South African Casino News Articles

Gamblers blow R10bn as casinos hit jackpot ( Business Day Article 17 June 2005 )

CAPE TOWN — South Africans blew R9,9bn gambling at casinos, on the horses, bingo and limited-payout machines in the year to March, a 22% increase on the R8,1bn they wagered last year, according to the latest statistics from the National Gambling Board.

This spending represents a significant increase in income and profits for the country’s big gaming groups and their empowerment partners, including Sun International, Peermont Global, Gold Reef Casino Resorts, Phumelela Gaming and Leisure and Hosken Consolidated Investments (HCI), all of which have invested heavily in casinos.

The National Gambling Board’s acting GM of strategic operations, Michael Burns, said on Wednesday that gross gambling revenue — casino income after winnings payouts, but before levies, taxes and operating costs — was a truer reflection of the amount spent by gamblers than total turnover, which contains some double counting because gamblers often used some of their winnings to bet again.

The return to punters is determined by legislation, and although it varies slightly from province to province it is generally about 80% at casino tables, about 85% at slot machines and about 75% on horse racing and totalisators because of their higher operating costs.

The board’s figures show that Gauteng takes 44% of gross gambling revenue, followed by KwaZulu-Natal and Western Cape with 16% each. Casinos account for 87,6%, or R8,7bn, of revenue from gambling, followed by the horse racing and totalisator industry with 11,9%, or R1,2bn.

Bingo and limited payout machines garner only 0,2% and 0,3% of gross gambling revenue respectively, but limited payout machines have made phenomenal progress in the two provinces where they have been established in the past couple of years.

In Mpumalanga, where these machines have been available for the full 12 months to end-March, revenue rose 24% to R6,25m by the end of March from R5,02m at the end of June.

In Western Cape, revenue from limited payout machines quadrupled to R7,6m in the fourth quarter from R1,9bn in the third quarter, as more machines were introduced.

In the limited-payout machine industry, Vukani Gaming, which is owned by HCI, has now secured licences in three provinces — Mpumalanga, Western Cape and Eastern Cape.

Strong consumer spending on gambling is reflected in the profits posted by major listed companies. Sun International recently reported that fully diluted headline earnings a share rose 61% in the six months to December over the year before, after a 19% increase in gaming revenues.

Gold Reef grew headline earnings a share 46,4% in the year to December — its sixth successive year of growth in headline earnings — while Peermont Global grew headline earnings 24,6% in the same period.

Charlotte Mathews

Consumer Industries Editor

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