The growing popularity of online betting is raising concerns that it might affect certain consumer sectors. While consumers wagered a staggering R1.5 trillion in the year to March 2025, their actual spending was substantially lower at R74.5bn. Nevertheless, the rapid acceleration in spending on gambling since 2020 is worrisome, in our view, as it could cannibalise other discretionary items, such as retail.
We assess the impact that increased gambling expenditure could have on selected discretionary spending categories, and conclude that the effect on the retail sector is relatively low (at most, it slows retail sales growth by around 80bps). Food services (restaurants, takeaways) and other leisure activities may be more vulnerable, while telecom spending should be resilient, in our view.
We examine the long-term trends in gambling activity, noting the decline of casinos, while betting has increased rapidly since 2020. In three provinces – Mpumalanga, Western Cape, and Limpopo – gambling revenues increased significantly over the past five years. This is mainly because there are no restrictions on the number of licences these local governments can issue.
The growth in betting revenue has generated a tax windfall for some provinces, and we think other provinces might also pursue this tax revenue source. We worry that the tax gains may discourage regulatory efforts to curtail the rampant growth of the gambling industry.