Modelling the economics of gaming in South Africa

This paper considers the application of two models for determining the optimal location and characteristics of a casino in a post-apartheid South Africa. The intention in developing the models was to allow provinces a facility for considering how to maximize the return to the stakeholders in the license award process, namely society at large, as represented by the provincial government, and the casino operator. The Allocation Model works on an estimate of total potential gambling spend and how that may be best distributed amongst a number of casinos. The Profitability model takes the estimated gaming spend from the allocation model and assesses the appropriate size and characteristics of the casino best suited to this level of gaming spend. It can then simulate levels of profitability for different proposed sizes and characteristics of proposed casinos. Together these models represent a powerful assessment mechanism for a country considering the introduction or radical changing of gaming legislation.