Month: July 2026

To bet or not to bet. Being realistic about sports betting in SA

July 22nd 2026

South Africans enjoyed full access to the World Football Cup – as they do to the Springboks and most important global sporting events. Who paid for such valuable access? Thanks are due to the punters betting on the outcomes. The competing Sports Betting Bookmakers and their advertising budgets cover much of costs the television programmers incur for the rights to broadcast the events. Without the punters, their telephones, internet connections and the bookmakers taking and advertising their bets, watching the games at a distance would be far more expensive- perhaps unavailable.

Sports betting has become the dominant form of gambling in South Africa. Before Covid, licensed Casinos in South Africa accounted for approximately 56% of all gambling activity and Sports betting 22%. By 24-25 the sports betting houses claimed 70% of all legal gambling and the share of Casinos had fallen to 26.5% – with the Casino operators adding on-line sports betting to their portfolios to compete better for the gambling rand.

Source;  SA Reserve Bank Quarterly Bulletin. March 2026.

How much then do the punters pay to back their teams? The answer is perhaps less obvious than it may appear on the surface as the transactions with their bookmakers heat up.  It depends on not how much the punters bet, rather on how much they lose collectively to the gambling houses, the bookmakers. An amount known as Gross Gambling Revenue. (GGR) That is the money with held by the book makers and Casinos after paying out the winners. The amounts returned to punters in SA are about 94% when playing games of chance in Casinos. (a 6% average loss ratio) Sports betting appears to offer less generous odds paying out less than 92% of what they took in 2025.

The notion that all gamblers must lose is therefore not accurate. A significant number of the bets laid will be winning ones – on a day, month year or lifetime of gambling – depending on the distribution of the outcomes around the average loss ratio. If the distribution around this average loss ratio of 6% were a normal one, around 27.0% of all punters would break even and 11.5 % of the punters would more than break even or better. The number of successful gamblers- those who broke even or better  and who presumably had some fun along the way -would fall or rise with the GGR.

Since 2015 the Turnover (Revenue) of all licensed gambling houses in SA has risen from R358 million in 2015 to R1501m in 2024. An increase of 4.2 times. Over these 10 years GGR or what may also be described as the Gross Operating Surpluses increased from R26.3m to R74.5m, a lesser increase of 2.8 times. Perhaps a sign of a more competitive market.

The share of GGR in Gross Household Consumption Expenditures grew from 0.9% in 2015 to 1.6 per cent in 2024. The biggest loser from this shift in spending patterns was spending on other forms defined as Recreation and Culture that fell from 7% of estimated household spending in 2015 to 5.8% in 2024. That is minor shifts in consumption patterns towards gambling have occurred – inspired by changes in technology – but hopefully not enough to inspire panic – or successful attempts to interfere with essential freedoms of adults to spend as they wish.

Of the R74 billion GGR in 2024 a significant proportion was paid in taxes – that is not returned to punters. Specific taxes on the GGR, amounted to R5.8 billion (7.8% of GGR) in 2024, of which the Sports Betting houses contributed 59% or R3.4 b. It was R240 m in 2018/19. The betting houses will also be liable for income taxes on their earnings which will be less than their GGR after taxes.

The temptation to raise the specific taxes to discourage gambling will always be a force. As it is with excise taxes on alcohol or tobacco the consumption of which is much disliked. Raising such excise taxes, as we have noticed in our lawless society, may however not even lead to increased tax revenues. It most obviously adds encouragement to illegal production and smuggling. Even to the point where the prices on the streets decline as the producers of contraband compete away some of the extra margin higher tax rates wittingly or perhaps unwittingly provide them.

The price of an opportunity to gamble is the pay out ratio- that part of the bet paid back in winnings. Forcing the bookmakers to pay over more to the receiver of revenue is very likely to reduce their pay-out ratios. And therefore to encourage the illegal operators to improve their odds to encourage more flows and GGR their way. And so less for punters and the tax man and sports lovers.

But there is another new force in the gambling market that may be an even bigger threat to the bookmakers and Casinos than higher taxes on GGR. It is the increasingly important role now being played by the Prediction Markets. Polymarket or Kalshi do not make money by “being the house” and taking the opposite side of your bet. They operate more like exchanges where users trade contracts with one another betting on a huge variety of possible outcomes, sporting or financial or political. Their profits come primarily from facilitating trading activity rather than from gamblers losing. And they charge fees to do so, as would a stock or commodity exchange. Indeed Kalshi is licenced and regulated in the US as such an exchange.

One source, my helpful BOT, analysing Kalshi’s 2025 activity reported as follows.  Trading volume: $22.88 billionFee income: $263.5 million- That is 263m/2288m =1.15%Which  is a formidably high payout ratio – over 98% – and one very likely to encourage the odds conscious and well informed large punters- or perhaps better described as hedgers rather than gamblers. The sooner SA licences such an exchange to reduce illegal gambling the better.

Kevin Warsh is a central bank reformer.

The highly influential tribe of central bankers gathered in Sintra Portugal last week at the invitation of Madame Legarde, President of the ECB. Some of their leaders, Legarde, Governor Baily of the Bank of England, Maklem of the Bank of Canada and Kevin Warsh, only four weeks into his tenure as Chairman of the Board of Governors of the Fed, agreed to take part in an unrehearsed panel discussion expertly led by Sarah Eisen of CNBC. The Q&A can be found on Youtube [1].

The Mantra strongly shared and proclaimed by the panellists was NO FORWARD GUIDANCE. That is no insights at all were offered on how the central bankers saw their economies evolving over the next twelve months and more. And all attempts to extract such information about the expected direction of interest rates or the size of their balance sheets guidance were firmly rejected with Walsh leading the resistance.  Predictably given his already widely shared objections to the public prognostications of his FED colleagues.

And despite his obvious acknowledgment that monetary policy works with “long and variable lags” for which some reliable sense of where the economy might be heading would surely be required when setting interest rates today, to work their magic tomorrow.  But if they have such forecasts the central bankers were determined not to have to share them.

The ECB and the BOE have in fact refused to offer forward guidance. For fear that in an unruly world their forecasts might prove embarrassingly wide of the mark and might have to be defended despite their errors. Legarde spoke of the necessity for framework guidance, that is to inform the financial markets of the process of reasoning that informs the ECB. That is to foster a better understanding of what is the “reaction function” of the central bank. Upon which market participants would draw when predicting the direction of interest rates. Something they will continue to do to avoid losses or to make profits when central banks decide to move their key interest rates higher or lower as they are bound to do. Which participants in financial markets will continue to make every effort to anticipate- using all the information they collect to do so.  

But Warsh’s resistance to forward guidance- sharing his forecasts- is not based on the chances that the forecast might prove inaccurate. His objection is one of deeper principle. He thinks that the central bank should not look forward. And only observe as accurately as it can the actual current state of the economy to which it reacts with changes in short term interest rates. Which he regards as the most important instrument of monetary policy.

He does not wish the Fed to feed the market with news – to add grist to the hedge fund mill that leads the market – and thrives on uncertainty and accompanying volatility. He would rather have the well-informed marketplace feed him with better and more timeous information about the current state of the economy, to which he could then react appropriately. Removing or spiking up the punch bowl as we used to say. Thus he would wish the Fed to become more, not less data dependent, but with superior data drawn from the current state of the economy rather than to act on unreliable forecasts.

Which is indeed the actual state of monetary policy. In an essentially unruly world monetary policy is in fact very largely data dependent. It reacts to the observed state of the economy as best it can. Though the financial markets will always be driven by expectations of the future and the developments on the financial markets- on share and debt markets – that profoundly influence the real economy through wealth effects – will be forecast dependent. Hopefully such financial market behaviour will be highly rational, rational also when interpreting the reactions of central banks and not blindly momentum driven. Momentum that can easily reverse.

The panel referred to significant changes in the government debt markets. And as seasoned central bankers who survived the GFC are well aware of the risks, the unknowns  that might abruptly change the course of financial markets. To which they may be forced to react – having to act outside of their normal lanes – as the phrase goes -in ways that they would prefer not to do. And be correctly blamed for having to do.  But such grave potential dangers that might soon call upon all the skills and resolve of central bankers were not top of mind of the panel.

What was top of mind of Kevin Warsh’s mind was clearly AI and its huge promise for the US and other economies. He is aware that the demand side of the US economy is being greatly stimulated by the extraordinary investments being made in rolling out AI. He refers favourably to these impressive real forces rather than financial engineering that is driving the stock markets rather than financial engineering. And he is optimistic about how the supply of goods and services will increase in response over time. He mentioned of this being the most consequential time to be a central banker. I would suggest that having to wait and see these supply side responses makes higher interest rates in the US less not more likely this year.

Warsh hopes his six task forces of the best and brightest will help him do a superior job managing inflation and the labour market. Perhaps point the way to superior sources of data about the economy.  And hopefully also point to better ways of managing supply side shocks and understanding inflationary expectations that are not simple mindedly extrapolations of past inflation. I was struck by one lacunae in the panel discussion. When asked about the key indicators the central bankers watch or ignore none mentioned the money supply or financial conditions more generally. Perhaps the task force can explain again in an old-fashioned way, why the money supply and bank credit can go a long way in explaining and containing inflation.

US Money Supply (M2) and Inflation Annual y/y % Change

[1] https://www.youtube.com/watch?v=LvHNpbQx_EU