remains an integral contributor to the economy through the creation of jobs, continued capital expansion and payment of taxes to both provincial and national government. The gaming industry in South Africa is an investor’s delight and the return on investment (ROI) is very high. For investors wanting to come to Africa, South Africa presents a good investment destination in the gaming industry.