South African Casino Resorts
A Brief History of Casino Resorts in South Africa
People over the ages have always had the desire to gamble. Inherently, the human being needs to feel lucky and to win. It provides a sense of fulfilment. Some people are risk averse while other’s have a strong “gambler’s streak” and love to take chances.
We have seen them all in the casinos playing high stakes, while their adrenalin and their blood pressure rise simultaneously. Some believe in beginner’s luck, others believe in lucky numbers, while others believe in their rituals, all of which are quite comical to watch as an observer.
Before the dawn of Democracy in South Africa in 1994, gambling within the borders of the country was illegal. People would cross the borders to holiday at casino and entertainment resorts in places like Bophuthatswana, Ciskei, Transkei and Venda. These were independent homelands of the natives who battled to gain access to the gaming establishments.
By 1995 an estimated 2000 illegal casinos were operating within the country.
Once gambling was legalised in the former homelands of apartheid South Africa, where people would previously holiday, it became even more accessible, and the gambling outlets were attracting large numbers of South Africans. Seventeen casinos had been established, providing entertainment. It was there that the concept of Casino and Entertainment Worlds was born.
When the new government came into power in 1994, the constitution mandated the legalisation of gambling.
Just two years later in 1996, The National Gambling Act regulated gambling activities. It provided outlines and definitions of different gambling activities. It was then that the Act decided that 40 gambling licences should be distributed throughout the country.
When the former homelands were integrated into a democratic South Africa after 1994, their casinos presented a problem, as they then became illegal businesses. These casinos were then compensated through the interim constitution in 1994.
While all other forms of gambling, other than horseracing, remained illegal, the Minister of Justice established the Lotteries and Gambling Board in August 1994 with a mandate to advise the government on a national policy on gambling for South Africa. It was clear that gambling in its various forms required a clear definition and thus needed to outline its parameters.
Six representatives of the private sector sat on The Lotteries and Gambling Board. The gaming policy was drafted but was met with resistance by the chairman, Professor Nic Wiehahn. As a result, this led to the launch of The Wiehahn Commission, in which it was argued that prohibitions, in general, were not successful, as people would find ways to get around them. It was recommended that it would be more appropriate to make gambling activities legal but to ensure that it would be strictly controlled through a licensing scheme with specific policies and administrative functions.
The National Gambling Act, 1996 (Act No. 33 of 1996) made provision for the granting of a maximum of forty casino licences which they chose to divide between the provinces. It stipulated that the maximum number of casino licences which any company could hold was sixteen, of which no more than two could be held in a province (or 3 in the case of persons who held casino licences in that province before 1994.)
The Wiehahn Commission intended to provide for a wide spread of ownership in the gaming industry and to bolster competition. Since then, a total of thirty-seven casino licences were granted, and are currently operating.
The licences for casinos were issued on condition that they made extensive capital investments, not just in the construction of the “destination-style venues” in which the casinos operated – which typically include theatres, restaurants and shops – but also in community infrastructure in the areas from which people were drawn. Examples of this expenditure include the construction of the Cape Town International Convention Centre. It also included the funding of the Apartheid Museum.
The National Gambling Board, an organisation responsible for the supervision and regulation of the gambling industry was then established. The change in legislation legalising casinos, a national lottery, and other forms of gaming, came into play. It was the start of many grand casinos being established in their glory of glitz and glamour, modelling copies of Vegas. The legalisation of casinos has also created jobs for many thousands of people.
One of the main objectives of legalising gambling was the generation of revenue for the country, as gambling tax is one of a limited number of taxes that provinces may collect. The country had realised that by gambling being illegal within South Africa before 1994, its citizens were taking their cash beyond its borders and that the illegal gaming industry was flourishing. In that way, they were losing out on the significant tax revenue.
The most significant component of the gambling sector are casinos which contribute significantly to the GDP in South Africa. The government receives around a third of the casino industries’ turnover, while a significant percentage is apportioned to the procurement of goods and services, salaries and wages and a marginal percentage of CSI.
The casinos believe that this has contributed to the upgrading of the areas within which they operate, and to the development of the tourist industry in each province. Land values have escalated, and many new developments unrelated to the casinos have occurred as a result.
In 2004, another National Gambling Act repealed the Act of 1996. And in 2008 The National Gambling Amendment Act was introduced. It appeared to be an ongoing work in progress whereby close attention was being paid to the evolution of gambling.
Size and growth of the casino industry
The number of visits to casinos fluctuates year on year. It is cyclical depending upon the trends in the economy of the country. Some casinos have been established on the borders of lower income areas. Due to the downturn of the economy and joblessness, people have desperately turned to the chance of luck and hope of gaining substantial income through the winnings of a casino. While it can be problematic in the event of playing with the month’s rental, the casinos are still frequented which bears witness to the relevance of casino gambling as a form of entertainment and revenue generation in the South African economy. For some, it has changed lives positively, for others not.
Since 2004/05 the number of casinos in operation across the country has increased.
The total number of tables at all casinos has increased from 700 to 800, and the total number of slots has increased from 17,481 to 22,206.
Casino non-gaming revenues
Non-gaming revenues from the various entertainment and leisure activities offered at casino and entertainment establishments are important sources of revenue for the casino industry. These activities separately generate tax revenues for the country.
The following expenditure facilities within casino complexes are made up of:
- theatre tickets
- fast food outlets
- entertainment areas
- retail outlets
- casino hotels
- conference facilities
- spas and other facilities
- sports events
As capital investment continues to be made, the tourist and entertainment sectors profit accordingly.
In 2018, land-based casinos continue to dominate South Africa’s gambling industry. However, they were the only gambling facility to record a decline in the financial year of 2017.
South Africa’s National Gambling Board (NGB) has indicated in a report spanning the 12 months ending March 31, 2017, that overall gaming was up 3.8% from the year end 2016.
Nearly two-thirds of the total was generated by the land-based casinos. The casinos earned R17.9b in the financial year end of 2017, indicating a decline of 1.8% from the previous report.
Casinos claimed 73.2% of all gambling turnover, but the total amount spent at casinos’ slots and tables was also down around 1.2% each year. Casinos were the only gambling facility to report declines in both turnover and revenue in the most recent fiscal year.