Sports betting boom in South Africa

Online sports betting is becoming increasingly popular in South Africa, and local companies are investing billions into their platforms to capitalize on this boom.

Recent data from The Outlier showed that South Africans placed R418 billion worth of bets last year, an 80% increase from the R233 billion wagered in 2021/22.

As the publication explains, betting involves placing a wager through a bookmaker like PlayaBets and Easybet on the outcome of a specific event, usually a sports event. It can be done in person or online.

“In South Africa, about 80% of sports betting is done online, with wagers made with just a couple of clicks on a computer or mobile device,” The Outlier reported. 

“The total value of bets is significantly higher than overall revenue because these don’t include payouts, and winnings are often ‘recycled’ to place further bets.”

In South Africa, this market is dominated by a handful of players – while some new entrants are pumping billions into their platforms to take them on.

While there are many platforms to choose from, well-known gambling companies such as Betway and Hollywoodbets dominate online betting, advertising, and sports sponsorship.

SunBet has also become increasingly popular. The platform is owned by Sun International, which plans to triple SunBet’s gaming income and market share by 2028, targeting approximately 10% of the fast-growing domestic online gaming market.

In its latest annual report, Sun International announced that SunBet had seen another record growth year and is ahead of its 5-year target.

SunBet generated record income during the 2023 financial year, up 116.2% and is ahead of its aggressive growth targets set for this business. 

The platform achieved an adjusted EBITDA margin of 30.2% up from 12.4% the year prior.

Its marketing resulted in daily sign-ups increasing from around 450,000 to nearly 2,000 with 176,000 first-time depositors.

Its unique active players were up 269.4%, while first-time depositors were up 286.6%. Deposits were up 162.65%.

“We continue to leverage the Sun International brand, presence and loyalty offering to attract and retain players while positioning SunBet as the most trusted and responsible gaming operator in Southern Africa,” the company said. 

“In a highly commoditised online industry, our competitive advantage lies in our ability to add value to the offering through the wider Sun International stable.”

Below is an overview of the growth of sports betting in South Africa, courtesy of The Outlier.

Newcomer

A newcomer to the market is SuperSportBet, which its owners believe will revolutionise the sports betting experience for fans across South Africa.

SuperSportBet is the result of a partnership between Nigerian betting company KingMakers and MultiChoice.

It was launched in January this year and is one of the few online betting platforms specifically targeting sports fans.

It aims to be “the ultimate destination for sports fans, the betting fraternity, and sports lifestyle enthusiasts”.

“SuperSportBet reflects our commitment to evolve into a platform-based business driven by innovation, delivering unparalleled entertainment experiences,” MultiChoice CEO Calvo Mawela said earlier this year.  

“We believe SuperSportBet is the ideal platform for fans to augment their sporting experiences.”

SuperSportBet GM Barrie Swart explained that sports betting is quickly growing to be a game-changer in the country and on the continent. 

“SuperSportBet will, with its exciting features and its association to a rich brand like SuperSport, set itself apart in a competitive and saturated market,” the company said.

SuperSportBet has a tactical advantage through its association with SuperSport and DStv, which offers South Africans one of the only ways to access both local and international sporting events.

However, it should be noted that MultiChoice’s previous foray into the online gambling market has not gone well.

MultiChoice has lost a tremendous amount of money after investing nearly R6 billion in Blue Lake Ventures, which traded as BetKing and recently changed its name to KingMakers.

KingMakers, headquartered in Nigeria, specialises in sports betting and entertainment with ambitions to expand throughout Africa.

In 2020, the company bought a 20% shareholding in BetKing for an upfront investment of $81 million (R1.4 billion) paid in cash and $31 million (R500 million) in potential earn-out targets.

MultiChoice announced that the $31 million payment had been triggered, making the total amount payable for the 20% stake equal to $112 million (R1.9 billion).

In 2021, MultiChoice increased its shareholding in KingMakers to 49% by acquiring the additional 29% for $281.5 million.

Therefore, the total consideration for MultiChoice’s 49% stake in KingMakers was $393.5 million, equivalent to around R5.9 billion.

MultiChoice said its 49.23% voting interest is fully diluted for KingMakers but represents a 51.23% economic interest.

MultiChoice explained that it owns 49.23% of the business. However, due to an IFRS requirement, the economic ownership is considered to be 51.23%.

This is due to the sale of shares to the KingMaker’s share scheme, which was considered to be the issuance of an option liability.

MultiChoice said sports betting is a natural extension of its video entertainment platform, further enhancing its product set.

“The global sports betting market is experiencing a growth surge. Africa comprises only 2% of global sports betting revenue and is poised for significant momentum as it plays catch-up,” it said.

It added that KingMakers is particularly well-positioned to capture a large share of the African growth opportunity.

It will also benefit from SuperSport’s strong brand and reach across the continent, as well as MultiChoice’s regional presence and acumen – an advantage it hopes SuperSportBet will also benefit from.

However, KingMakers did not live up to its promise. Although it increased its revenue, the cost associated with this growth was much higher than anticipated.

As revenue increased, the company’s profits have done the opposite. Since the MultiChoice acquisition, KingMakers’ losses have grown to a record high.

In the last financial year, KingMakers recorded a loss after tax of $28 million (R500 million).

MultiChoice blamed the record loss on investment to further scale the business and cash extraction losses out of Nigeria, which amounted to $13 million.

Its expansion plans also did not work as expected, and KingMakers exited operations in Kenya and Ethiopia.

MultiChoice announced in its latest results that an increase in the discount rates in Nigeria prompted a R2 billion write-down in the value of KingMakers.

MultiChoice stated that its current 51.23% stake in KingMakers was now valued at R4.6 billion following the write-down.

In simple terms, it means that MultiChoice has lost around R1.3 billion on its investment in KingMakers.

Therefore, it remains to be seen whether SuperSportBet will go the same way as KingMakers or position itself well enough to capitalise on South Africa’s online sports betting boom.