UCT researchers say Treasury’s proposed online betting tax is needed to address rising gambling harms and protect vulnerable households.
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Academics from the University of Cape Town are backing the National Treasury’s proposal to introduce a 20% tax on gross gambling revenue from online betting, warning that the rapid growth of gambling in South Africa is creating significant social and economic harm.
Researchers from the university’s Research Unit on the Economics of Excisable Products said the proposed tax is a necessary intervention as online and retail betting activity continues to accelerate across the country.
According to the researchers, online and retail betting more than tripled between the 2021/22 and 2024/25 financial years, while total gambling expenditure more than doubled over the same period.
The academics, Dr Nicole Vellios, Mxolisi Zondi and Professor Corné van Walbeek, outlined their views in an article published in Econ3x3.
The proposal from National Treasury would impose a 20% tax on gross gambling revenue in addition to existing provincial taxes ranging from 6% to 9%.
The researchers argued that the tax should also apply to retail betting to prevent gamblers from simply shifting from online platforms to physical betting outlets.
“The gambling industry has strongly criticised Treasury’s proposal, first published in a discussion paper in November 2025. This is hardly surprising,” said Vellios.
“We have seen a similar pattern in other sectors, including tobacco, alcohol and sugar sweetened beverages. The supposed economic benefits of these industries are loudly promoted, while the social, health and financial costs are conveniently ignored.”
The researchers highlighted growing concerns around the scale of gambling participation in South Africa.
A 2025 survey by Old Mutual found that 52% of South Africans earning more than R8 000 a month engage in gambling, with participation highest among people aged between 30 and 49 years old and among men.
Three quarters of gamblers surveyed said they used online betting or gambling applications, while one quarter reported experiencing financial difficulty as a result of gambling.
“The rapid expansion of online betting, fuelled by relentless marketing and frictionless digital access, represents a significant public policy challenge,” said Zondi.
“A tiny fraction of gamblers win large sums, but most lose. The industry functions as an arbitrary and highly asymmetrical income redistributor, where, in aggregate, resources tend to flow from poorer households to corporate operators.”
The report estimated that South Africans wagered approximately R1.5 trillion on gambling during the 2024/25 financial year, although this includes recycled payouts where winnings are repeatedly reinvested into further betting activity.
“While it illustrates the scale of gambling activity, it also reflects the dynamic that payouts are not typically withdrawn in full by players, but are instead frequently reinvested into further betting,” said Van Walbeek.
“Industry marketing strategies actively reinforce this behaviour, commonly targeting customers immediately after a payout with incentives, such as exclusive offers, to encourage continued play.”
The academics warned that gambling harms extend far beyond financial losses and can contribute to poverty, domestic conflict, child neglect and criminal activity.
“Approximately 95% of the R1.5 trillion wagered is returned to players, while around 5%, or R74.5 billion in 2024/25, accrues to operators as gross gambling revenue,” the researchers stated.
“This R74.5 billion represents a significant withdrawal from household spending.”
The researchers argued that taxation alone would not solve the problem and called for stricter advertising regulations, stronger consumer protection measures and increased support services for problem gamblers.
They also urged policymakers to strengthen enforcement against illegal gambling operators and offshore platforms.
“Increasing tax rates by 20% without strengthening compliance is unlikely to yield the expected revenue gains,” said Vellios.
“The South African Revenue Service should therefore explore and mandate appropriate technologies to enhance monitoring and enforcement.”
The academics also pointed to the proposed Remote Gambling Bill, introduced to the National Assembly in 2024, as an important step toward strengthening South Africa’s online gambling regulatory framework.
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