South Africa’s gambling industry could soon become one of the world’s most heavily taxed if the government implements its proposal to impose a 20% levy on gross gambling revenue from online betting.
Taking into account the levies that licensed operators are already paying at the regional level, the effective tax for local operators will rise to 39%, Sean Coleman, the chief executive officer of the South African Bookmakers Association (SABA), tells iGB.
They are paying a provincial tax of 6.5% of gross profit in respect of online betting, plus 15% value added tax (VAT) on their GGR, which, when adjusted for the recovery of vatable expenses, translates into an effective combined rate of between 18% and 19%.
“It is therefore manifest that the impact of VAT on the South African licensed betting industry has been completely overlooked or ignored in the analysis performed in support of the proposed tax,” Coleman adds. “If a further national tax at a flat rate of 20% of GGR is to be levied on licensed bookmakers, over and above the provincial taxes and VAT, the effective tax rate will soar to between 38% and 39%. A rate of this nature comfortably outstrips the rates applicable in all but four of the international jurisdictions sampled.”
South Africa’s planned gambling tax hike overlooks additional provincial and VAT rates
South Africa, the continent’s most advanced economy and leading gambling market, announced the proposal in late November 2025, saying the core objective of the tax, expected to yield 10 billion South African Rand (equivalent to $596 million) for the fiscal year, is to curtail problem gambling. Initially, public consultations for the tax were supposed to close on 30 January, but the government extended the period to 27 February. A workshop between government officials and stakeholders is expected soon, after which a bill will be drafted and go through the normal law-making process.
“Due to the surge in online gambling and its impact on society, it is proposed that a 20% tax is applied on GGR from online betting, including interactive gambling, which would be in addition to the currently applied provincial taxes,” said the Treasury in its discussion paper. “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 National Gambling Board (NGB) of South Africa says 1.5 trillion South African Rand ($89 billion) was wagered in the country over the 2024/2025 financial year, 31.3% higher than in the prior financial year. The betting sector accounted for 75% of that sum while casinos contributed 19.5%. Limited payout machines (LPMs) and bingo made up 3.6% and 1.8%, respectively. The gambling sector employed about 34,316 people by 2024, the NGB notes.
Statistics South Africa says in its 2023 report on the personal services industry, that enterprises providing bookmaker and online gambling services experienced a surge in income to R152.6 billion ($9 billion), a 72% year-on-year jump compared to the period between 2018 and 2023. GGR amounted to R74.5 billion (about $4.4 billion), a 25.6% increase from the previous financial year.
Gambling tax to go straight into national revenue pool
As part of its justification for the tax rate, the South African government said in its discussion paper that some jurisdictions have online gambling taxes that are higher than 20%. However, Coleman, whose organisation represents 109 operators, argues that the position overlooks the fact that the thresholds in those countries are generally stand-alone rates which are not supplemented by other pre-existing or parallel levies, such as VAT.
“In this regard,” he said in a response filed during the public consultations, “it is instructive to note that of the 50 jurisdictions referenced, 22 (or 44%) do not levy VAT in respect of gambling or betting, while in respect of a further 24 (or 48%), information as to whether gambling or betting transactions attract VAT is not readily available. Only in one case (or 2% of the entire sample) is VAT levied, while in a further three (or 6%) VAT may be chargeable, depending on the nature of the transaction in question.”
MyBroadband, a local publication, cited Christopher Axelson, the deputy director general for Tax and Financial Sector Policy at National Treasury, as saying on 26 February that the tax will not be ring-fenced but deposited straight into the national revenue pool. This, he noted, could reduce pressure on other tax heads and prevent future tax increases.
“If there’s a reduction in online gambling because of this tax, we would be happy with that even if it reduces revenue,” he said. “It’s a good thing. It’s good for development and it’s good for social expenditure. It might mean that there’s less pressure on other taxes to go up.”
Backlash against proposed South Africa gambling tax hike
But the Free Market Foundation (FMF) has urged authorities to withdraw the proposal on multiple grounds, including that it does not promise an allocation for harm reduction. In addition, the tax could “disproportionately punish” licensed operators and likely face enforcement challenges. “The surge in online gambling is largely driven by the country’s socioeconomic crisis, with many individuals seeking to generate income,” FMF policy officer Ayanda Zulu tells iGB.
“The proposal, instead of resolving the legal grey area surrounding online casinos, puts forward a 20% national online tax. This tax would be largely unenforceable against online casinos and would disproportionately burden licensed bookmakers, which already contribute substantial taxes to provincial regulators. The likely result is that more users will be driven to offshore online casinos, which operate outside the existing regulatory regime and do not pay gambling taxes.”
One the world’s highest-taxed betting industries
Wendy Rosenberg, head of digital media and electronic communications at Werksmans Attorneys, a South African law firm, agrees. She highlights that, if implemented, the tax would be paid by online gambling operators, not online gamblers. Therefore, because gamblers should not feel the tax “in their pockets”, there is no reason to think that they will be discouraged from gambling. “If the proposed tax were introduced, the South African online betting industry would become one of the highest taxed online betting industries globally,” she warns.
“South Africa is an outlier in that online betting operators are already required to pay 15% VAT, as well as provincial gaming taxes. Online betting operators would thus have to pay provincial gaming taxes plus the national online gambling tax, as well as VAT, all of which are calculated based on gross gambling revenue. This is in addition to contributions to the South African Responsible Gambling Programme and other costs.”
South Africa’s gambling sector expanded remarkably during the Covid-19 pandemic from about 64% in 2020 to between 82% and 83% in 2025. The number of people with internet access reached 50 million in 2025 from 36.5 million in 2020. Alexis van Eeghem, a candidate attorney at HJW Attorneys and Conveyancers, says the tax could harm the competitiveness of licensed operators and drive activity to offshore platforms, which do not pay any taxes in South Africa.
‘A weak motivation for a national tax grab’
With no harm reduction programmes to be funded by the levy, the tax will, if implemented, ultimately undermine both consumer protection and the government’s revenue objectives, he states. “From a regulatory perspective, the proposal also raises questions about alignment with South Africa’s existing gambling framework,” van Eeghem adds.
“Gambling is largely regulated at the provincial level, with operators licensed and taxed by provincial gambling boards under the broader framework of the National Gambling Act. In any event, the National Gambling Amendment Act of 2008 was never promulgated, meaning that online gambling remains somewhat of an illegal grey area in South Africa. As such, it is interesting to see how tax proposals are being implemented, notwithstanding that there is a lack of mechanisms and enforcement infrastructure.”
SABA states that apart from destabilising the regulated betting market, the proposal will duplicate the existing provincial taxation structures applicable to licensed bookmaking operations and reduce total tax collection over time, and does not proportionately target problem gambling behaviour.
Coleman wonders why, if the motivation of the tax is “explicitly” not to enhance revenue generation, the discussion paper does not promote an allocation to defined, proactive and tangible measures designed to alleviate the symptoms of problem gambling in South Africa. “Put differently,” he tells iGB, “this is a weak motivation for a national tax grab.”
Original article: https://igamingbusiness.com/finance/tax/south-africa-gambling-tax-hike-punishes-operators/
