Gross gambling and casino revenues in Africa showed subdued growth in 2013 in the wake of a faltering economy.
Some casino operators in certain regions believe the slowdown in 2013 was due in part to growing competition from electronic bingo terminals, limited payout machines (LPMs) and sports betting shops, which are becoming more prevalent in the industry.
These are some of the highlights of PwC’s third annual edition on the gambling industry entitled ‘Raising the stakes in Africa: Gambling outlook 2014-2018 (South Africa – Nigeria – Kenya).
The publication focuses on segments within the gambling industry with detailed forecasts and analysis. The National Gambling Board of South Africa is the source for South African historical data.
Of the three countries included in the analysis, South Africa has the largest overall gambling market as well as the largest land-based casino gambling market.
Gross land-based casino gambling revenues totaled R16.5 billion in South Africa in 2013 compared with only R428 million in Nigeria and R195 million in Kenya.
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Nikki Forster, PwC hospitality and gambling industry leader for South Africa, says: “The South African gambling industry is a vibrant and dynamic sector, but is facing the challenges of a slow economic climate and a changing regulatory environment. In particular the casino sector is facing increasing competition from other gambling facilities.
“We expect slower economic growth to lead to slower gross casino gambling revenues in Nigeria and Kenya and continued slow growth over the next two years. We then look for a pick-up in growth in each country as economic conditions improve,” adds Forster.
Currently, there are three licensed casinos in Nigeria. Most forms of gambling are illegal, other than skill-based card games, backgammon, and the national online lottery. Casino gross gambling revenues have grown at double-digit rates during the past three years, including a 19.4 percent increase in 2013.
As a result of a slowing in the economic growth rate and the adverse impact on tourism due to the Ebola outbreak in the country, slower growth is expected in the industry. Growth is expected to drop to 5 percent in 2014 and to 4.5 percent in 2015.
For the forecast period as a whole, gross gambling revenues will expand at a projected 7.7 percent compound annual rate to $58 million in 2018.
Forster concludes: “Overall, the gambling industry is vibrant and dynamic. However, as a business the margins are low, a large portion of the costs are fixed, regulatory compliance is stringent and profitability depends on volume.
“On the whole, the outlook for the industry is positive, with the further rollout of LPMs and electronic bingo machines in the pipeline that will further contribute to the expected growth in revenues.”
