Greentube, the online gaming and entertainment division of Novomatic, is taking on the growth South African gaming market with a 'revolutionary' technology stack and aims to leave its footprint in both the offline and online spaces. Greentube's chief revenue and product officer Michael Bauer explains the opportunities and challenges of making a presence within the market.
South Africa has enjoyed a monopoly role as its continent's biggest gambling market for decades – and underpinning statistics suggest the country will become increasingly dominant on the global stage.
While total Africa is to generate US$11bn of GGR this year, according to H2 Gambling Capital, South Africa alone accounted for a record $3.37bn of GGR in the 12 months to March – the most recent available figures. The amount, a 40.2% year-on-year rise, came despite the nation's 63 million people contributing just 4% towards the continent's total population.
While 37 casinos around the country accumulated almost $1bn of GGR in the last financial year – led by Gauteng's, the most densely populated province – it was in online where there was particularly precipitous growth.
Sports betting revenues increased by 51.2% over the prior year. Online sports betting accounts for the vast bulk of such expenditure – as well as 49% of the country's total GGR.
Market launch
Having Novomatic parent company already in South Africa several years ago, Greentube determined the time was right to enter the market some year ago after finding out that the country's notoriously patchwork regulation could be overcome with success.
Whereas South African gambling apps has thrived in South Africa in recent years owing to the legislature that initially only pertained to sports betting, Greentube aims to establish itself in the country through on-the-ground operations, alongside the digital.
We started exploring the South African market quite recently, and I think it still has a great deal of potential to grow within the online casino space," Greentube head of product and revenue Michael Bauer states, adding that casinos' popularity in the nation works to support the increasing demand for online gambling.
Tech stack
Above all, however, Greentube punched out with what it referred to as a "revolutionary" new tech stack. Mynt, which had the start trigger its manufacture and worldwide supply of games, includes multiple modules and player interaction tools and is supported by a Remote Gaming Server.
South Africa was where Mynt originally launched in a regulated environment, with the tech stack also being online in multiple other test markets around the world.
"It gives us a variety of advantages, and one of them is that it's cloud-ready compared to our old stack, so we can be nearer the player, so we can achieve a reduced latency," Bauer clarifies.
Building momentum
Although Novomatic's long-standing presence gave there a list of ready-to-call providers to target South Africa, Greentube also approached operators directly, "attacking the market on both sides" for both traditional and online gambling.
"Both approaches have been successful, and we are in talks with quite literally all of the leading regulated operators across the market," Bauer says. "We make sure that we have the right games for that market on Mynt and make sure that we can get it all approved."
The momentum has been building since.
Early last year, Greentube and its South African sister company, Novomatic Africa, signed an agreement with Sunbet to enter the market live.
Later in this April, Greentube released with leading operators Goldrush and Supabets, with another two deals to be completed by the end of this month.
Book of Ra 'opening doors
Bauer states that its operations have been underpinned by the popularity of its Book of Ra slot machine, which is readily available on land-based casino terminals, and also internet casinos. Bauer states this has helped "open doors" to iCasino and land-based operators.
But Greentube itself has more than enough games to fill the box, and the supplier is also eying up the opportunity to introduce its Italy-based subsidiary Capecod to the country, in response to the latter's expanding portfolio of crash games – thought to be a rapidly emerging game genre in the country.
The method that it works is that we must get feedback from the operators, but also the players, and what else they would like to receive from us there," Bauer explains.
Challenges
There are difficulties that come with entering any market, but in South Africa, the difficulties are numerous.
First, as Bauer observes, there is a scattered and – even by the standards of international gaming law – unprecedentedly complicated regulatory framework that needs to be understood by gambling business operators in South Africa.
Although last year's Remote Gambling Bill is still pending, and there is a hope that it will eventually provide clarification of the licensing regulations that are presently applied by nine provinces, there is no specific law for online gambling in South Africa, although a bill has been pending.
As such, internet gambling games such as slots, roulette or draw games on South African licensed online betting sites are treated as betting events to comply with the law.
A launchpad for Africa
Pursuing the future in South Africa, Bauer considers the country a launchpad for all of Africa.
"For us, the whole continent actually is interesting – it's not only South Africa," he says.
"Step one however is to roll out into most of the operators there, aggregators included, so that we cover most of the online casinos.
- The plan is to create a pipeline on Mynt so that we can deliver fresh new content to the casinos there on an ongoing basis.".
- In the land-based operations, Novomatic will be launching a lot of content and games to the market so individuals will be familiar with seeing our games and our products on all levels of everything.
- We will also be extending more in the marketing aspect so we will be much more prominent.