SOFTSWISS: A South African overview

Max Trafimovich, Chief Commercial Officer at SOFTSWISS, delves into the enormous potential offered by a South African gambling ecosystem that the company has previously compared the prospects of which to a certain South American nation that has captured much of the industry’s attention in recent times. 

SBC News: SOFTSWISS has confidently declared that South Africa could prove to be the industry’s next Brazil. Why do you believe that this is the case?

Max Trafimovich: Due to several key factors, South Africa could mirror Brazil’s rapid igaming growth in the coming years. Of course, the SAR market is much smaller than Brazil, but we should also focus on dynamics. 

South Africa’s rising internet penetration and smartphone usage, as well as the burgeoning middle class, present a significant opportunity. Increased disposable income and a growing appetite for high-quality entertainment drive demand for igaming services.

Needless to say, South Africa has a rich sports culture, particularly in soccer, rugby, and horse racing. Besides, the government is taking steps towards a more regulated and supportive environment for igaming, while the opposition has put forward their own vision of updating gambling regulations. This shows that local elites are paying attention to our sphere. 

These combined factors position South Africa as a promising market for igaming expansion, and we are keen to capitalise on these opportunities.

SBCN: Where do you expect to witness the biggest boom within the country’s gambling ecosystem?

MT: It’s hard to name a specific direction because the factors I’ve named affect the whole industry. However, I would emphasise what distinguishes the SAR market and what is worth attention.

Firstly, online casino-style games are still in a ‘greyish’ regulatory area, compared to traditional sports betting or horse racing which have clearer rules. Licensed operators are adapting their igaming offerings to somehow fit within sports betting regulations. Eradicating such legacy legal constraints would help the business, while also ensuring a proper level of player protection.

Secondly, there is significant interest in esports and fantasy sports. These sectors appeal particularly to younger demographics, reflecting global trends and resonating with tech-savvy players. According to Statista, 51% of South African survey participants expressed interest in esports betting.

Fantasy sports, especially soccer, cricket, and rugby, are also growing. Players create virtual teams based on real-life sports players and earn points from their performances. According to the NGB, 39% of South African participants showed interest in playing fantasy sports for money.

SBCN: Related to the previous question, what are the main hurdles that South Africa must overcome to become the aforementioned thriving industry?

MT: One of the main hurdles is the infrastructure, particularly internet access. While internet penetration is increasing, there are still areas with limited connectivity. Ensuring reliable internet access across the country will be crucial for the growth of any online business activity. Additionally, addressing issues related to payment processing and financial inclusion will help facilitate smoother transactions for players and operators alike.

The regulatory landscape for gambling in South Africa is intricate. The country is divided into nine provinces, each with its own regulatory body operating under the national framework set by the NGB. These provincial bodies are responsible for licensing various gambling activities, including online sports betting. Operators must navigate the specific requirements and licensing options within each province’s regulatory framework.

One notable aspect is that a sports betting licence from any single province generally allows operators to accept online players nationwide. However, it’s important to understand that while sports betting is widely accepted, traditional online casino games that don’t conform to local regulations are banned in all nine provinces. So, regulatory peculiarities can pose challenges for international companies looking to enter the market.

SBCN: Your standing was recently bolstered by the purchase of Turfsport. Could you talk us through why this was deemed as the ideal acquisition? And can we expect SOFTSWISS to dip its toes into the M&A well once again?

MT: The acquisition of Turfsport was strategically significant for us. Turfsport’s established presence in the South African market and its robust retail platform provides a strong foundation for us to expand our footprint in the region. This acquisition allows us to leverage Turfsport’s local expertise and customer base, accelerating our entry into the South African market and enhancing our overall service offerings.

Looking ahead, we are open to further mergers and acquisitions to strengthen our global market position and diversify our product portfolio. Also, we recently announced the acquisition of a significant stake in Ously Games GmbH, the driving force behind the fastest-growing European social casino SpinArena.net. This strategic step aligns with the fact that social casinos are more than a contemporary trend; they are transforming the future of online gambling.

SBCN: What has your research into the market highlighted when it comes to player preferences? And how will you best capitalise on this?

MT: South African players have a strong preference for sports betting, particularly on soccer, which comes at no surprise. There is, however, a super rapidly growing interest in online casino games, with players showing enthusiasm for a variety of game types, including slots, crash, and live dealer experiences. 

Additionally, horse racing should not be overlooked. Although its popularity has waned somewhat among younger South Africans who prefer simpler betting options, it continues to hold a cherished place among older generations and those with higher income.

Regarding the younger generation, I already mentioned a high interest in esports and fantasy sports.

Our best capitalisation, in this case, is helping operators adapt business plans to market specifics and localising our product offerings. Of course, Turfsport with its knowledgeable team and 35 years of experience in the market, plays a vital role in all these activities.

SBCN: Within your latest report looking at South Africa it was stated that “the insights from this report are instrumental in guiding our strategies”. What exactly will this strategy for growth comprise?

MT: The first crucial step is integrating Tutfsport’s product modules into our existing ecosystem. This integration will enhance our operational capabilities and offer a more seamless experience for our users. Concurrently, we are in the very final stages of the certification process for SOFTSWISS products for the SAR market. Completing this certification is a solid foundation for launching several new projects that are currently in the setup process.

With the insights from the report, we adapted our software and services to the specific needs and preferences of the local market. This tailored approach ensures that our offerings are not only relevant but also highly competitive in the South African context.

Looking ahead, we plan to maintain our adaptive strategy by continuously monitoring market trends and regulatory changes. We are committed to maintaining strong collaborative relationships with our partners and clients. Our global approach has always emphasised knowledge sharing and strategic partnerships, and this will be no different in South Africa.