Discovery Bank reveals interesting data about online gambling in South Africa

Online sports betting now accounts for the majority of gambling spend in South Africa, with land-based casinos seeing their growth flatline and, in some cases, decline. 

This has fundamentally changed how South Africans engage with sport and their money, with gambling taking up a greater share of disposable income. 

Standard Bank chief economist Goolam Ballim even warned that it is beginning to impact spending on groceries and basic necessities, making it a major threat to economic growth. 

Apart from its impact, financial institutions have begun tracking online gambling spend and behaviour much more closely. 

One of these institutions is Discovery Bank, which included an analysis of sports betting and online gambling in its SpendTrend26 study.

This study, done in collaboration with Visa, uses 2.6 billion transactions across 12 million credit cards to analyse how South Africans spend their money. 

In the latest report, Discovery Bank examined how individuals interact with online betting for the first time, revealing interesting data. 

Crucially, the shift towards online betting means behaviour can be measured and tracked as opposed to in-person betting, which institutions have no insight into. 

The bank noted that consumers are becoming increasingly deliberate about managing their betting behaviour and how much they wager online. 

Nearly half of all South Africans who bet online set a budget or limit expenditure and stick to it, which indicates that sports betting is seen as a part of normal financial behaviour. 

South Africans also appear to understand the destructive nature of gambling, with 46% of respondents saying they are spending less on online gambling now than they did a year ago. 

However, 15% still say that they spend more than they are comfortable with and are reducing entertainment spending to fund betting. 

“Taken together, these findings suggest that while online betting is mainstream, it is often event-led and, for many consumers, consciously managed,” Discovery Bank CEO Hylton Kallner said. 

Bad news for retailers and economic growth

While data points to South Africans being more responsible with their online gambling, the rise in spending on it is still significantly impacting the economy. 

Online gambling now accounts for 70% of gross gambling revenue in South Africa, with it overtaking land-based casinos as the country’s largest gambling channel. 

This has eroded the historic pull of land-based casinos, many of which drew customers to hotels, such as Sun City, or shopping malls, such as Montecasino. 

The most severe impact is likely to be on retailers and on South Africa’s broader economic growth, as online gambling increasingly takes up a larger share of consumer disposable income. 

South Africa’s economy is heavily reliant on consumer spending to drive growth, with over 60% of GDP coming from household spending. 

As online gambling impacts households’ disposable income, the upshot will be slower economic growth, as it lacks the same multiplier effect, Ballim explained. 

He said household spending has proven resilient in South Africa and, with lower inflation and falling interest rates, has meaningfully driven economic growth in recent years. 

“There is one area that is somewhat troubling with regard to consumer spending, and that is the allocation to gambling,” Ballim said. 

“From 2021 to more recently, the share of spending on gambling has surged. Digital formats, aggressive marketing, and gamification have made it more attractive for individuals to allocate more capital to gambling.” 

Standard Bank’s research shows that at least half of South Africans, sampled by the bank, spend up to R500 on gambling each month.

“You may not think that is much, and it is not a large proportion. But, close to a third of South Africans are spending over R2,350 on gambling,” Ballim revealed. 

Ballim said this is an addiction that needs to be tackled in a nuanced way, with it proving difficult in many other countries around the world.

Crucially for Ballim, spending on gambling does not have the same positive multiplier effect for the economy as spending on goods or services. 

“The key thing with gambling is that it is fundamentally redistribution. It does not have the multiplier effect. It does not create value or economic activity. It is a redistribution of income away from individuals,” Ballim said. 

“One hope that some regulation, awareness or consciousness enters society to guard against the social perils of gambling and the way in which it can be a menace to economic momentum.” 

Ballim also noted that increased gambling can also indicate growing consumer vulnerability, as many see it as a means to supplement their income.