South Africa’s National Treasury has proposed the introduction of a 20% tax on online gambling, to mitigate the industry’s associated social harms.

In a discussion paper released yesterday (25 November), the Treasury said the proposed levy would apply to gross gambling revenue from online betting, including interactive gambling.

While the tax could generate around R10bn ($580m) in additional revenue, the Treasury emphasised that its primary goal is to “discourage problem and pathological gambling and their ill effects.”

“From a public policy perspective, recreational gamblers do not place any external costs on society. However, to the extent that problem and pathological gambling impose a cost, it is in the public interest that such behaviour be regulated or reduced,” the paper said.

 

Rapid growth

The Treasury highlighted the dramatic shift in South Africa’s gambling landscape in recent years.

Once dominated by traditional forms of gambling, the industry has increasingly moved online, a trend accelerated by technological advances and greater internet access following the Covid-19 pandemic.

According to data from the National Gambling Board (NGB), the total turnover in the South African gambling industry for the 2024/2025 financial year reached approximately R1.50tn, a 31.3% increase from the previous year.

Betting activities, including sports and horse racing, accounted for 75% of the industry’s turnover, while casinos contributed 19.5%.

The Treasury highlighted the limitations of the current provincial licensing system, which cannot fully regulate online gambling due to its borderless nature.

While the NGB is the national regulator, South Africa, functioning as a quasi-federal state, grants autonomy to its nine provinces in shaping gambling policies. Each province has its own regulatory body.

 

Proposed national tax

A national tax would streamline administration, improve compliance, and prevent provinces from competing to attract operators through lower taxes.

The proposed 20% tax on GGR would be levied in addition to existing provincial taxes, bringing effective rates to 26–29%.

According to the Treasury, most jurisdictions internationally with large online gambling markets apply similar or higher tax rates.

Local online betting providers would be required to register and provide the South African Revenue Service (SARS) with the same information submitted to provincial gambling boards, easing compliance and enforcement.

The levy would also apply to operators offering online casino gambling, despite the activity being technically illegal in South Africa.

However, some provincial regulators license traditional casino games under current sports betting regulations.

Two provinces, the Western Cape and Mpumalanga, remain at the forefront of this evolution, by allowing fixed odds bets on casino games, live-dealer games, and virtual games.

As a result, the majority of online operators today hold licences issued in these two provinces.

In April 2024 the Democratic Alliance (DA), then in opposition, introduced new online gambling legislation to the country’s parliament. However, no meaningful progress has been achieved to date.

The Treasury has opened the draft national online gambling tax discussion paper for public comment. Stakeholders can submit feedback until 30 January.

 

 

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