Nigeria 2014 gambling revenues up despite weakening economy

Gambling revenues improved in Nigeria in 2014, despite a challenging and weaker economic growth.

Gross casino gambling revenues in Nigeria rose by 17.1 percent in 2014, continuing the pattern of double-digit annual increases. ]

The casino market was not harmed by the recent terror attacks or the Ebola outbreak that hit the country in July 2014.

As a result of a slowing in the economic growth rate, slower growth is expected in the industry. For the forecast period as a whole, gross gambling revenues will expand at a projected 8.5 percent compound annual rate to $68.9 million in 2019.

Although growth will be substantially lower than during the past five years, Nigeria is expected to continue to expand at a faster rate than either Kenya or South Africa.

Gross gambling revenues in South Africa posted their second-largest annual increase over the past five years, with casinos taking the largest share of this growth by rising 4.5 percent over the prior year.

Overall, gross gambling revenues in South Africa rose by R2.1 billion in 2014.

Casino gambling revenues rose by 6.9 percent in Kenya in 2014, down from the 11.2 percent increase in 2013 and the 24.2 percent compound annual increase between 2009 and 2011.

It is believed that the imposition of a 20 percent withholding tax on gambling may have contributed to the slowdown.

In addition, increasing competition from legal online gambling and from a new national lottery may also have contributed to the slowdown for the 13 licensed casinos.

Kenya, like Nigeria, has been troubled with terrorism, which has hurt the tourism industry.

However, the country’s casinos do not rely on foreign tourism and have fared well. For the forecast period as a whole gross casino gambling revenue is projected to increase at a 7.5 percent compound annual rate, rising from $20.1 million in 2014 to $28.9 million in 2019.

These are some of the highlights from PwC’s fourth annual edition on the gaming industry entitled ‘taking the odds: Gambling outlook for 2015 – 2019 (South Africa – Nigeria – Kenya).

The publication focuses on segments within the gambling industry with detailed forecasts and analysis.

Each segment details the key trends observed as well as key challenges and future prospects.

The National Gambling Board of South Africa is the source for historical data. With regard to Nigeria, figures are derived and extrapolated from selected company information.

With respect to Kenya, figures are derived and extrapolated from casino taxes.

Of the three countries included in the analysis, South Africa has the largest overall gambling market. In South Africa, gross casino gambling revenues totaled R17.2 billion in 2014 compared with R497 million in Nigeria and R218 million in Kenya.

Pietro Calicchio, Gambling Industry Leader for PwC South Africa, says: “Overall, the South African gambling industry continues to remain a vibrant and exciting sector, but is facing significant challenges, in particular a slowing economic climate and changes in regulation.

“An issue of particular concern to the casino segment is that of illegal online gambling. In addition, certain casinos are also facing competition from other gambling facilities opening up in their catchment areas.

“We anticipate slower economic growth to lead to slower growth in gross casino gambling revenues in South Africa and Nigeria, while Kenya’s casinos will face increasing competition from legal online and mobile gambling.”

Calicchio concludes: “Overall, the gambling industry in South Africa and Nigeria is dynamic and ever-changing. However, the industry will be adversely affected in the near term by slower economic growth, but improving economic conditions over the latter part of the forecast period will fuel spending at a faster pace. In Kenya, growth will remain relatively stable during the next five years compared with the increase in 2014.

“In the three market regions as a whole, gross casino gambling revenues will total an estimated R19.9 billion (USD1.8 billion) in 2019, a 2 percent compound annual increase on the R18 billion (USD1.7 billion) in 2014.”