SOUTH Africa’s gambling industry, which is dominated by casinos, experienced strong growth in 2011, and overall consumer spending in the industry is projected to increase to R349.6bn in 2016 from R257.6bn last year, according to a report released on Wednesday by professional services firm PricewaterhouseCoopers (PwC).

The industry has already made a "substantial" contribution to the economy, with direct gaming taxes and levies (excluding corporate taxes and VAT) to provincial governments amounting to R1.8bn last year, up 9.8% on 2010, said PwC gaming industry leader for South Africa Nikki Forster.

"The outlook for the industry remains positive and the further rollout of limited payout and bingo machines, and the possible introduction of online gaming will further contribute to the expected growth in revenues.

"Casino operators are also expanding or upgrading their properties to offer a better experience to gamblers and nongamblers seeking out quality entertainment," Ms Forster said.

The report shows South Africans spent R257.6bn on gambling last year, which equates to more than R8,000 per adult.

Turnover, or the total amount spent by gamblers, is projected to increase at a 6.3% compound annual rate over the next five years to R349.6bn in 2016.

Casino gaming remains the largest category by some distance, and generated R14.9bn in gross gaming revenue — the amount gambled less the amount returned to the gambler — last year, which was 80.7% of the total.

Sports betting came in second, contributing R2.2bn in gross revenue in 2011, while limited payout machines (gross revenue of R1.2bn in 2011) and bingo (R235m) have shown significant growth off a low base, and are expected to continue this upward trend, according to the report.

Most of the gambling activity occurred in Gauteng, KwaZulu-Natal and the Western Cape.

"Gambling, like most other industries, is affected by the economy," Ms Forster said, adding the industry had improved since 2010 with the Soccer World Cup and as the economy began to improve.

"We expect a steadier economic profile during the next five years and steadier turnover growth," she said.

While taxes and levies on the industry are imposed at a provincial level, Finance Minister Pravin Gordhan announced in the February budget review that a national 1% tax based on casinos’ gross gambling revenue would be introduced next year.

Ms Forster said the 1% tax, over and above provincial taxes, would lead to a 16.9% increase in taxes and levies for casinos in 2013, and a 16.1% overall increase in taxes and levies when compared with 2012.