Casino Association of SA CEO Themba Ngobese discusses how illegal gambling is eating into the industry’s profit
Themba Ngobese is the CEO of the Casino Association of SA (Casa).
BUSINESS DAY TV: Gambling revenues over the past year ticked up 6.7% to R18.2bn showing that the industry is just managing to keep pace with inflation, but while the industry feels the pinch of a slowing economy it did help generate a 36% increase in taxes and levies, which means the taxman could put R5.9bn to work to improve infrastructure and healthcare.
So, while the casino industry in this respect is seen as vital to the economy, how much of a threat is illegal gambling, which could reduce the revenue that SARS (South African Revenue Service) is able to collect? For more detail we are joined by Themba Ngobese, he’s the CEO of the Casino Association of SA.
Themba ... so it looks like this is a conversation that continues year after year, illegal gambling, and how its eating into revenues that you could be earning but also into tax revenues? What’s being done to stamp it out? Is enough being done?
THEMBA NGOBESE: Certainly ... like you say it’s an ongoing fight, we keep on pushing and government understands and appreciates the problem and that it needs to be resolved.... We understand that part of changing the National Gambling Act with the new amendment bill is to try and enforce that and give them a proper legal framework to be able to stamp out all illegal....
BDTV: Is that easier said than done?
TN: The thing is that we’ve done it before. This country has done it before. Before you had the legal casinos, we had massive illegal gambling joints all over the place. We did shut them down, so with enough will and resources we can actually deal with it.
BDTV: I suppose it’s become a lot more difficult in an online environment though, particularly when you have foreign operators also playing in that space?
TN: The fortunate part is that at least most of the time when you talk about illegal gambling, you’re thinking about someone sitting in their private house and playing online. To be honest, that is the least of the problem. The bigger problem is these people that open shops and run businesses, they call them internet cafes and entertainment lounges and what have you, and those are the people we need to shut down, because actually they run proper businesses, and they are the ones that are eroding the revenues.
BDTV: Talk us through the growth that you have seen though, because you have ... it’s up 6.7% your revenue over last year, and the last time we chatted you spoke of a low-base effect to take into consideration. Is that still very much the case here?
TN: We’ve grown this year, one or two things could explain it, but we really appreciate the fact that at least we’re not regressing we’re moving forward. But two significant things happened this year, first a new casino operation opened in Limpopo, in Burgersfort, which is why Limpopo has had the biggest growth at 29% year on year, and then we had new money in the sense that we have visitors that came into a private exclusive gaming area at Sun City, which accounts for quite a lot of revenue growth year on year.
BDTV: So at the same time we also have, again and something that we discussed this last year, the fast-track roll-out of electronic Bingo terminals (EBT), that’s still on the cards, does that pose a threat to revenue growth going forward?
TN: Certainly, it is an issue but fortunately at least at the policy level, government has decided that in fact even if we had EBTs they’re not supposed to look or feel like slot machines, that is in the final National Gambling Policy and in the National Gambling Bill that we’re currently commenting on. So at least from that point of view government is actually keeping the framework to what it was designed to be.
BDTV: And are you seeing a marked improvement in relations with government and do you feel that you’re being consulted better when it comes to coming up with the regulatory environment within which you operate?
TN: There were always processes in this country to be consulted and yes we are consulted. Whether in fact most of the stuff we say is heeded that’s a different story all together. But we can’t fault them in terms of consulting and talking to you, but it doesn’t necessarily mean that actually what is said will be done.
BDTV: What inputs are you giving for the draft national liquor policy that ... the deadline for comment keeps on being pushed forwards, but is imminent, and this is something that is going to affect casinos because if you cannot serve alcohol within an entertainment space, then you are going to lose customers?
TN: It gets worse and actually it’s laughable because when government decided to introduce gambling in this country, they said, we don’t want gambling joints where people just come and gamble and that’s all they ever do. We want resorts, so we want you to have an hotel, convention centre, we want you to have restaurants etcetera, all recreational facilities.
And then, now we are told, you can’t have a liquor licence within 500m of the very same things that we were supposed to put in. So now where do you put your casino ... where do you get a liquor licence in that environment when you can’t because obviously we are supposed to? We could not open those casinos without hotels, without restaurants, etcetera, and now we are told we are not going to get a liquor licence, and then do you then demolish these places. In fact it’s worse...
BDTV: Has this impacted investments into the sector already?
TN: It’s worse ... because now when you think about it, in fact, one of the clauses there, you’re not supposed to have a liquor licence within 500m of a residential area. Now I don’t know whether we’re going to be redesigning our suburbs, making sure that we don’t have pubs, so it’s really a significant concern. We hope we could still talk about it and have it resolved before it’s finalised.
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