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- The National Gambling Board told Parliament that tax revenue from the gambling industry had recovered to pre-pandemic levels in the 2021/22 financial year.
- In 2021/22, the sector's tax revenue levels reached R3.2 billion for the first time since the 2019/20 financial year.
- NGB chief strategic advisor Caroline Kongwa said the board was watching Tsogo Sun's acquisition of Emerald Hotel Resort & Casino with interest.
- For more financial news, go to the News24 Business front page.
Tax from the gambling industry has returned to pre-pandemic levels, the National Gambling Board (NGB) told Parliament on Tuesday.
Some R3.2 billion in tax revenue was from the sector in the 2021/22 financial year – the same amount as in 2019/20, before the Covid-19 lockdowns hit. In 2020/21, tax revenue fell to R2 billion.
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NGB chief strategic advisor Caroline Kongwa told Parliament's Portfolio Committee on Trade, Industry, and Competition that the sector showed a "good rebound to pre-pandemic levels", which was reflected in taxes and sector fees paid to the NGB.
"Tax has grown to R3.2 billion, back to pre-pandemic levels. In fees, we projected to collect R240 million and the actual revenue we collected was R259 million.
"This basically includes our grant and the fees that we receive from the monitoring fee that we impose through the National Central Electronic Monitoring System and other revenue which would have included interest," said Kongwa.
Kongwa said after the Covid-19 pandemic, the NGB noticed a convergence of technology and new trends redefining the industry, such as online gaming and e-betting.
Kongwa said last year the NGB requested a market inquiry into the gambling industry and the Competition Commission undertook a market concentration report.
Mergers
Kongwa told the committee that the acquisition of Emerald Hotel Resort & Casino by Tsogo Sun - rebranded as Southern Sun in May 2022 - was receiving the NGB's attention. The acquisition was approved by the Competitions Tribunal in July and is expected to take Southern's share of the national gambling market from 40% to 42%.
"Tsogo* Sun's market share will therefore be equivalent to Sun International's share at 42%. If the proposed transaction goes through, Tsogo Sun would then have four casinos in Gauteng. Tsogo Sun's Gauteng market share would rise from 44% to 47% based on gross gambling revenue figures as at 31 March 2021," said a written submission by the NGB.
Kongwa said mergers and acquisitions in the sector were getting the NGB's attention as it wanted to prevent a hyper-concentration of market dominance.
"We are concerned about the mergers. It's understandable from a financial perspective. There has been no finding in terms of an abuse of dominance. But we are concerned and continuously monitor and report on dominance from the merger perspective and market concentration and shares," Kongwa said.
A note from the Competition Tribunal in July said after the merger is concluded: "The primary acquiring firm is Newco, a newly registered South African private company. The shareholders of Newco comprise Tsogo Sun Gaming and other shareholders. Tsogo Sun operates casino and entertainment destinations offering a wide variety of gaming, dining, and entertainment facilities in South Africa. Emerald offers casino, short-term hotel accommodation, conferencing and banqueting facilities, and leisure activities."
READ | Tsogo Sun Hotels still at only 50% of rooms occupied prior to the pandemic
New challenges
Kongwa said the rise of electronic betting has added a layer of complexity to the NGB's regulation work, with practices such as online betting on lotteries, which the board believes should not be allowed.
"Historically, we had the betting sector licensed at a provincial level to take bets on contingencies. So, the first thing in our view that we don't agree with is betting operators taking bets on lotteries and we said that issue is a subject matter of litigation," she said.
She told the committee that electronic betting changed the regulations with online gambling games and that the NGB was considering one national piece of legislation governing the gambling sector.
* Tsogo rebranded earlier in 2022. The documentation referred to in this article referred to Tsogo, not Southern.
