Dark clouds gather over casinos in South Africa

South Africans are increasingly relying on online betting to get their gambling fix, reducing the role of physical casinos in the country’s gambling market.

This was revealed in data compiled by The Outlier, which showed that betting accounted for more than half of South Africa’s gambling revenue of R47.2 billion in the past financial year.

Casinos, on the other hand, accounted for just 37% of the total revenue in 2022/23, down from 84% in 2010.

The publication explained that, since the Covid-19 pandemic, there has been a shift to online betting and gambling triggered by pandemic-related shutdowns.

In addition, wider access to the internet and the increase in the number of smartphones means gamblers no longer have to rely on physical outlets and can gamble anywhere and anytime. 

Sports betting, which involves placing a wager through bookmakers such as EasyPlay or Yesplay on the outcome of a specific event, is very popular.

South Africans placed R418 billion worth of sports bets last year, an 80% increase from the R233 billion in 2021/22. 

The total value of bets is significantly higher than overall revenue because winnings are often  ‘recycled’ to place further bets.

Revenue-wise, the National Gambling Board reported R47.17 billion of gross gambling revenue for 2022/23, with 50.3% – R23.75 billion – coming from betting.

Notably, in South Africa, online sports betting is legal, but online gambling – aside from sports betting – is not. 

BizCommunity reports that this has prevented South Africa from developing an online gambling industry while other parts of the world have built substantial operations. The global casino market is now worth over $60 billion.

However, several South African companies have managed to capitalise on the country’s booming online betting market.

For example, platforms like Betway and Hollywoodbets dominate the local online betting market.

One interesting company benefiting from the online betting boom but losing out due to the move away from casinos is Sun International.

Sun International owns and operates casino, hotel and resort properties in South Africa and Nigeria. It also provides management service businesses in the hotel, resort, casino and gambling industry. 

Founded in 1967, Sun International is headquartered in Sandton, South Africa, and is listed on the JSE’s main board.

Sun International pioneered gaming in Southern Africa, introducing casinos to this part of the world in the late 1970s.

However, in recent years, the company has had to switch up its strategy to remain relevant and up-to-date with the modern gambling market by launching SunBet, an online betting platform.

In its 2023 results, the company said its urban casinos segment showed resilient performance, achieving R6.7 billion in income for the year. 

“Our larger casinos, particularly GrandWest and Time Square, performed well, while our regional casinos’ performances reflected the challenging macro environment,” the company said. 

“We continue to see resilience in casino income and drive margin protection strategies to maintain high levels of cash flow generation from this segment.”

While its casinos struggled, SunBet, the group’s online business, had a very impressive year with record earnings. 

Overall, income was up 116.2% to R0.7 billion, and SunBet is now a significant contributor to group earnings. 

“With run-rate performance well ahead of our five-year plan, the board has set an even more ambitious target to more than triple GGR from the business to R3.0 billion by 2028, targeting approximately 10% of the fast-growing domestic online gaming market,” the company said.

“We also continue to evaluate opportunities to grow the SunBet brand in selected markets in the rest of Africa incrementally.”

The growth of its online betting platform’s contribution to the company’s earnings can be seen in the graphic below: