South African consumers are generally in a better financial position now than they were 12 months ago, with rising spending boosting retailer revenue and economic growth.
However, there is a major threat to all of this in the form of online gambling, which is beginning to take a growing share of disposable income in South Africa.
While some dismissed fears of such a phenomenon, data show that an increasing number of South African households are cutting their spending on basic necessities to play “Vegas-style” online games.
The trend has become prevalent enough for Standard Bank chief economist Goolam Ballim to warn that increased spending on online gambling risks reversing some improvements in household financial health and undermining South Africa’s economic growth.
Ballim noted that the financial health of South African consumers is improving, and thus, they are spending more. This boosts corporate profits and economic growth.
This is largely due to the fact that incomes are growing at 2% to 3% in real terms amid low inflation and slightly faster economic growth.
Rising incomes have been coupled with declining interest rates, which boost disposable income as less is spent on servicing debt.
A forgotten factor in boosting spending has been the soaring JSE, with rising asset prices resulting in significant changes in behaviour, Ballim explained.
“Consumers may not necessarily feel inclined to spend overwhelmingly, but when they have improving balance sheets, they become less defensive in their spending,” Ballim said.
“This is particularly true among middle-income and higher-income individuals, who dominate spending in South Africa. We think this will be one element that helps to spur discretionary spending.”
“This wealth effect will bring forward spending, especially on these items, by high-income households, boosting retailers and the local economy.”
Crucially, the increased spending has also been on durable goods and services, not just essentials, which indicates that optimism among consumers is increasing.
These big-ticket purchases are also more lucrative for retailers, offering wider margins and increased profits.
The online gambling threat
Despite this good news for consumers, the rise in online gambling risks undermining any economic benefit of these tailwinds.
“There is one area that is somewhat troubling with regard to consumer spending and that is the allocation to gambling,” Ballim said.
“From 2021 to more recently, the share of spending on gambling has surged. Digital formats, aggressive marketing, and gamification has made it more attractive for individuals to allocate more capital to gambling.”
Standard Bank’s research shows that at least half of South Africans, sampled by the bank, spend up to R500 on gambling each month.
“You may not think that is much, and it is not a large proportion. But, close to a third of South Africans are spending over R2,350 on gambling,” Ballim revealed.
Ballim said this is an addiction that needs to be tackled in a nuanced way, with it proving difficult in many other countries around the world.
Data from the National Gambling Board shows that R1.5 trillion was wagered in the 2024/25 financial year, with around 60% coming in the form of online betting.
Crucially for Ballim, spending on gambling does not have the same positive multiplier effect for the economy as spending on goods or services.
“The key thing with gambling is that it is fundamentally redistribution. It does not have the multiplier effect. It does not create value or economic activity. It is a redistribution of income away from individuals,” Ballim said.
“One hope that some regulation, awareness or consciousness enters society to guard against the social perils of gambling and the way in which it can be a menace to economic momentum.”
Ballim also noted that increased gambling can also indicate growing consumer vulnerability, as many see it as a means to supplement their income.
In terms of where the spending on online gambling is coming from, it is largely replacing basic necessities as a share of household expenditure.
Trade Intelligence surveyed hundreds of South Africans who said they have played at least one online gambling game.
The survey indicated that grocery spending is taking the biggest, or at least the most widespread, knock from funds being diverted into online gambling.
Trade Intelligence provided respondents with a list of ten categories where the money used to gamble online would have been spent otherwise.
Groceries and household essentials were the most chosen category, with fast food and takeaway being a distant second.
