Gaming in SA is on an upward trajectory, driven by broadband penetration and online betting, although margins are low.

According to PwC’s fifth annual gambling outlook, gross gambling revenue in SA is set to jump from R26bn in 2015 to R34.8bn in 2020.

The expected growth comes as the industry is experiencing debilitating market conditions particularly as more South Africans tighten their belts due to poor economic performance.

But Pietro Calicchio, PwC SA’s gambling industry leader said there was a segment of society willing to spend money on gaming.

"The South African gambling industry continues to grow from a revenue perspective and continues to expand and invest large amounts in capital expenditure.

"As a business, however, the margins are low, a large portion of the costs are fixed, regulatory compliance is stringent and profitability depends on volume," said Calicchio.

The PwC report looked at data from 2015 provided by the National Gambling Board of SA and the Casino Association of SA (Casa).

Revenue from all forms of gambling rose 11.2% in 2015, up from the 8.4% increase in 2014.

While the casino sector remains the largest component of the gaming market in the country, accounting for 70% of total revenues in 2015, it has taken a hit, with its share dropping from 81% in 2011.

Casinos have lost market share to the betting market and the bingo industry.

The betting sector grew 28.5% in 2015, making it the fastest-growing category in the industry. It also increased its share of gross gambling revenues to 17%.

Calicchio said gaming benefited from the surge in legal sports betting, which in turn was fuelled by the availability of legal online wagering.

Sports betting rose 51.9% in 2015 to R2.4bn, five times the amount of R478m, which was achieved in 2011.

"The growth in broadband penetration and the licensing of more online betting services will continue to propel sports betting," Calicchio said. "In addition to the underlying growth in sports betting, international events such as the Fifa World Cup, the Rugby World Cup and the European Championship stimulate betting volumes."

In 2015, about 75% of gambling revenue came from Gauteng, KwaZulu-Natal and the Western Cape.

Calicchio said total gambling taxes and levies paid by the industry in 2015 amounted to R2.6bn, up 7.3% from 2014.

However, illegal gambling remained a problem. The Casino Association estimated that the government lost about R140m in tax revenue due to illegal gambling each year.

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