PwC: Outlook for South Africa’s gaming industry remains positive

By Rob Starr, Content Manager, Big4.com

PwC’s inaugural edition on the gaming industry entitled:  ‘Betting on the future: South African gaming outlook, 2012-2016’ focuses on segments within the gaming industry with detailed forecasts and analysis. Each segment details the key trends observed as well as key challenges and future prospects. The National Gambling Board of South Africa is the source for historical data.

Specifically, South Africans wagered R257.6 billion on gambling in 2011, which equates to more than R8 000 per adult (18 years and older). Overall turnover, the total amount wagered, for all types of gambling rose 10.6% in 2011 following the 8% increase in 2010. Turnover is projected to increase at a 6.3% compound annual rate during the next five years to R349.6 billion in 2016.

Casino gaming is by far the largest category, generating R14.9 billion in gross gaming revenues, the amount gambled less that returned to the gambler, in 2011, 80.7% of the total. Sports betting is next at R2.2 billion. Limited payout machines (LPMs) and bingo have been the two fastest-growing components of the market albeit off a low base, in both cases more than doubling between 2007 and 2011. LPMs contributed R1.2 billion to the total in 2011, while bingo accounted for R235 million.

Direct gaming taxes and levies, excluding corporate taxes and VAT, totalled R1.8 billion in 2011, up 9.8% from 2010. Casino gaming accounted for 76.7% of the total, which was less than its 80.7% share of gross gaming revenue.

For casino operations, VAT is an expense and cannot be passed on to the gambler, therefore adding to the tax burden.