Last week, while South Africa was preoccupied with domestic political friction, Brazil’s president signed a decree that deserves urgent attention in Pretoria.

Luiz Inácio Lula da Silva granted his government the authority to freeze the funds of companies operating illegal online betting platforms, with the seized proceeds earmarked for public security. A concurrent finance ministry decision went even further, holding banks and fintech firms legally liable for unpaid taxes if they continue to process payments for these rogue operators after being warned. It also ensnares anyone advertising the platforms.

President Lula has reached for the one lever that actually works against offshore gambling operators: the payment rail. It is a lever South African authorities have been circling for months, yet have failed to pull.

Consider the scale of the challenge. South Africans wagered a record R1.5-trillion in the 2024/2025 financial year. Online betting has swallowed the market, and the resulting social wreckage is mounting rapidly. The national problem-gambling helpline has reported a steep increase in distress calls, and the Responsible Gambling Foundation treated nearly twice as many people for addiction last year compared to the year before. Most South Africans are not gambling for entertainment; they are desperately attempting to gamble their way out of poverty.

Worse, a massive portion of this activity occurs entirely outside the licensed local ecosystem. Research published by the South African Bookmakers’ Association claims that unlicensed offshore operators account for roughly 62% of online gambling in the country. This siphons more than R50-billion in revenue out of the local economy every year, reaching an estimated 16 million people.

Cut the conduit

These operators hold licences in jurisdictions like Curaçao, Malta and the Philippines. Under South African law, those licences are worth precisely nothing. By definition, these platforms remain entirely beyond the jurisdictional reach of the National Gambling Board (NGB).

How do you fight an opponent you cannot physically touch? You target the infrastructure connecting the punter to the offshore account. Every illegal bet is a payment moving through a South African bank, card network or payment gateway. Cut that conduit, and the offshore business model collapses. Local bookmakers understand this dynamic perfectly, which is why they have asked commercial banks to intervene. Brazil demonstrates what happens when a government stops asking and starts acting.

South Africa has a compelling case to follow suit, but only if policymakers proceed with open eyes. The execution is fraught with genuine difficulties.

The first hurdle is constitutional. Brazil froze assets by presidential decree. Attempting a similar executive shortcut in South Africa would collide head-on with section 25 of the Ccnstitution and the Promotion of Administrative Justice Act (Paja).

Brazilian President Luiz Inácio Lula da Silva

Asset forfeiture in South Africa rightfully requires judicial oversight via the courts and the Asset Forfeiture Unit. While the financial chokepoint concept is legally sound, the decree route is not. Instead, this mechanism must be codified into legislation – and the National Gambling Amendment Bill currently sitting in parliament is the obvious vehicle to carry it.

The second challenge is definitional. Brazil’s classification of “illegal betting” is legally tidy. Ours is a mess. In South Africa, online sports betting is legal; online casino games are not. Courts have spent considerable time untangling local bookmakers who attempt to dress up roulette as a “sporting contingency”. Any payment blocklist must be incredibly precise; otherwise, licensed local operators will inevitably get caught in the dragnet alongside offshore rogues. The NGB’s verified-operator portal provides a foundational framework, but maintaining a legally defensible, real-time registry requires a level of regulatory agility the board has yet to demonstrate.

The third issue is displacement – the objection the gambling industry will voice loudest. Squeeze the formal financial rails too tightly, and punters will not simply stop. They will migrate to crypto, stablecoins and less traceable corners of the parallel financial system. This mirrors the pushback against national treasury’s proposed 20% gambling tax: push too aggressively, and you drive the entire ecosystem underground. There is truth to this argument. A financial chokepoint strategy is a powerful deterrent, but it is never entirely airtight.

Finally, there is the question of the money itself. Brazil’s decision to funnel seized funds into public security is politically neat. In South Africa, the allocation of these revenues would be contested the moment it hit the table. Earmarking revenue for specific funds is close to heresy at national treasury. The obvious candidates – ranging from the Responsible Gambling Foundation to local harm-reduction programmes – would have to fight tooth and nail for every cent.

Scrambling

Despite these hurdles, the argument for payment intervention remains overwhelming, and we should watch the Brazilian experiment closely. Brazil legalised online betting first and is now scrambling to contain the fallout with emergency measures. By contrast, South Africa has not yet passed its Remote Gambling Bill.

For once, we are ahead of the regulatory crisis rather than trailing behind it. This gives the country a rare opportunity to design financial chokepoints directly into the system from the outset – lawfully, transparently and with due process baked in – rather than trying to bolt them on after the structural damage has already occurred.