Regulations are a vital consideration for investors considering offshore outlay. Without robust directives, venture capitalists are unprotected from swindlers looking to make a quick buck. Thanks to its potential, established by a population of over 1 billion people and the revenue capacity possible therefrom, Africa could well become the next big region for the gambling industry in the near future.
This industry is experiencing enormous growth in many African countries, but having the capability to succeed and possessing the necessary frameworks to make success possible are two different things.
Local partners need to be well-versed on local laws, knowledgeable as to the requisite processes, and understand what obtaining the necessary licenses requires. They also need the right connections, the proper amount of experience, and relevant knowledge to properly navigate the jurisdictions these financiers are interested in expanding into.
The South African Gaming Market
The gambling sector in South Africa is driven by a progressive board which can hold its own among its international counterparts. With the exception of Horse Racing betting, which is classified as a sporting activity, all wagering was vetoed in 1965 by the Gambling Act, essentially confirming the restrictions that have been in place since 1673.
When democratic rule was restored in 1994, however, all forms of wagering enjoyed a brief period of legality. The National Gambling Board was established two years later, in 1996, and has since then been responsible for regulating the industry countrywide. It is also mandated to ensure that the country preserves its status as a responsible global citizen that operates with integrity at all times.
The Evolving Legal Framework
The 1996 National Gambling Act not only established the NGB but also provides for the control of gambling-related activities via the promotion of a set of uniform standards that govern all entities involved in this sector across the country. Thereafter, this Act was amended in 2004. Licenses are currently issued by the nine South African provinces individually, each with its own committees operating under the supervision of the NGB.
Backers interested in offering online betting services would have to work with each individual provincial panel individually. The Western Cape Gambling and Racing Board is currently the biggest provider of internet-based betting in South Africa, but directorates are in place for each district, including the Eastern Cape, Free State, KwaZulu-Natal, Gauteng, Limpopo, Mpumalanga, North West, and the Northern Cape. National licenses are generally reserved for financiers applying to operate as manufacturers, suppliers, or as maintenance service providers for entities working within the gambling industry. Both regional and national permits may be issued via sectoral gambling boards and the application process can be undertaken by heading to the appropriate site.
PwC’s Predictions for SA
PricewaterhouseCoopers recently released its sixth annual overview of betting and gaming practice, entitled Gambling Outlook for South Africa: 2017 – 2021. It provides detailed analysis and forecasts for the market based on data received the Casino Association of South Africa and the NGB. Gross gambling revenue in South Africa is expected to expand from its R27 billion 2016 total to as much as R35 billion by 2021, a 5.1% compound annual increase. Thus, gambling levies and taxes will benefit from a 5.2% compound annual rate of R3.5 billion by 2021.
Sports betting falls just behind casinos in terms of gambling in South Africa, and it increased by 21.3% in 2016 to R2.9 billion, more than three times the R847 million revenue it reported in 2012. For the purposes of this publication, sports betting includes wagering on the Lottery and similar games, both of which have grown in popularity over recent years and played a significant role in boosting sports wagering GGR. Besides the regularly scheduled events, mainstream international tournaments like the FIFA and Rugby World Cups and the European Championships see a sharp upsurge in the volume of wagering. For the forecast period, sports betting GGR is predicted to increase at a compound annual rate of 12.3% to a R5.2 billion total in 2020.
Why Investors Love SA
The gambling industry in South Africa is a vital economic contributor thanks to not only its job creations but its continued expansion of capital and the levies being paid at provincial and national levels. It’s very high return on investment does a lot to recommend it and things look like they’re just going to keep getting better for the foreseeable future.