South Africa is a gambling friendly environment. There are about forty casinos in the country, spread over all nine provinces.
It is easy to recognise a casino. In a country known for its reasonably good road network, the best roads lead to casinos. Casinos are the most palatial-looking buildings. South African style casinos offer visitors a variety of entertainment in addition to gambling: movies, theatres, restaurants, arcades, and even outdoor activities like swimming.
It was not always so. Casino gambling had a status of a pariah industry, outlawed in most of the country. Gambling in South Africa was heavily restricted from 1673, and from 1965 all forms of gambling were banned, with the exception of horse racing. In the 1970s casinos started being built in special apartheid zones called Homelands, where native South Africans lived.
In 1994, the government of South Africa changed and Homelands were incorporated into the rest of the country. With the advent of democracy, gambling started flourishing, in an unregulated manner. The whole industry, including the casinos, was formally legalised and regulated in 1996, with the National Gambling Act.
The emphasis is always placed on the economic benefits of the gambling industry. On the recent Sixth Biennial South African Gambling Conference, it was stated that gambling activities ranging from casinos, hotels and horse racing contribute significantly to job creation and economic development of the country. It was pointed out that the industry has led to an investment of more than R16 billion in gambling and related activities. Gauteng is the largest contributor to the industry's revenue (42 percent), followed by KwaZulu-Natal (19 percent) and the Western Cape (16 percent).
It is hoped that the that new gambling initiatives will help government meet the employment targets of its New Growth Path, which envisages the creation of five million jobs by 2020.
Thus far, the Peermont Global Group has invested well over R 120 million in a make-over project of Umfolozi Hotel and Convention Resort, creating more than 250 jobs during the construction phase and 80 new jobs upon completion.
Tsogo Sun Hemmingway Casino, which recently won the Eastern Cape Gambling Board’s new 15-year licence, envisages investing more R340 million and creating at least 100 jobs.
Sun International plans to spend R1 billion on the Boardwalk Casino in Port Elizabeth on or before 2012 and create more than 500 direct jobs.
Even though the gambling industry is somewhat of a cash cow for the state, not all is rosy in the industry. The stakeholders are especially worried about the introduction of a tax on winnings. The South African government plans to have a new fifteen percent withholding tax on all winnings over R25,000 from April 2012. While the government says it hopes the new tax will assist in discouraging excessive gambling, the gambling industry predicts that the new tax hike will cause massive job cuts and severely damage the country's gaming sector. For the horse racing and betting fraternity, already hit by a decline in revenue, this could be the final blow.
Representatives of the gambling industry would also like to see online gambling legalised, but this move does not seem to be in the cards. The theme of the recent gambling conference was Gambling driven by technology, which the industry representatives seemed to understand as a discussion that is to lead to legalising online gambling – while the government representatives seemed to be more concerned about how to find ways to use technology to curb illegal online gambling.