There is very little doubt that the Covid-19 pandemic has affected all sectors of world economies, with the gambling sector not being spared. Within the African continent, the dual effect of the pandemic and the preventative measures taken against it has resulted in operators engaging in cost containment initiatives while remaining operationally effective and efficient.
WHERE BUSINESSES have gone through commercial changes effecting its operating and management model to improve cost savings and efficiencies, the impact on its control and compliance environment may not be immediately evident with weaker trading conditions and financial performance pressures.
With a large proportion of Africa’s gambling industry being land-based and destination type offerings, while yielding considerable proportions of revenue from foreign tourists, the continued travel bans from and to high-risk countries has thrown a further spanner in the works for brick- and-mortar operations. The limitation on gatherings, trading capacity constraints and curtailment of on-site alcohol sales has further exacerbated the revenue generating capabilities of these operations.
“Globally the online gaming sector has grown exponentially, with player numbers doubling and revenues surging”
In South Africa, where online gambling is prohibited with the exception of betting on sport, operators with betting licenses were also not spared as the cancellation of all forms of sport events due to the pandemic left punters with nothing to bet on and looking for alternative gaming options.
Some punters and players started seeking their thrills elsewhere. Globally the online gaming sector has grown exponentially, with player numbers doubling and revenues surging. These converted thrill seekers have found an escape in pursuing their pastime from the comfort of their homes.
Despite the lack of regulation and no licensing authority that would allow or prohibit online gambling in most of Africa, for those operators who had an existing betting platform the transition into the provision of online casino games would have been a quick win.
Online gambling has become increasingly popular and the continued evolution of gaming technology and accessibility warrants agility in processes, controls and risk management. Cyber threats are on the rise with regulatory bodies leading the way in setting examples of non-compliance to regulations. Business Continuity in light of diversification is in the spotlight and with the increased demand for more online gaming revenue streams understanding that the preventative measures in place to address the pandemic did not contribute to a conducive sports betting environment, South Africa and African countries will need to consider their stance on either regulating online gaming or not.
Within South Africa the ongoing restrictions imposed on business and its activities in terms of the Disaster Management Act will continue to have an impact on the economy. Notwithstanding the easing of restrictions due to a decrease in the infection rate and the vaccination programme gaining momentum, recovery of this sector is expected to be slow considering disposable consumer income remaining under severe pressure owing to a stagnant economic climate.
Even with the continued uncertainties brought on by Covid-19, stakeholders still require return on investment and assurance that their investments are well protected by those charged with governance. Governance, risk, and compliance (“GRC”) initiatives have become more relevant to support improved decision making particularly in light of the agility required by business to adapt to the economic environment in which they trade in, elimination of silos, reduce fragmentation among divisions and departments and optimal investment in IT solutions.
Understanding the risk and regulatory landscape of businesses, provides a foundation to ensuring risks are mitigated or managed to an acceptable level. The gambling industry being one of the most regulated industries in South Africa requires continuous monitoring of compliance to regulations thereby mitigating the risk of non-compliance to regulation.
Risk management, the common thread between governance and compliance, focusses on predicting future risk events and ensuring there are preventative measures in place to reduce the effect of those risks. To be successful at risk management, organizations require a means to anticipate and plan for these events. In this instance scenario planning becomes that more relevant. According to The Wall Street Journal, “scenario planning helps organizations perceive risks and opportunities more broadly, to imagine potential futures and different scenarios that might challenge their assumptions, and to spot sources of risk that may otherwise go undetected.”
To navigate through these turbulent times and economic climate – risk assessments, risk appetite and tolerance levels coupled with risk mitigation strategies remain at the core of strategic matters of organisations. Most organisations with mature risk management processes may have not predicted the onslaught of the pandemic nor its effects on business, however organisational resilience remains at the core of their business models.
Embedding a GRC model into the organisation supported by a combined assurance framework and continuous monitoring enhances an effective internal control environment. Understanding an organisations GRC landscape adds value to the organisation by addressing emerging risk and compliance requirements to its overall strategic objectives. Within the evolving gambling industry benefit can be derived from the implementation of a GRC framework by integrating risks and compliance requirements to business objectives and processes. The continuous evolution bringing with it change
in process and risk appetite is demonstrated through the introduction of cryptocurrency, upgrading of slot machines to introduce a level of skill to attract younger players and placing bets through smartwatches amongst others as included in Team Linchpin’s article dated 13 July 2021 “Trends transforming the Gambling and Casino industry 2021”.
Governance, risk and compliance may not be the silver bullet to sustained business success however it does bring into perspective the importance of reconciling business objectives to emerging risks and compliance requirements.
GRIPP Advisory is well positioned to assist in supporting your governance, risk, and compliance journey having provided advisory services to clients in casino gambling, limited payout machines and paper and electronic bingo operations within South Africa and Africa. Our collective experience in the gambling industry includes, but is not limited to the provision of Governance, Risk Management, Internal Audit, Information Technology Advisory, Investigative Services and drafting of Policies and Procedure frameworks.
The Article was written by Adhika Singh CA (SA), CIA, Chief Operating Officer of GRIPP Advisory.
Adhika has 22 years professional work experience delivering external audit, internal audit and advisory services across various sectors, with 15 years spent in the hospitality and gaming industry.
Adhika is an innovative problem solver and change agent with unwavering courage to provide independent and objective observations by her clients.