South Africa’s casino industry remains the biggest player in the country’s gambling market, but sports betting is coming on fast.
On Thursday, PwC published the fifth edition of its Gambling Outlook for South Africa, which covers actual data up the end of 2015 and forecasts as far out as 2020. PwC believes South Africa’s gaming industry will enjoy 6% compound annual growth from now until 2020, pushing annual revenue to R34.8b ($2.6b) from just R26b ($1.94b) in 2015.
According to PricewaterhouseCoopers, casino revenue grew 6.7% to R18.2b in 2015 and PwC expects the casino market to be worth R22.4b by 2020. But the vertical’s share of the overall pie is shrinking. Casinos accounted for 70% of 2015’s overall gambling revenue, down from 73% in 2014 and from 81% in 2011.
Casino’s porridge is being eaten by South Africa’s betting and limited payout machines (LPM) operators. LPM, which are based outside casinos and offer low-price gambling, reported revenue of R2.4b in 2015, up 13.7% year-on-year. PwC expect another double-digit rise for LPM in 2016, but believe growth will slow in the coming years, leading to an LPM market worth R3.4b by 2020.
The market’s real star is sports and horserace betting, which rose 28.5% to R4.4b in 2015. The gains were driven by sports betting, which improved nearly 52% to R2.4b. Sports betting revenue has quintupled in the past five years, rising to 54% of total betting revenue in 2015 from just 22% in 2011, and PwC expects sports’ share to hit two-thirds by 2020.
It helps that sports betting is the country’s only legally permissible form of online gambling (and appears likely to stay that way for the foreseeable future). PwC expects betting’s rise will eventually slow to 10.7% compound annual growth over the next five years, but that would put its 2020 revenue projection at R7.4b.
As for the rest of the market, National Lottery revenues declined nearly 3% to R2.2b in 2015, the third straight year of falling numbers. PwC expects the Lottery will right the ship at some point over the next five years, but compound annual growth will be limited to 0.2%.
Bingo enjoyed the second largest revenue growth of any vertical in 2015, rising 27.5% to R936m, up from just R241m in 2011. PwC expects the expansion of new bingo venues will push that revenue total to R1.6b by 2020.