10 May Digital Drains & Discretionary Drops

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April 2026 Insights

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Digital Drains & Discretionary Drops

Since we last examined the surge in legal gambling in late 2024, the shift in South Africa’s consumer landscape has accelerated from a growing trend into broader economic disruption. Although the formation of the Government of National Unity (GNU) and the resolution of load-shedding were expected to ignite a retail recovery, the “consumer rand” is increasingly being diverted. Total Gross Gambling Revenue (GGR) in South Africa reached R75bn in the year ending March 2025, up 26% year-over-year and now rivalling the Western Cape’s annual budget.

This explosion is almost entirely digital. Online and sports betting revenue has surged from roughly R8bn in 2021 to R49bn in 2025, fundamentally reshaping the industry. Online betting now accounts for around 70% of total revenue, while traditional casinos have fallen to just 22%. Two forces have driven punters online: smartphone penetration rising above 70%, and an aggressive marketing blitz. Betting operators spent an estimated R2.6bn on advertising in the last year, more than the entire telecom sector.

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The increased prevalence of online gambling is also creating a headwind for JSE retail companies. Data from the Bureau for Economic Research (BER) suggests gambling now accounts for 26.7% of all “recreation and culture” spending. This is no longer abstract; as consumers increasingly view a bet as a potential payday rather than an expense, the pool of capital for essential retail continues to shrink. Management at The Foschini Group and Pick ’n Pay have flagged online gambling as “entirely extractive,” arguing it poses a greater threat to clothing sales than international disruptors like Shein.

Crucially, the problem is evolving, not just growing. While regulators focus on taxing local GGR, a globalised new “drain” is emerging through decentralised prediction markets like Polymarket and Kalshi. These platforms gamify macroeconomics, allowing users to bet on elections, interest rates, and even warfare. The CEO of Flutter Entertainment even admitted recently that these markets are beginning to displace traditional sports betting volume. At High Street, our 2024 exit from Flutter (which has since declined over 50%) was predicated on the belief that long-term value creation should not come at the expense of society as a whole. As the “drain” moves from the sportsbook to the smartphone, and from sports to statecraft, the investment risk only intensifies.

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Unless otherwise stated, all performance and statistical figures provided in this article have been pulled from Bloomberg by the High Street Asset Management Research Team on 29 April 2026 and all the images provided in this article have been sourced from FreePik and have been used in line with their Acceptable Use Policy. The contents of our newsletters are frequently sourced from or verified through our various product providers and other third parties. Although every effort is made to ensure the accuracy of the information contained in the newsletter, it should not be construed as financial advice as defined in the Financial Advisory and Intermediary Services Act. Links are provided to third-party websites for convenience only. High Street Asset Management (Pty) Ltd cannot accept responsibility and does not endorse any information contained on a third-party site. For our full disclaimer, please see: https://hsam.co.za/legal/.

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© High Street Asset Management (Pty) Ltd. All rights reserved | FSP No. 45210 | Legal Disclaimers

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