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Did PwC fudge its gambling report?

Dec 14 2012 14:49 *Buhle Ndweni
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Johannesburg - Regulatory gambling body, the National Gambling Board (NGB), has disputed the interpretation of South Africa’s first gaming outlook report released by PricewaterhouseCoopers (PwC) last month. 

NGB’s chief executive Baby Tyawa told Finweek during a telephonic interview that the report paints a distorted picture of South African gamblers. 

“Our worry with the PwC report is that it gives a message that gamblers are very unreliable,” says Tyawa. 

The report entitled South African gaming outlook 2012-2016 states: “In 2011 South Africans wagered R257.6bn, which equates to more than R8 000 per adult (18 years and older).” Tyawa said she cannot understand how PwC’s gaming leader, Dr Nikki Forster, whose team researched and compiled the report, came up with the R8 000 figure. 

Tyawa says the NGB initiated a meeting with Forster where it flagged this and other information contained in the report, but she says Forster stuck to her guns and maintained the report was accurate. 

When Finweek, asked Forster about any apparent inaccuracies in the report prior to speaking to the NGB, she replied: “We are not aware of any inaccuracies in the report. I understand that the NGB has indicated such but to date it hasn’t provided PwC with any details, so I’m unable to comment on this.” 

“We found in the last data that 80% of South Africans don’t gamble. How can the report come up with that figure? That’s just ridiculous. 

“This is our argument, hence any South African who gambles cannot spend R8 000, [but] only a few high rollers or compulsive gamblers who are at 1% of the population,” says Tyawa. 

Tyawa argues that the average South African gambler of legal age spends R1 500 to R3 000 of his/her disposable income a month on gambling. 

In her defence Forster argues: “The R8 000 is merely a mathematical calculation using the estimate of the population in South Africa, which is of a legal age to gamble. I’m not sure why members of the media are giving this number so much attention. It was never described as a socioeconomic indicator at any time.” 

Tyawa says Forster could have made the correct interpretation of the gaming industry had she used turnover instead of the gross gaming revenue. 

But Forster says they have discussed both measures throughout the report for the individual categories of casinos, limited payout machines, sports betting and bingo, stating: “We do not use the turnover measure in preference to gross gaming revenue. 

“Turnover and gross gaming revenue are two different measures and provide different information. No single measure is better than the other, it depends on what the reader or analyst wishes to look at.” 

Forster says turnover is the total measure of how much is gambled (including winnings), while gross gaming revenue (which is a much lower number because over 90% of the amount gambled is returned to the gamblers) is the amount used by the operator to determine how much it has retained; also a measure used by Government to calculate gaming taxes. 

Tyawa confirmed that local bookmakers with raised eyebrows had approached them about the listing of unlicensed bookmakers in the report. 

The report also refers to bookmakers - Titan Bet, Bet 365 and 888 Sports - which are not licensed in SA as leading bookers in the country. 

“With regard to the bookmakers listed, although they may not be licensed in South Africa, the external research conducted for us indicated that these sites are among the most popular and most visited online gaming sites by South Africans,” says Forster. 

Much of the data presented in the report credit the NGB as primary source, something Tyawa does not dispute since she says information is a public document available to the public via its website that may be subject to individual interpretation. 

But this CEO says PwC should have consulted them first before using their data and making their own interpretation of it since they “could have clarified the data for them”. 

In hindsight, Tyawa admits the misinterpretation could have been avoided had the NGB website included analogy references to accompany the data, which to this point, as presented on its website, is still subject to individual interpretation. But she says this is something the NGB will correct early next year when it releases its latest gambling data.

 *This article first appeared in Finweek magazine.


 

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