Calicchio was presenting PwC's fourth annual edition on the gaming industry, Taking the odds: Gambling Outlook for 2015 - 2019 (South Africa - Nigeria - Kenya). The presentation took place at 54 on Bath in Rosebank, Gauteng.
The report focuses on the casino, Limited Payout Machines (LPM) (these are gambling machines found in pubs and restaurants), sports betting and bingo segments. It examines casino gambling not only in South Africa, but also in Nigeria and Kenya. The National Lottery is also touched on in the Report.
For 2014 the local industry's Gross Gambling Revenue* (GGR) was just under 24 billion (up by 9.6%). The South African casino gambling segments in Gauteng, KwaZulu-Natal (KZN) and the Western Cape are responsible for just over 72% (down from 76% in 2013) of GGR from gambling in the country, with Gauteng contributing 41.5% of the total. Its revenue was R7.2bn, KZN's R3.2bn and the Western Cape R2.8bn.
However, in total the casino sector revenue increased to R17.2bn, (an increase of 4.5% from 2013) making it the biggest contributor in the sector. "This is higher than we expected and we were surprised to see this, considering the current economic climate," says Calicchio.
"The casino figures show that this is a mature market. In contrast to this Bingo is a relatively new segment, and it is the fastest growing segment in the sector, having increased by 5.2%," he adds. Bingo was only introduced in 2014 to KZN and since then it has expanded rapidly in the Eastern Cape and the North West provinces. It is also available in Gauteng and Mpumalanga. At the end of March 2015, 5,369 out of 9,813 licensed bingo positions were operational. In 2014 GGR was R1.1bn.
"This sector is showing a lot of growth but it needs to be kept in mind that it is off a low base. Electronic bingo is starting to dominate," adds Calicchio.
Sports betting is the second largest segment in the market and increased its share to R3.5bn revenue in 2014 (a 2.2% increase).
The report forecasts the total gambling market to increase to over R30bn in 2019. "In 2019, Casino gambling will increase its revenue to just under R20bn, with LPM to grow to almost R3.5bn and sports betting to R5bn. Bingo will increase to R2.7bn."
"Bingo, as well as LPM, are impacting on the gambling market in that while they are growing the market, they are doing so at the expense of casino gambling," says Calicchio.
LPM are expanding as new machines and new sites come into the market. The Western Cape has the largest LPM market (R626m) with KZN second and Gauteng in third position. All of the provinces with LPM (the Northern Cape has not introduced these yet) recorded double digit growth in 2014. "We forecast that LPM's GGR will reach R3.4bn in 2019, generating R425m in taxes and levies.
Of sports betting's R3.5bn GGR, over 66% comes from Gauteng and KZN. Sports betting grew by over 22% in 2014. "The sports betting segment comprises horse racing and live sporting events. Currently horse racing is the dominant component (54%) but it is reducing and live sports events betting is increasing. We forecast that by 2017 live sport events betting will overtake the horse racing betting component," he says.
This is a trend in emerging markets as online wagering grows with access to the internet and the spread of smartphones. In 2019 sports betting will total R5bn, an increase of almost 8%.
While the Lottery generated R4.6bn in Lotto and Powerball ticket sales in 2014, the sale of lottery tickets have fallen during the past two years by a cumulative 3.3%. "This is an indication of the economic climate but also that other gambling segments are preferred by consumers," he says. Lottery GGR is expected to increase by 0.4% from R2.28bn in 2014 to R2.32bn in 2019.
*Gross Gambling Revenues (GGR) is the amount wagered less winnings paid to players, that is the profit that the betting concern keeps at the end of the day.
