Assessment of saturation report on gambling in KwaZulu-Natal

Genesis was appointed by the Casino Association of South Africa to conduct an independent economic assessment of the KwaZulu-Natal Gambling and Betting Board’s Saturation Study.

The study was undertaken by the board to provide stakeholders in the province’s gambling industry a basis from which to make future applications for gambling venues in the province. The study presented the level of gambling saturation across KwaZulu-Natal and provided area-specific recommendations on the scope for new gambling venues.

Genesis found that the study’s general findings of relatively high levels of saturation across the province was consistent with a number of other available indicators. However, when examining the narrow geographic area recommendations, Genesis found that the study did not apply an objective set of criteria for determining the suitability of a particular area for additional gaming venues.

Further, the approach adopted did not appropriately account for certain important industry dynamics and, in particular, the broad catchment areas of existing casinos. This was demonstrated in the impact assessment by Genesis that used detailed customer spend and location data to model the impact of the outcomes of the recommendations. This showed that certain additional venues recommended by the study risked causing substantial damage to the performance of these existing casinos.

In sum, the Genesis report found that the study could be significantly improved if (i) casino catchment areas were more appropriately accounted for; and (ii) each area was assessed on the basis of the same set of objective criteria. Our analysis also indicated that without such changes certain of the recommendations in the saturation study ran the serious risk of negatively affecting the viability of existing casinos and other licence holders. It also highlighted that, while a saturation study was informative at the general level, final individual licensing decisions should still be made on a case-by-case examination of the evidence.