Sportingbet Gearing Up for South Africa Launch

20 November 2008

While legislators in South Africa gather comments on a draft tax bill for interactive gambling, a major United Kingdom online operator is awaiting final approval on a provincial sports betting license.

In its yearend results in October, Sportingbet expressed confidence about obtaining a license and launching in South Africa by Christmas 2008.

While it's not likely to happen quite that soon, Simon Gregory, director of business development for Sportingbet, told IGamingNews that if all goes well with the regulatory process at the Western Cape Gambling and Racing Board, the online betting proposition will launch in the first quarter of the 2009 calendar year.

Sports betting in South Africa is regulated provincially, and has been, for the most part, since the mid-1990's when most of the country's provinces passed legislation to form gambling and racing boards and legalize betting, according to Wayne Lurie, a South African attorney specializing in commercial, Internet and Internet gaming-related law.

By 2001, all but three provinces had passed laws to license and regulate sports and horserace betting. The remaining three, KwaZulu-Natal, Mpumalanga and Limpopo, all have gambling boards, but according to each province's legislation, none regulates sports betting of any kind.

Internet sports betting, according to Mr. Lurie, has been inherently legal since each of the provinces passed legislation. No specific legislation was required to regulate an electronic form of the activity, nor is there a special license for it.

"So, operators with a regular bookmaking license can put their services online," he said, adding online bookmakers are required to adhere to a software standard devised by the South African Bureau of Standards.

In 2004, South Africa's Department of Trade and Industry solidified those standards when it implemented a regulation under which all licensed "computerized bookmakers" were required to use software that was certified by the bureau, according to government documents.

Offshore bookmakers like Sportingbet can obtain a sports betting license in South Africa, but they must also adhere to the software standards and establish a physical presence in the country.

Sportingbet, for its part, intends to establish offices once its license is granted, Mr. Gregory said.

Currently, 90 percent of the sports betting market is derived from horseracing, according to Mr. Lurie.

And according to South Africa's National Gambling Board, the sports betting market, including online and offline bookmakers -- as well as totalizators -- contributed 11.9 percent of gross gambling revenue for the 2008 fiscal year, up 1.1 percent against 2007.

Sportingbet is being realistic, if not humble, about its expectations for the market it is about to enter.

"We think it's going to be similar to the Australian market where it's relatively small, because whilst there are 15 or 20 million people in South Africa, those with money and Internet access and credit cards will be relatively confined," Mr. Gregory said.

"It's not a huge market, but we think those who are interested will exhibit similar propensities to the Australian market, which has a significant appetite for gambling on a range of products," he continued. "It (South Africa) is a colonial market, so there are betting shops in South Africa today, albeit relatively fragmented. And the Internet offerings that are out there today are exceptionally poor, I'd go as far as to say. So, we think there is a good opportunity for a significant provider to come in and provide a vastly increased service for customers and capture a decent share of the market."

Sportingbet pulled in £19.1 million in revenues from its Australian operations in 2008, an increase of 54 percent over 2007.

Other firms rumored to be looking at setting up sports betting operations in the South African market include Bwin Interactive Entertainment A.G. and Victor Chandler. While IGN was unable to confirm the rumors with both companies, Victor Chandler, chairman of the eponymous company, is on the record about reviewing the licensing process in South Africa.

Bwin, on the other hand, has been mostly mum in the press about confirming any chit-chat about a move into South Africa, but in 2007 the company made an investment in the country "with the view to possible market entry," according to its yearend 2007 results.

Kevin O'Neal, a press officer with Bwin, told IGN that the company is interested in the market, but has no immediate plans to make a move.

With the 2010 FIFA World Cup in South Africa in sight, IGN intends to gauge the Internet bookmaking industry's interest in establishing a presence in the country. More on this to come.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.