The National Treasury has proposed slapping the booming online gambling industry, including the popular sports betting, with a 20% tax on the gross gambling revenue of the online and interactive gambling industry in a move that it says might rake in more than R10bn for the fiscus.
To this end, if the National Treasury has its way, it will demand that local suppliers of online betting register and provide the SA Revenue Service with similar information that is currently provided to the provincial gambling boards to collect provincial gambling tax revenue.
The department says in a consultation paper the proposal is not fixated with revenue raising, but on addressing the negative effects that online gambling is having on society.
“At the current levels of gross gambling revenue, the 20 percent tax on gambling would translate into more than R10bn in additional revenue for national government. However, the main objective of the reform would not be to raise further revenue but rather to discourage problem and pathological gambling and their ill effects,” the consultation paper reads.
“Advances in technology have made online gambling more accessible, changing how people gamble and increasing the variety of gambling products available, which gamblers can now access from anywhere, at any time. It transcends the provincial boundaries and cannot be realistically and fully administered at a provincial level.”
It transcends the provincial boundaries and cannot be realistically and fully administered at a provincial level.
— Consultation paper
According to estimates from asset management firm M&G Investments, most online bettors fall within the 26-35 age bracket, many earning R5,000-R15,000 a month — a demographic with an unemployment rate exceeding 40%.
The asset manager said it estimates that at current run ratesthe money lost by South Africans to online betting platforms will soon be more than R50bn a year, suggesting that some families are diverting funds away from basic household needs towards high-risk gambling in the hope of quick financial relief.
For the 12 months to March, industry data shows the total value of gambling turnover in all gambling modes amounted to R1.5-trillion, including recycled funds (money wagered, won back and wagered again).
South Africa’s bookmakers have opened industry talks to consider measures the sector can take to bar Sassa social grant recipients and National Student Financial Aid Scheme (NSFAS) recipients from channelling taxpayer assistance to the scourge of online betting.
South Africa is struggling to rein in an explosion in online betting.
The scourge is amplified by the proliferation of illegal online gambling, which, according to a study commissioned by the South African Bookmakers’ Association, accounts for 62% of total online gambling activity.
The National Treasury’s consultation paper acknowledges that taxing online gambling might lead to illegal platforms.
“It should be kept in mind in the design of a tax instrument that an inappropriate tax regime could force legal gamblers and facilities to go underground and partake in illegal forms of gambling. This would hamper efforts to properly regulate the industry and may cause a larger externality than is currently associated with problem gambling,” the document states.
“Legal gambling facilities may also choose to take their business offshore and thereby reduce the contribution of the industry to the economy and fiscus,” it says.
“There are already concerns that the introduction of a tax or higher taxes could potentially shift punters from the legal to illegal industry, depending on the design of the proposed tax and possible reforms required to the existing regulatory framework to facilitate the implementation of the tax.”
Rise Mzansi has led the political charge against the gambling crisis, calling for deeper industry reforms and regulation.
Business Day
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