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Despite growing unemployment and the torrid economic environment, gambling revenues grew by 3.5% in the last year, taking gross gambling revenue (GGR) to R18.5 billion in the year to March 31. This is according to the 2018 Survey of Casino Entertainment in SA released by the Casino Association of South Africa (Casa) on Tuesday.
The industry experienced a contraction of 1.8% in 2017, the first since its inception in 1997, with the dip in receipts attributed to tough economic conditions and unchecked illegal gambling operations.
The relative recovery was in line with higher consumer spending in the period under review. Casa members’ gross gambling revenues contributed R6.1 billion in tax revenue, representing 37% of the value generated after taking into account dues to suppliers.
While the bottom line improved, Casa members remain concerned about illegal gambling activities.
“With illegal gambling operations cropping up with alarming frequency, the casino industry has had to adapt to operating with invisible competitors,” says Casa CEO Themba Ngobese, “besides advocating for more concerted action to be taken by law enforcement.”
Illegal gambling operations – online and otherwise – continued to put pressure on the regulated casino industry, despite a commitment from government to assist in this regard. The lack of enforcement remains an issue. “Illegal establishments are still growing and they are now in the form of entertainment centres,” adds Ngobese.
Casa has warned that recent proposed changes in legislation could put the casino industry under regulatory pressures on a number of fronts. The body said in a statement: “The draft Control of Tobacco Products and Electronic Delivery Systems Bill, for example, could see all smoking banned in enclosed public places, including current designated smoking areas, and should this Bill be passed, casinos could see as much as an 18% drop in GGR nationally, which translates to around R3.16 billion.”
A proposed amendment to Gauteng Gambling Regulations that seeks to change the way the province’s casinos are taxed is another regulatory concern. Although the legislation is currently specific to Gauteng, many operators worry that its approval could lead to other provinces changing their regulations.
Compliance costs remain high, with R86 million (0.5% of gross gambling revenue) spent on compliance-related costs in the year under review – an increase of 2.4% or R2 million over last year.
Online gambling dilemma
Under current legislation, all online gambling is illegal in South Africa – but Casa cautions that an unregulated online gambling industry would erode revenue from legitimate operations and adversely affect the bottom line of licensed casinos.
“We believe that there are two options available to government – either maintain the status quo with respect to online gambling being illegal, but then take decisive action against illegal operators, or legalise it and subject it to an effective and credible legislative and regulatory dispensation,” says Ngobese.
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