The biggest loser in South Africa’s R75 billion online gambling boom

Land-based gambling has been overtaken by its digital counterpart in recent years, with online gambling now accounting for 70% of gross gaming revenue in South Africa.

Camissa Asset Management investment analyst Nicholas Brown explained that, over the past five years, online gambling has overtaken all other forms to become the country’s largest gambling channel.

“This shift has reshaped the industry’s structure and competitive dynamics,” Brown said in a recent research note.

“Operators are increasingly prioritising online platforms to capture growth, while protecting profitability by improving operational efficiency and optimising their mature, land-based portfolios.”

Brown explained that the expansion of online gambling has materially increased the size and relative importance of the digital channel within South Africa’s gambling market. 

In 2019/20, total gross gambling revenue (GGR) in South Africa amounted to R32.7 billion. By 2024/25, total GGR had risen to R74.5 billion.

Betting constitutes by far the largest share of GGR, having risen from 12.4% in the 2012/13 financial year to 69.8%
in 2024/25. Conversely, casinos’ contribution to GGR declined markedly from 78.4% to 22.3% over the same
period.

The Reserve Bank explained in its March 2026 Quarterly Bulletin that the significant increase in betting was primarily driven by a surge in online betting revenue.

Online betting accounted for 80.7% of total betting revenue in 2023/24 and 85.5% in 2024/25.

Brown attributed the switch-up between casinos and online betting largely to the Covid-19 pandemic, which he said acted as a key catalyst for the acceleration of online gambling’s market share growth.

“During this time, regulatory acquiescence to operators’ interpretation of existing laws extended the use of bookmaker licenses for online gambling,” he explained. 

“Many players who migrated online during lockdown have continued using these platforms.” 

The graph below, courtesy of the Reserve Bank, shows the change in composition of South Africa’s GGR over the past decade.

Online vs on land

Brown explained that the move from land-based to online gambling is mainly because physical gambling formats have faced several additional challenges.

This includes struggles such as load-shedding and safety concerns, which reduced evening footfall across all segments.

From a business perspective, he said online gambling also offers structural advantages in convenience and accessibility, since players can participate in online gambling from home at any time.

“In addition, new game formats (e.g., crash games) are only available online, further enhancing the appeal of this channel,” he said.

All of these factors have resulted in online gambling taking market share from physical gambling formats. It has also expanded the market as a whole by attracting new and younger players.

Brown said online gambling is appealing to younger players, in particular, as these customers have greater digital familiarity and were previously underrepresented in physical gambling venues.

He explained that there are also distinct differences between the operating and financial models for online versus physical gambling, which makes the latter more appealing to some companies.

One difference is that online gambling generates lower cash operating margins, typically between 20% to 25%, compared to physical formats, which typically have margins of around 35%.

“This reflects the higher level of online competition with lower geographic moats and elevated marketing and bonusing costs, which constrain profitability,” he explained.

This means operators must continually invest in their online infrastructure to ensure it is as seamless as possible for customers to interact with.

“They must also offer reliable payment systems, which is particularly important as it underpins trust and confidence between users and operators,” Brown explained. 

In addition, marketing and customer acquisition costs are higher for online gambling platforms, with “bonusing” playing a central role.

“Bonuses allow newer players to wager without risking their own capital, to encourage trial and long-term engagement,” he said.

“As competition has intensified, marketing and bonusing spend has increased, raising acquisition costs.” 

Brown explained that operators are therefore focusing on scaling platforms to improve operating leverage and support reinvestment in growth.

However, he said that despite these investment requirements, online gambling remains less capital-intensive than land-based formats. 

This is because physical casinos require substantial ongoing capital expenditure to maintain and refurbish the premises and gaming assets, including tables, slots, bingo terminals and limited payout machines.