The latest figures published by the National Gambling Board of South Africa show that gambling revenues in the last financial year increased by 22%. South Africa is seeing a consumer spending boom, and gambling operators are profiting. Lower interest rates, higher pay and Black Economic Empowerment (BEE) are contributing to a growing middle class with more disposable income.

Casino revenues, after payment of winnings and before payment of costs and taxes, were around US$1.5 billion for the year to March 2005. However, casinos are facing increasing competition for gambling dollars. The Western Cape, Eastern Cape and Mpumalanga Provinces have licensed limited-payout machines in bars, clubs and other venues, and other provinces are likely to follow suit. In Mpumalanga, where the machines have been running for the full financial year, revenues have shown a 24% rise over the last six months, and last quarter figures from the Western Cape have quadrupled with the introduction of more limited-payout machines. The Eastern Cape has only recently licensed the machines.

Casino operators have also shown substantial growth in headline earnings a share, with Sun International leading the field with 61% in the six months to December. Gold Reef was up 46.4% and Peermont Global 24.6% over the same period. Limited-payout machines only represent 0.3% of gross gambling revenue at present, but their accessibility and rapid growth in numbers could prove to be competition for market share. The casinos’ 87.6% share of South Africa’s gambling revenues may soon be under attack.
(E-06.20.05)

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