The recently imposed withholding tax on gambling winnings will slow down gambling revenue in casinos, a report shows.
The Pricewaterhouse Coopers’ ‘Raising the stakes in Africa: Gambling outlook 2014-2018 (South Africa – Nigeria – Kenya)’ said the 20% tax, coupled with a general slowdown in the economy will see the expected growth drop to 4.9% in 2014 and to 4.1% in 2015.
Currently the gross gambling revenue stands at 7.6%, an improvement over the 5.6% increase in 2012. The PwC report says the local casino market held up well in 2013 despite concerns about terrorism, particularly after the Westgate Shopping Mall attack in September last year.
By 2018 the report however predicts that the annual growth in the sector will peak at an average of 6.8%, rising from USD18.4 million in 2013 to USD25.6 million in 2018. Almost all forms of gambling are permitted in Kenya, including online and mobile gambling.
On the contrary, gambling is highly restricted in Nigeria. There are only three licensed casinos in the country with most forms of gambling being illegal, other than skill-based card games, backgammon, and the national online lottery.
Nonetheless casino gross gambling revenues have grown at double-digit rates during the past three years, including a 19.4% increase in 2013, according to the report. But, as a result of a slowing in the economic growth rate and the adverse impact on tourism due to the Ebola outbreak in the country, slower growth is expected in the industry. Growth is expected to drop to 5% in 2014 and to 4.5% in 2015. For the forecast period as a whole, gross gambling revenues will expand at a projected 7.7% compound annual rate to USD58 million in 2018.
“We expect slower economic growth to lead to slower gross casino gambling revenues in Nigeria and Kenya and continued slow growth over the next two years. We then look for a pick-up in growth in each country as economic conditions improve,” said Nikki Forster, PwC’s Hospitality and Gambling Industry Leader for South Africa.
South Africa recorded R16.5 billion gross gambling revenues in 2013 and is expected to hit R29.5 billion in 2018.
