The South African betting market is in good stead to become a global betting powerhouse over the next few years, but operators need to be able to diversify their products should the industry wish to grow further. That was according to Sean Coleman, CEO of the South African Bookmakers Association and MD of BetData.
In an interview with SBC News, Coleman started by reflecting on his background within the betting and gaming industry, having first started out in the regulatory space
He said: “I started out largely from a regulatory background. I had 15 years service with the South African Revenue Service, where I ran an audit team in the Compliance Division auditing within the ambit of the Value Added Tax Audit System.
From there, in around 2009, I was offered an opportunity with the regulator of the bookmakers which is effectively the equivalent of the gambling board. It was only a regulator of bookmakers called the KwaZulu Natal Bookmakers Control Committee. There, I ran the compliance division, auditing and regulating the bookmaking industry for approximately three and a half years.
“At this stage, the KwaZulu Natal Bookmakers Society, which has evolved into the South African Bookmakers Association, had a general manager and it was a registered cooperative society. As the current GM was in the process of retiring, two of the directors of the co-op made me an offer to come across and join them
“Having had 19 years of regulatory experience, I thought it might be interesting to go and work for the industry and for the benefit of the industry, as opposed to waving a big stick at the industry and saying ‘you haven’t done this, and you’re non compliant with that’. I’ve been at the Bookmakers Association now for just over 13 years, and in that time I believe we’ve achieved a fair amount.
“We’ve taken a regionally based cooperative society, and we’ve moved that into a voluntary, nonprofit national association, which now has members in six of the nine provinces in South Africa. We continue to work towards expanding our membership into the other provinces. “
“We are now the single biggest trade association in South Africa, representative of both corporates and right down to single independent bookmakers who continue to remain members of our association and actively participate.”
As a key stakeholder in the industry, the South African Bookmakers Association works alongside all stakeholders including the 10 gambling boards and engages with amongst other things, draft legislation. In its remit, the body also offers both advice and guidance on non-compliance issues to its members with the aim of offering a variety of different solutions from a licence condition compliance point of view.
Coleman continued: “Some of our members are required, with certain licence conditions, to do corporate social investing and contribute a certain amount to responsible gambling . and so we provide customised solutions for them to do that.
“Approximately three and a half years ago, the vision that I had was to launch a very particular industry based training academy for the betting industry, which again, I was thankful to my executive for buying into the concept and allowing me the opportunity to run with it. With that, we launched the South African bookmakers Training and Development Academy where we are pioneering particularly bespoke training material for the opportunity for skills upliftment into the communities.
“The academy has had some immediate success, particularly in the case of the KawZulu-Natal Gambling Board, whereby we have run a course that took 10 unemployed historically disadvantaged youth and put them through a training programme. We were able to empower those individuals with a set of skills and give them workplace experience. At the end of the programme, seven of those that took part were able to gain immediate employment with the on the job training they received.
“It’s those types of bespoke solutions that we’re able to offer members and also drive their compliance with licence conditions, which is an exciting thing to be part of.”
No two days are the same for Coleman, he told SBC News, explaining that he is often required to wear ‘two hats’ – one for the Bookmakers Association, and the other fas the MD of BetData.
A Betting Odds dissemination service by Bookmakers for Bookmakers was set up approximately 15 years ago and after bookmakers spotted a commercial opportunity, evolved into a business that utilised satellite information for betting products.
“In around 2015, I looked at this particular betting product in the way that it was sitting within the organisation. I wanted to take the Association as it became known and register it as a non-profit organisation for the work that it was doing, and for the standard that it had. But then to be able to continue the commercial exploitation of what’s become a very good, trusted and preferred odds service on South African horse racing, I wanted to keep that commercial component, but I put that into a for profit, PTY limited.
“The association is the 100% shareholder of Betdata, and also Betdata International, which does international business. It made sense to separate the international business from the local business in terms of the exploitation of our products overseas. The Association does, therefore, benefit wholly from the commercial agreements of BetData.”
Looking at the South African market as a whole, the CEO expressed his view that the market was going through a ‘very exciting time’ – especially now that bookmakers have greater access to different verticals.
Coleman touched upon his role in bringing greyhound racing to the country, which subsequently allowed the betting industry to ‘break down’ pre-existing barriers to growth. Some seen as a “disruptor” Coleman was confident of challenging the legal status quo and succeed in some of the Provinces in South Africa.
“Traditionally, betting on horse racing was the only form of gambling pre-1994. Then we entered the millennium with casinos and bingo – that massive betting and horse racing monopoly has slowly been eroded away. Bookmakers found themselves with less of the market share, because of all of these other modes of gambling that have now been legitimised and regulated and licenced in the country.
“Then what happened is there was another major shift with the introduction of sports and then lottery based betting, which has been a fantastic diversification opportunity for bookmakers. For the longest time, those three verticals were all that bookmakers had. When you look at that against, for example, the UK markets were virtuals and various other live dealer games were available for betting operators, we were incredibly limited.
Coleman explained that the wider range of products, which now also includes Random Number Generator (RNG) games, has allowed betting operators to diversify their offering. This, he believes, will only contribute to the sustained growth of South Africa’s betting industry.
Drawing upon his experience within the regulatory space, the CEO shed some light on the key differences between the different provinces across South Africa, and the way in which these provincial legislative parameters can impact the country’s gambling industry as a whole.
“In South Africa, you have the national gambling board, and then you have the nine provinces which all have their own provincial gambling board,” Coleman said. “The legislation in each of these provinces may differ against one another. And how that legislation is then interpreted can be based on historical events.
“To give you an example, we can look at greyhound racing. The three or four provinces that were successful in introducing the sport didn’t have 1957 dog racing ordinances that were still enforced or in effect that could be repealed, to then allow dog racing to progress in that particular province.
“Simple nuances with the legal definitions may differ, or how gambling boards interpret their own legislation is something that continues to be a frustration for the industry, particularly when you’re a corporate bookmaker who is operational across a multiple provinces.
“In some provinces, you can operate live casino games but in others that’s prohibited. You can offer dog racing in some provinces but not in others. That can be an operational nightmare for bookmakers, particularly in an online environment.”
Coleman warned that bookmakers really must err on the side of caution when considering what they are offering in a particular province due to the impact of non compliance findings by the Provincial Regulators.
But in his role at the South African Bookmakers Association, Coleman has ensured that the trade body maintains an “active and good working relationship” with regulators, with advice provided to its members on regulatory and compliance issues.
When quizzed on South African horse racing as a product, Coleman was confident in his belief that this remains a core component for betting – both on a domestic and international level.
He continued: “I think South African horse racing as a product is successful. South African horse racing, just in terms of a numbers game, is on the decline. I think from an economic perspective, the horses in training are in decline. The breeding side of things, which was particularly strong, is also on the decline. This has largely been due to the inability to open up exports of our well bred horses into international markets.
“The way in which the sport was run in the past was problematic, and the long-standing picture rights deals between the bookmakers and Phumulela as a race course operator gave rise to some of that. But as a product for betting purposes, I think the race course operators run a good product. As an industry, I think they understand the key components of having races that have at least 10 to 12 runners in them so that you can build an appropriate betting margin across the entire field.”
“The introduction of some all-weather tracks in KwaZulu-Natal and the Eastern Cape has made a difference in terms of the sustainability of the sport. It means that we still have the ability to host race meetings even in inclement weather – in the past, this would have led to a multitude of cancelled race days and loss of betting revenues.
“We have also seen our product exported into various international markets which has had a tremendous effect. The commingling initiatives that were undertaken by the racecourse operators and the continued betting into Hong Kong pools on major race days – and even Hong Kong betting into our pools on major race days – are key drivers to the success of the industry.
“What then comes with that is our very own fixed odds operation which has core odds makers that are employted by BetData. We generate the odds on South African racing and provide a full data service for South African racing through BetData. We’ve been able to take that product internationally as well, which I think speaks for itself in terms of the trusted and preferred service level that we offer.”
Speaking to SBC News, Coleman underlined the independence of BetData’s odds which helps retain the highest possible integrity standards across the industry.
To generate its own odds, BetData’s trading team has identified a number of market indicators to look at the different trading patterns within the market. Using this information, combined with the team’s trading expertise and understanding of wider racing conditions, BetData can then produce a suggested market price.
“BetData is not a bookmaker, so we’re not entitled to lay bets – and nor do we. So we have a look at market indicators, that are driven through various analysis and tools that we utilise, to look at the trading patterns in the market. We then interpret those market conditions, and that culminates in us putting out a suggested market price. Our disseminated download price is then used as a suggested trading price that the bookmakers then adjust to their own system. Our odds do largely stand within the market.”
So what’s to come for retail and online betting across South Africa? For Coleman, we’re likely to see further evolution and diversification, but also a consolidation of the independent betting market, similar to what we have seen in the UK.
“I think much like the UK, the market will undergo a process of evolution. We seem to be three to five years behind what’s happening in the UK market so it will be really interesting to see just how South Africa will mirror that.
“Over the next few years, I think large scale bookmakers will continue to gain more of a market share which means that there will be a loss of independent bookmakers which is incredibly unfortunate. Sustainability wise, the way that bookmakers have now finally been able to diversify into virtual and RNG-based products will help drive further growth. I’m confident that the market will continue to go from strength to strength.
“One of the big things that’s looming for all gambling operators in this country is the extent to which interactive gaming, or online casino, is something that is being considered by the government.
“There’s been overtures of the official opposition through the DA bringing private members bills with regards to allowing interactive gaming to progress. I think that if this mode of gambling succeeds it then becomes a strategic threat to all components of the industry but one where, if it is allowed, then people need to compete commercially and continue to find their place in a sustainable market.
“But for now, I think the diversification of the industry is hugely positive, and one that will stand the industry in good stead for years to come.”