Understanding the hidden financial risks of gambling
Image: File picture.
South Africans place over R1 trillion in bets annually, with R700 billion spent on sports betting alone. For many, particularly those with limited financial resources, the appeal of a big win can be incredibly tempting. However, the reality is often more complex. Instead of earning easy money, those who indulge in excessive gambling frequently face financial strain.
In March, an online betting platform shared a story of someone turning an R4 wager into an astounding R83,701.54. While stories like this grab attention, the rise in online sports betting also brings important considerations.
According to the National Gambling Board's 2022/23 gambling statistics, sports betting in South Africa has expanded significantly over the past decade, growing from under 10% of the gambling sector in 2009/10 to over half in 2022/23.
What stands out is that 36% of those who gamble do so to pay off debts or cover expenses, according to the 2024 Old Mutual Savings and Investment Monitor. Among low-income earners (those earning between R8,000 and R15,000 per month), this figure rises to 41%, highlighting a concerning trend.
Understanding the risks
Despite rising costs of living and economic pressures, gambling has gained popularity, particularly due to the widespread use of mobile phones and internet access. This is especially evident among young African men. Advertising from betting companies further fuels this trend, increasing participation within this demographic.
This can be risky, particularly for young people and low-income earners, who may see gambling as a way to improve their financial situation. However, losses can add up quickly, sometimes leading to financial stress. In a country already facing high unemployment and economic challenges, it's important to be aware of the potential financial pitfalls of gambling.
A game of chance, not strategy
Unlike investing, gambling is based purely on luck, yet many believe they can develop a winning approach. The truth is that the house edge ensures that bookmakers maintain a profit over time. For instance, when odds are at -110 on both sides of a bet, a bettor must risk R110 to win R100, meaning even skilled bettors face a statistical disadvantage in the long run.
The belief that the system can be beaten can lead to risky financial decisions. Beyond financial losses, gambling can also take a psychological toll. It can lead to stress, anxiety, and even a cycle of chasing previous bets in the hope of recovering losses.
A 2016 study by the University of Cape Town's Department of Psychiatry and Mental Health noted a significant association between suicidality and pathological gambling. It found that pathological gamblers were five to ten times more likely to have a history of suicide attempts than non-gamblers.
Furthermore, gambling doesn't just affect individuals—it can have ripple effects on families, sometimes resulting in financial strain for loved ones. While gambling is legal, many people don't fully understand the long-term risks involved due to a lack of financial education.
For those who feel their gambling habits might be affecting their financial well-being, Manyike advises seeking support. The South African Responsible Gambling Foundation offers free and confidential counselling services. Additionally, professional counsellors who specialise in gambling addiction can provide guidance.
Gambling is not a reliable source of income, and without careful management, it can lead to serious financial setbacks. By increasing financial awareness and promoting responsible gambling, we can help people make informed decisions and avoid unnecessary financial risks.
* Manyike is the head of financial education at Old Mutual.
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