Gambling tax | Online gambling tax plan draws industry ire

The gambling industry has come out guns blazing against a Treasury proposal to mitigate the socioeconomic harm of online gambling by imposing a 20% tax, saying the tax would threaten jobs, encourage illegal gambling and have the opposite effect to what was intended.

The National Treasury’s draft discussion paper, released for public comment until January 30, proposes the tax as a response to the growth of online gambling and its social impact — including gambling addiction.

There has been a surge in gambling in recent years, with the number of distressed gamblers seeking help increasing sevenfold in the past year. South Africans spent more than R4bn a day gambling and gaming platforms raked in R75bn in gross revenue on turnover of R1.5-trillion in financial 2024.

Alarm has also been raised at the exponential rise of illegal online gambling sites that are cashing in on the bonanza. It is estimated that illegal online gambling sites operating from offshore tax havens such as Gibraltar, the Isle of Man, Curacao and Malta suck in more than R50bn in gross gaming revenue annually from South Africa.

However, Wayne Lurie, head of the Safe and Responsible Online Gaming Association (Saroga), accused the Treasury of overreach with the proposal, saying provincial governments and gambling boards are the constitutionally appropriate regulators and administrators of gambling tax. He dismissed the calculation used to arrive at the 20% figure as “meatball mathematics”.

Lurie said there would almost certainly be a court challenge should the Treasury discussion document become law. “I’m pretty sure that there would be a constitutional challenge if it becomes an act… We’ve got a constitutional and administrative law problem in terms of who should do this, and the National Treasury is seeking to impose a tax on top of the provincial governments."

The Treasury said the proposal seeks to respond to socioeconomic harms caused by online gambling, and could raise up to R10bn in additional taxes for the fiscus.

Gambling regulation falls under the department of trade, industry & competition and the Treasury, responding to questions from Business Times, said the paper had been released for public comment following an agreement between the minister of finance, Enoch Godongwana, and the minister of trade, industry & competition, Parks Tau.

The next step would be the drafting of a policy document, after which the budget process would follow established consultation and approval processes at ministerial and cabinet level before going to parliament for the formulation of new laws or amendments to existing ones.

The Treasury said the focus of the tax was mainly on licensed online betting.

“There are other processes geared towards dealing with illegal online gambling operators through other regulatory instruments, including through the South African Reserve Bank,” it said.

“However, if gambling operators continue to provide an illegal service, such as interactive gambling, the tax would still apply in relation to revenue that is generated from that activity. This is consistent with the current practice where income from illegal activities is still taxable.”

Aa new tax would push the effective tax burden on licensed operators to more than 36%, an unsustainable level that would threaten jobs and impact the legal sector’s contribution to support sports development, media, and other critical socioeconomic contributions

—  Betway

Betway, a leading global online sports betting platform, said the additional tax would increase the financial burden on licensed gambling operators and threaten jobs in the sector.

“As a fully licensed and regulated operator, we believe any consideration of further taxation must be approached with caution and supported by empirical evidence.

“Introducing a new tax would push the effective tax burden on licensed operators to more than 36%, an unsustainable level that would threaten jobs and impact the legal sector’s contribution to support sports development, media, and other critical socioeconomic contributions,” Betway Africa told Business Times on Friday.

It said licensed and regulated operators contributed significantly to the fiscus. According to the National Gambling Board (NGB), in financial 2025 the regulated industry contributed an estimated R5.8bn in taxes and levies and supported more than 144,000 jobs, Betway said.

International experience showed that excessive or poorly conceived gambling taxes could unintentionally strengthen the illegal offshore gambling market, the company said.

“These operators do not contribute to tax revenues, support the local economy, offer no consumer protections, and pose significant risks to vulnerable players, the very opposite of what National Treasury’s draft policy aims to achieve.

“Any reforms should prioritise consumer protection, the sustainability of the licensed market, and strong enforcement against illegal operators.”

Lurie said the proposal would effectively recognise unlicensed foreign operators as taxpayers who would have to register with the South African Revenue Service, effectively “giving them a Black Friday deal on taxes” because they did not pay the 6.5% tax rate imposed by provinces on legal operators, they did not pay VAT and they flouted corporate social responsibility obligations.

“This could drive the tax obligation up to as much as 40%, while offshore operators would end up with half of that tax, while still remaining illegal and unregulated,” he said.

Ulrik Bengtsson, CEO of Sun International, warned that in other markets, an increase in gambling taxes tended to lead to a reduction, rather than an increase, in tax revenue.

Speaking at a gambling regulators forum, he said offshore online gambling had received little attention to date.

“Given all that the local gambling industry does, we strongly urge National Treasury to reconsider their proposal to add further taxes on our industry, and to instead consult with industry stakeholders to develop a sustainable, predictable and stable tax and regulatory framework that will allow the industry to continue to invest in South Africa.

“Local operators will find it difficult to invest in new products and personnel, so customers will inevitably shift to offshore platforms. The major consequence of this shift will be that customers will receive less protection, which directly contradicts the proposed regulatory intent. Offshore operators do not offer the same level of consumer safety; they pay zero taxes and invest nothing in this country.”

According to Bengtsson, in the first half of 2025, Sun International’s online gambling platform, Sunbet, generated R65m in gaming taxes in North West and Mpumalanga. Over the past six months, Sunbet paid R100m in VAT and salaries to 250 employees, he added.

Bengtsson said more than 2,000 offshore platforms were targeting South Africans and halting the flow of billions of rand to these operators could significantly increase revenues for provincial governments and their gambling boards.

Sean Coleman, CEO of the South African Bookmakers’ Association, acknowledged other jurisdiction had similar taxes as that proposed by the Treasury, such taxes were generally stand-alone levies that were not supplemented by others such as VAT.

“Any notion that adding additional taxes will curb gambling is wrong. Increased taxes will only harm the local industry, which makes an enormous contribution to South Africa, but it will not touch the offshore operators as their operations fall outside of South Africa’s regulations.

“In South Africa, licensed bookmakers not only typically pay a provincial tax of 6.5% of gross profit in respect of online betting, but are also liable for 15% VAT on their gross gaming revenue, which, when adjusted for the recovery of VATable expenses, translates into an effective combined rate of between 18% and 19%,” Coleman said.

- additional reporting by Thabiso Mochiko.