SOUTH AFRICA’S CASINO INDUSTRY SHOULD COUNT ITS BLESSINGS – AND RELISH ITS CHALLENGES

[Johannesburg, 18 April 2008] South Africa’s casinos have many blessings to count – but also many challenges still to surmount, says Anthony Puttergill, chief executive of Peermont Hotels, Casinos and Resorts.

Speaking on the topic of “the benefits and challenges faced by casinos in the 21st Century” this week at the National Gambling Board conference at the Emperors Palace casino, outside Johannesburg, Puttergill said the local casino industry had been able to flourish over the past decade because of several benefits, which he categorised as “blessings”.

These included the following:

  • A stable and well-established regulatory framework, coupled with the generally effective enforcement of the country’s gambling laws. Without these elements, operators would not have invested over R15-billion in the industry and created almost 100 000 jobs in under a decade, driving tourism in South Africa.
  • Opportunities for the casino industry due to a resurgence on the African continent – provided that there are open markets, fair taxes, protection of property rights and maintenance of the rule of law. Casinos could play an enormous role in developing economies on the continent, in terms of encouraging investment, job creation and the creation of facilities for business and leisure tourism.
  • Technological evolution means that players have ever more creative gaming options.
  • At a growth rate of over 8% in 2007, South African tourism is outstripping the overall global growth rate of just more than 6%.
  • Increasing social acceptance of gambling, with a study showing that less than one in five people find gambling unacceptable. Reasons for this include the wide variety of facilities at casino resorts, strong competition between operators to the benefit of the public, successes in minimising the effects of problem gambling, and the broad base of corporate social investment beneficiaries of the casino industry.

Puttergill, however, listed the following as challenges facing the casino industry that still needed to be addressed:

  • While in most cases regulators and the law enforcement agencies have succeeded in eliminating illegal casinos, there are notable exceptions. He said that in the North West, for example, it was estimated that there are more illegal slot machines than licensed slots. In addition, illegal Internet and interactive casino operations were becomingly increasingly brazen in their advertising, creating the impression that they are legal.
  • Bingo halls that operate using machines that resemble and work like slot machines in licensed casinos, yet have not made the same investment in the gambling industry as casinos. Separate legal actions on this issue have been launched in Gauteng and KwaZulu Natal.
  • Anti-smoking laws, which have had a substantial effect on casinos worldwide. Should further smoking restrictions be placed on casinos, which have already spent millions to comply with the law, the consequences for the casino industry could be dire.
  • The lack of a single, agreed minimum level of BBBEE compliance for all casinos in South Africa. Operators were originally required to fulfil differing BEE requirements, only to then revisit their policies to comply with BBBEE legislation and guidelines introduced last year.
  • Machine manufacturers, who by law may not share in a percentage of casino revenues, circumvent this by leasing machines to casinos – at rates equating to many times the purchase price of their machines – instead of selling them outright to casinos.
  • Infrastructure – including electricity provision and roads – present problems for casino operators.
  • The lack of a single set of rules, regulations and standards for all operators nationally. Because many operators have casinos in several provinces, they struggle to standardise their operating procedures in the face of differing rules and regulations in the provinces.
  • South Africa faces a serious skills shortage, especially in areas where staff can find work overseas such as in the hotel, food and beverage, IT, finance and engineering fields.
  • High crime levels in South Africa.

Despite these challenges, Puttergill said he remained upbeat about the future of the casino industry in South Africa and further afield on the continent.

“While we are operating in tougher economic times and being subjected to additional cost pressures, and despite the challenges, I believe the prognosis for the casino industry in Africa as a whole to be positive. There is no doubt that with the right fundamentals in place that Africa will experience a period of sustained high economic growth.

“With the right regulatory frameworks in place, there is no doubt that the industry will play a key role to assist the development of economies in the African region by encouraging investment, job creation and facilities for business and leisure tourism,” Puttergill said.

For further information please contact CASA chief executive, Derek Auret, on 082 557 6566.
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