As the South African government argues that the proposed gambling tax increase is “a good thing”, stakeholders have warned that the increase is a blatant tax grab with no benefits for the sector or the consumer.
South Africa's gambling industry could soon become one of the most heavily taxed in the world if the government implements its proposal to impose a 20% levy on gross gambling revenues from online betting.
South African Bookmakers Association (SABA) chief executive Shaun Coleman told IGB that taking into account the levies that licensed operators are already paying regionally, the effective tax for local operators will increase to 39%.
They are paying a 6.5% provincial tax on gross profits in relation to online betting, as well as a 15% value added tax (VAT) on their GGR, which, when adjusted to recover chargeable expenses, translates into an effective combined rate of between 18% and 19%.
Coleman says, “It is therefore clear that the analysis done in support of the proposed tax has completely ignored the impact of VAT on the South African licensed betting industry.” “If in addition to provincial taxes and VAT another national tax at a flat rate of 20% of GGR is imposed on licensed bookmakers, the effective tax rate would rise to between 38% and 39%. A rate of this nature would comfortably exceed the rates in force in all but four of the international jurisdictions sampled.”
South Africa's planned gambling tax increase ignores additional provincial and VAT rates
South Africa, the continent's most advanced economy and leading gambling market, Proposal announced in late November 2025It said the main purpose of the tax, which is expected to generate 10 billion South African rand (equivalent to $596 million) for the financial year, is to reduce problem gambling. Initially, the public consultation for the tax was scheduled to close on January 30, but the government extended its period to February 27. A workshop is expected to be held soon between government officials and stakeholders, after which a bill will be drafted and go through the common law making process.
“Due to the growth in online gambling and its impact on society, it is proposed that online betting, including interactive gambling, will be taxed at 20% on GGR, in addition to the provincial taxes currently in place.” The Treasury said in its discussion paper. “The main objective of the reform will not be to increase further revenues, but to discourage problem and pathological gambling and their side effects.”
South Africa's National Gambling Board (NGB) says 1.5 trillion South African rand ($89 billion) was wagered in the country in the 2024/2025 financial year, a 31.3% increase on the previous financial year. The betting sector contributed 75% of that amount while casinos accounted for 19.5%. Limited Pay Machines (LPM) and Bingo made up 3.6% and 1.8% respectively. As the NGB notes, the gambling sector is projected to employ approximately 34,316 people by 2024.
Statistics South Africa says in its 2023 report On the personal services industry, revenues of enterprises providing bookmakers and online gambling services increased to R152.6 billion ($9 billion), a 72% year-on-year jump compared to the period between 2018 and 2023. The GGR amounted to R74.5 billion (about $4.4 billion), an increase of 25.6% from the previous financial year.
Gambling tax will go directly into the national revenue pool
As part of the justification for the tax rate, the South African government stated in its discussion paper that online gambling taxes exceed 20% in some jurisdictions. However, Coleman, whose organization represents 109 operators, argues that the position ignores the fact that caps in those countries are generally stand-alone rates that are not complemented by other pre-existing or parallel levies such as VAT.
“In this regard,” he said in a response filed during the public consultation, “it is worth noting that 22 of the 50 jurisdictions referred to (or 44%) do not charge VAT in relation to gambling or betting, while in relation to the other 24 (or 48%), information is not readily available as to whether VAT is charged on gambling or betting transactions. Only in one case (or 2% of the entire sample) is VAT charged, given the nature of the transaction in question. An additional three (or 6%) VAT may be charged depending on.
MyBroadband, a local publication, cited Christopher Axelson, deputy director general for tax and financial sector policy at the National Treasury, as saying on 26 February that the tax would not be ring-fenced but deposited directly into the national revenue pool. This could reduce pressure on other tax items and prevent future tax increases, he said.
“If this tax reduces online gambling, we will be happy with it, even if it means less revenue,” he said. “It's a good thing. It's good for growth and it's good for social spending. It may mean there will be less pressure to raise other taxes.”
Backlash against proposed South African gambling tax increase
But the Free Market Foundation (FMF) has urged officials to withdraw the proposal on several grounds, including that it does not promise allocations for harm reduction. Furthermore, the tax could “disproportionately penalize” licensed operators and potentially face enforcement challenges. “The growth in online gambling is largely driven by the country's socioeconomic crisis, with many people looking to generate income,” FMF policy officer Ayanda Zulu tells IGB.
“The proposal, rather than resolving the legal gray area surrounding online casinos, imposes a 20% national online tax. This tax would be largely unenforceable against online casinos and would disproportionately burden licensed bookmakers, who 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. Are.”
One of the most taxed betting industries in the world
Wendy Rosenberg, head of digital media and electronic communications at South African law firm Werxmans Attorneys, agrees. She highlights that, if implemented, the tax would be paid by online gambling operators and not online gamblers. Therefore, because gamblers should not feel the tax “in their pocket”, there is no reason to think that they would be discouraged from gambling. “If the proposed tax is implemented, the South African online betting industry will become one of the most taxed online betting industries globally,” she warns.
“South Africa is different in that online betting operators already have to pay a 15% VAT, as well as provincial gaming taxes. Online betting operators are thus required to pay provincial gaming taxes as well as the national online gambling tax, as well as VAT, which are calculated based on gross gambling revenues. This is in addition to contributions to the South African Responsible Gambling Program and other costs.”
South Africa's gambling sector expanded significantly during the COVID-19 pandemic, growing from approximately 64% in 2020 to between 82% and 83% in 2025. The number of people with internet access is expected to increase from 36.5 million in 2020 to 50 million in 2025. Offshore platforms, which pay no taxes in South Africa.
'Weak motivation to grab national tax'
He said that no harm reduction programs would be funded by the levy and, if implemented, the tax would ultimately undermine both consumer protection and the government's revenue objectives. “From a regulatory perspective, the proposal also raises questions about alignment with South Africa’s existing gambling framework,” says van Eeghem.
“Gambling is largely regulated at the provincial level, with operators licensed and taxed by provincial gambling boards under the overarching framework of the National Gambling Act. In any event, the National Gambling Amendment Act of 2008 was never promulgated, meaning that online gambling remains a somewhat illegal sector in South Africa. As such, it is interesting to see how the tax proposals are being implemented, despite the lack of mechanisms and enforcement infrastructure in place Is.”
SABA says that in addition to destabilizing the regulated betting market, the proposal would mimic existing provincial taxation structures applied to licensed betting operations and reduce total tax collections over time, and does not proportionately target problem gambling behaviour.
Coleman wonders why, if the motivation of the tax is not “obviously” to increase revenue generation, the discussion paper does not promote the allocation of defined, proactive and concrete measures designed to reduce the symptoms of problem gambling in South Africa. “Put differently,” he tells the IGB, “this is a weak incentive for national tax grabs.”