Investing in Africa's Gambling Market: Projected to Reach $11 Billion by 2032

Africa's gambling industry is experiencing rapid growth, fueled by technological advancements, a young tech-savvy population, and increasing internet and smartphone penetration. With the market projected to reach $11.42 billion by 2032, investors have a unique opportunity to tap into a dynamic sector poised for substantial returns. From online sports betting to virtual casinos, Africa offers a wealth of investment opportunities, driven by government incentives, international partnerships, and a growing demand for digital gaming experiences.

Transforming the Gambling Landscape

Improved internet connectivity and smartphone penetration are transforming the gambling landscape, making platforms more accessible across the continent. Leading providers such as Betway are capitalizing on this trend by offering sports betting, casino games, and lotteries through mobile apps. These advancements reflect a shift toward online channels, positioning Africa as a key player in the global gambling industry.

South African Gambling Market Performance

From a local perspective, South Africans spent R1.1 trillion in the local gambling industry between April 2023 and March 2024, with gross gambling revenue (GGR) rising 25.7% to R59.3 billion, according to the National Gambling Board. Betting dominated with 60.5% of GGR (R35.9 billion), followed by casinos at 29.3% (R17.4 billion), limited-payout machines (7%, R4.1 billion), and bingo (3.2%, R1.9 billion). The Western Cape led regional contributions with 31.7% of GGR, ahead of Gauteng (22.1%) and Mpumalanga (21.9%).

Growth in Betting and Casinos

Betting grew by 51.2%, driven by sports and horse racing, while casinos showed marginal growth (0.1%). LPMs declined by 1.9%, and bingo rose by 2.4%. Taxes and levies from the industry increased by 19.2% to R4.8 billion, underscoring its growing economic impact.

Super Group’s African Expansion: Owner of Betway

Super Group’s African expansion continues to drive growth, with the region contributing 38% of total revenue in Q3, making it the company’s largest revenue generator. Strong performances in Europe and Canada offset declines in the Middle East and Asia-Pacific, while its iGaming division, Spin, earned €163.5 million, with North America contributing 68% of that figure. CEO Neal Menashe highlighted Africa and global casino brands as key growth areas and revealed plans to explore shareholder returns through a special dividend.

Super Group’s Financial Performance

Despite a 20.3% drop in Q3 profit due to an €11.5 million adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) loss in the US, Super Group achieved record revenue of €402.9 million. The company’s ex-US adjusted EBITDA reached €95.3 million following its exit from the US sports betting market, driving a 59.8% year-on-year increase in total adjusted EBITDA to €83.9 million. For the first nine months of 2024, profit rose 33.8% to €48.5 million, with adjusted EBITDA at €212.2 million and cash reserves climbing to €296.6 million. Monthly active customers grew 17% to 4.7 million, prompting the company to raise its FY2024 ex-US adjusted EBITDA forecast to over €345 million.

Goldrush Holdings: Online Gaming Growth

Goldrush Holdings achieved strong growth in its online gaming division, with gross gaming revenue rising 102% from R57 million to R115 million in six months. Its brands, Gbets.co.za and Goldrush.co.za, are capitalizing on the rapidly expanding South African online gaming market. The business has reached a scale where it benefits from the efficiencies of the online model, allowing for increased marketing investment to strengthen brand presence. Despite fierce competition, the team has focused on running the division profitably rather than solely pursuing market share.

Challenges in Land-Based Operations

Meanwhile, Goldrush’s land-based operations, including Bingo, Limited Payout Machines, and Retail Sports Betting, faced challenges during the same period. However, the overall operating environment showed some improvement, aided by reduced load-shedding compared to previous years.

Sun International’s Performance and Acquisitions

Sun International’s income rose by 5% to R6 billion, driven by gaming, which accounts for 77.4% of total income and grew by 3.4%. Casino income from the group’s four largest urban casinos increased by 2.2%, while smaller regional casinos faced challenges. Sunbet outperformed expectations, with income soaring by 71.8%. Hospitality income from resorts and hotels grew by 12.3%, but Sun Slots income fell by 4.3% to R686 million, prompting management to implement initiatives to reverse the decline.

Regulatory Challenges and Mergers

Sun International’s proposed acquisition of Peermont Holdings faces opposition from the Competition Commission, citing reduced competition in South Africa’s casino market. The merger would leave 92% of casinos under two firms, limit new market entry due to scarce licenses, and give Sun International a significant edge with prime locations. Sun International will review and evaluate the recommendations.

Challenges of Foreign Digital Gambling Companies

Casinos face growing competition as foreign digital gambling companies exploit regulatory gaps in African markets, particularly in countries like South Africa, Sudan, and Somalia. These companies operate from jurisdictions such as Gibraltar and Curacao, bypassing local regulations. Their activities resemble past predatory lending trends, creating significant challenges for regulators who struggle to monitor operators circumventing restrictions. In South Africa, the crackdown on illegal gambling has intensified following the country’s greylisting by the Financial Action Task Force due to financial crime deficiencies.

AI and Exploitative Gambling Practices

AI worsens the problem by exploiting user behavior with targeted promotions, personalized game features, and “near miss” strategies to keep players hooked. Like Africa’s digital financial revolution, digital gambling’s rise is driven by similar factors but plagued by regulatory gaps and fintech misuse, risking consumers’ financial health through exploitative practices.

Conclusion

Africa's gambling market offers significant growth potential, driven by technology and a young, tech-savvy population. Investors can benefit from the expansion of online gambling in key markets like South Africa, Nigeria, and Kenya, with companies like Super Group and Goldrush Holdings leading the charge.

However, regulatory challenges and the rise of illegal operators present risks. Investors should remain mindful of these issues, particularly in emerging markets with varying compliance standards. Balancing potential returns with responsible practices and regulatory adherence could be key to success in this rapidly growing sector.

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