Gambling has long been a popular leisure activity for South Africans. In recent years, iGaming has become the preferred option for most players, with the per-user revenue expected to reach a record US $239.60 in 2023. The annual growth rate is projected to sit around 8.20% between 2023-2027, which would translate to record numbers of both users and total revenue.
These figures represent a clear opportunity for economic growth in South Africa. However, due to current limits on legal online operations, most of that revenue is currently flowing out of the country. In this article, we will review the potential for the industry, and how its legalization can positively impact the local economy.
The Demand for Casino Games
The most important clue that online gambling has the potential to boost the South African economy is the sheer demand for iGaming. The number of players has increased year after year, with traditional games like roulette and blackjack combining with exciting slots to provide serious competition to land-based operators.
There are now a number of online operators based in foreign countries that accept the South African Rand and invite players to join them, highlighting how the market has picked up on the fact that the country is a hotbed for gambling. Whether it’s betting on sports or picking one of the many casino games, South Africans frequently deposit their money with these online operators.
One of the reasons that so many South Africans have an online gambling account is the bonuses the average site has on offer. With lower overhead costs as one of the primary reasons, online operators are able to offer a more generous bonus as part of any number of promotions, which has led to increased deposits from customers.
Online casinos are also more convenient than ever. Instead of suiting up with your best garb to visit the local land-based casino, players can simply load up their preferred games through their iPhone or Android smartphones. Whether you have five minutes or fifty, online casinos can easily fit around a busy schedule.
Online Casinos and Job Creation
The expansion of online casinos can also boost the South African economy via job creation. Considering the current expenditure on offshore operators, it’s clear that local demand is significant.
Should local operators be given the leeway to offer casino games, including spins and dealer games, it’s clear that they will be able to expand their overall numbers. This in turn will require an increase in staff numbers.
Let’s take a look at an example case study, William Hill in the United Kingdom. The bookmaker employs over 12,000 people, with a total of 1,414 betting shops. Over 8,000 staff members reside in the UK, representing a high number of jobs for the British economy.
With average wages lower in South Africa, it is reasonable to believe that casinos will employ the majority of their staff locally. This in turn offers huge potential for growth in the economy.
Gambling Tax Revenues Abroad
Perhaps the best way to illustrate the potential of tax revenues is by examining the difference it has made in other countries. In the United States, for example, six states, Connecticut, Michigan, Delaware, West Virginia, New Jersey, and Pennsylvania, have legalized online casino gambling. Put together, they generated a whopping $970 million in cumulative taxes.
Compare that figure to sports betting, which is legal in 30 states, which ‘only’ brought $560 million in tax revenue. According to details in a report by VIXIO GamblingCompliance, there is potential for the country to increase its tax revenues to over $6 billion, should other states legalize online gambling.
These impressive figures extend to other countries, also. In Germany, for instance, an increase in taxes for online slot operators led to a record €596.1m in tax revenues for the third quarter of 2022. Experts predict this figure will grow significantly in the coming years, with players increasingly opting for online options over land-based alternatives.
Considering these examples, it’s clear that if the South African government decides to consolidate its online gambling regulations, local operators will be able to expand their offer to South African consumers, driving further business and increasing tax revenues.
Will SA Legalize Online Gambling?
It is difficult to predict whether the South African government will legalize online gambling, opening the route to increased tax revenue and a boost to the economy. However, considering the positive examples seen in the United States and Canada, where legalization is a relatively recent phenomenon, public pressure will surely mount on the authorities.