National treasury is considering a 20% tax on online betting to curb the rising scourge of problem gambling in South Africa.
Speaking to TechCentral on Wednesday, Rise Mzansi MP Makashule Gana – who a year ago warned that online gambling is growing into South Africa’s next big social ill – said a national tax is welcomed, but is only the first step in ensuring online gambling does not spiral into an epidemic.
“We submitted to treasury that an online betting platform registered in one province should be taxed nationally if it is making money in other provinces, too – otherwise they should restrict their operations to the province they were registered in,” said Gana.
“This is a welcome first step, but we still need to clamp down on illegal online operators, update the advertising regulatory regime, improve education and public awareness on the dangers of online gambling, and get a grip on the use of social media influencer marketing by online operators.”
In a discussion paper arguing The Case for an Online Gambling Tax, published last week, national treasury argued that the “negative social costs” associated with online gambling could be counterbalanced by a tax on gamblers and the sector at large.
“The main aim of a market-based tax intervention by government is to reflect the social costs, or negative externalities, that the gambler imposes on others in the price of gambling,” said the document.
“The tax revenue could also contribute to public sector funds to mitigate some of the social costs incurred… To this end, a national tax of 20% on the gross gambling revenue of the online and interactive gambling industry is proposed.”
‘Ill effects’
This tax will be over and above any taxes that registered online sports betting platforms already pay to provincial gambling authorities. Administration of the tax would require the platforms to register with the South African Revenue Service and report on their activities.
Part of the rationale for imposing the tax at a national level is to ease administration and discourage the provinces from competing on the effective tax rate to attract investment.
Read: SA gamblers abandon casinos for phones as online betting surges
South African law only allows sports betting to be made available to the public using online tools. This means activity that can be classified as gambling, including casino-style games such as online roulette, slots, blackjack and poker – also known as “interactive games” – are outlawed. Yet the discussion paper proposes imposing the 20% tax on the proceeds on interactive games, too.
“At the current levels of gross gambling revenue, the 20% tax on gambling would translate into over R10-billion 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 its ill effects,” said the document.
According to the National Gambling Board, around 31% of punters identify as problem gamblers. Although the tax is meant in part to act as a deterrent for problem gamblers, the industry’s shift from physical establishments to digital platforms has exposed other vulnerable groups such as students and social grant recipients.
Last month, Pick n Pay CEO Sean Summers called for a ban on online gambling advertising, citing industry research that estimates that as much as 20% of the money received by social grant recipients ends up in the hands of gambling houses instead of being spent on household essentials.
Similarly, Tebogo Letsie, chairman of parliament’s higher education portfolio committee, cited a rise in the number of Nsfas-funded students who turn to gambling in an effort to make ends meet when their allowances are not paid out in time, leading to a debt cycle that is often impossible to get out of.
Read: Calls for crackdown on online gambling ‘wild west’ in South Africa
National treasury acknowledged in its discussion paper that the imposition of a tax could have the opposite effect of what it is intended to do. Higher taxes could also encourage local establishments to move their operations offshore, leading to lower contributions to the fiscus from the industry. Treasury looked at case studies from similar actions in the UK, New Zealand, Kenya and Australia to determine its proposed tax rate. – © 2025 NewsCentral Media
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