Africa's gambling shows moderate revenues

Some casino operators in certain regions believe the slowdown in 2013 was due in part to growing competition from electronic bingo terminals, limited payout machines (LPMs) and sports betting shops, which are becoming more prevalent in the industry.

These are some of the highlights of PwC's third annual edition on the gambling industry entitled 'Raising the stakes in Africa: Gambling outlook 2014-2018 (South Africa - Nigeria - Kenya). The publication focuses on segments within the gambling industry with detailed forecasts and analysis. The National Gambling Board of South Africa is the source for South African historical data.

Of the three countries included in the analysis, South Africa has the largest overall gambling market as well as the largest land-based casino gambling market. Gross land-based casino gambling revenues totaled R16.5 billion in South Africa in 2013 compared with only R428 million in Nigeria and R195 million in Kenya.

Nikki Forster, PwC Hospitality and Gambling Industry Leader for South Africa, says: "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.

"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," adds Forster.

The South African gambling market

Casinos are by far the largest component of the gambling industry with 76% of total gross gambling revenue. To counter the slower growth, casino upgrades and expansions to existing facilities are expected to boost a growth in revenue.

Bingo, the smallest category, continued to be the fastest-growing category in 2013 with gross gambling revenues rising 67.5%, the result of the introduction of bingo in Mpumalanga, the North West and the Eastern Cape. LPMs increased 17.8% and sports betting rose 18.5% in 2013 compared with 4.6% growth for horse racing. "Gross gambling revenues as a whole are expected to expand from R21.8 billion in 2013 to R29.5 billion in 2018, a 6.2% compound annual increase," says Forster.