Data Analysis: Live Dealer Casino Exemption Boosts South African Online Market

January 31, 2022
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A 37 percent jump in South African sportsbook revenue in 2020/21 was overwhelmingly driven by the provinces of Western Cape and Mpumalanga, where online live dealer casino games are permitted as “contingent events” on which to bet.

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A 37 percent jump in South African sportsbook revenue in 2020/21 was overwhelmingly driven by the provinces of Western Cape and Mpumalanga, where online live dealer casino games are permitted as “contingent events” on which to bet.

According to the latest statistics published by the South African National Gaming Board, overall betting revenue across retail and online channels rose by 21 percent year-on-year to R10.6bn (US$690m) over the year ending March 2021.

The 2020/21 upside matched the growth achieved during the prior reporting period and represented the broader betting sector’s ninth consecutive year of double-digit growth.

Fixed-odds sports betting accounted for R8.2bn (US$532m) or 77 percent of overall segment revenue in 2020/21, up 36.6 percent year-on-year and dwarfing an equivalent 15 percent share of overall betting gross gaming revenue (GGR) a decade earlier.

SA betting revenue breakdown

The sector’s sustained double-digit growth rate disguised the fact that six of South Africa’s nine provinces posted betting revenue declines in a year disrupted by enforced retail closures and a severely depleted global sporting calendar during the early months of the COVID-19 pandemic.

These declines, including a 10.5 percent shortfall in the country’s most populous province of Gauteng, were more than offset by sharp growth in mid-sized provinces Western Cape and Mpumalanga, which amounted to an extra R2.43bn (US$158m) in absolute terms.

The strong upswing observed in these regions, in defiance of the trend in most South African provinces, is a function of South Africa’s point of supply system for the recognition and taxation of online betting revenue and the somewhat unlikely emergence of live dealer online casino games as part of regulated betting offerings.

Live casino giant Evolution Gaming has been able to partner with South African online operators since receiving a national manufacturer licence from the Western Cape Gambling and Racing Board in early 2020, with live dealer games having been approved as “contingent events” for betting purposes.

Evolution games are promoted heavily by online market leader Hollywoodbets and on the South African-facing websites of international brands Betway and Sportingbet, all of which offer such games via their Western Cape licences.

A similar regulatory approval exists in Mpumalanga province, where domestically-owned online operator Supabets currently offers a range of live casino games under its local licence.

In the wake of Evolution’s entry into the South African market towards the end of the 2019/20 reporting period, overall Western Cape betting revenue spiked by 86 percent to R3.71bn (US$241m) in 2020/21 as the province usurped Gauteng, the population of which is more than twice the size of Western Cape’s, as South Africa’s largest provincial betting market.

SA betting GGR by province

Headline betting GGR in Mpumalanga, meanwhile, grew by an even headier 99 percent year-on-year to R1.43bn (US$93m) over the same period, overtaking KwaZulu-Natal to become the third largest contributor to segment revenue on a provincial basis.

The apparent impact of live casino games on South Africa’s regulated online market was aided by an accelerated retail-to-online channel shift effect arising from the pandemic-enforced closure of casinos and lockdown restrictions across South Africa for much of the reporting period.

Consolidated GGR from casinos, which have long dominated South Africa’s gambling market, nosedived by 50.5 percent year-on-year to R9.1bn (US$591m), falling short of the R10.6bn attributed to betting activity over the same period.

SA GGR by gambling mode

Live dealer games have soared in popularity across the global online gambling industry in recent years, with segment specialist Evolution having elevated itself to the top echelons of the broader gambling sector in terms of listed company market capitalisation.

In the absence of full regulation of online casino products in South Africa, which has persisted despite the lobbying efforts of local online bookmakers, traditional random number generator (RNG) games remain the sole preserve of unlicensed offshore operators.

The emergence of live dealer games as valid contingent events for betting purposes evokes parallels with the controversial rise of so-called “Lucky Numbers” betting over the last decade.

Betting on the outcome of lottery draws soared in popularity in South Africa long before the introduction of live casino products, reportedly driving a majority share of the revenues generated by the country’s bookmakers.

The practice has continued to proliferate despite continued legal opposition from the National Lotteries Commission and a proposed ban contained in South Africa’s draft gambling law amendment bill, which was first published in October 2016 but has since stalled amid litigation from bookmakers and a lack of consensus at provincial level.

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