South Africa is on the brink of a significant regulatory shift in online gambling, considering a 20% national tax on gross gambling revenue. This article explores the implications of this proposed tax, the challenges of implementation, and the potential impact on both the industry and consumers.
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As betting increasingly shifts to digital platforms, South Africa is approaching a pivotal moment in determining how to tax the rapidly expanding online gambling industry, where bets are placed instantly and often anonymously.
The 2026 Budget, together with the National Treasury’s earlier discussion paper, reflects a clear policy intention that online gambling can no longer be deferred if the country’s tax system is to remain relevant in the digital economy.
The government is now considering a 20% national tax on gross gambling revenue (“GGR”) for online betting and interactive gambling. This would apply on top of existing provincial gambling taxes, which currently range between 6% and 9% for online betting, and 10% to 15% for casino gambling.
In practice, operators could face a combined effective tax rate of 26% to 29%, which aligns South Africa with countries that already levy high taxes on remote gambling.
The motivation behind the tax is strong. Online betting has become the dominant form of gambling, accounting for over 85% of total betting GGR in 2024/25. The industry’s turnover reached R1.50 trillion, highlighting its size and rapid growth.
A 20% national tax on GGR could bring in more than R10 billion a year, offering meaningful support to a fiscus under pressure to broaden its tax base.
However, a key uncertainty remains unresolved. Will the national tax be imposed directly on licensed operators, or will it operate as a withholding tax deducted at the transaction level?
This distinction is critical:
If established as a standard GGR tax at the operator level, administration could occur through routine filings. However, this approach may duplicate provincial taxes and contribute to increased regulatory complexity.
If imposed as a withholding tax, it would require intermediaries, such as payment processors or banks, to withhold the tax before funds reach the recipient. This model is significantly more complex in the betting ecosystem and may be potentially unenforceable where offshore operators or cryptocurrency are involved.
If applied on turnover rather than at GGR, this would deviate from international norms and could affect business viability.
Revenue is not the only reason for this proposal. Another stated aim of the proposal is to address the social consequences of online gambling, including addiction, financial strain, and pressure on social services. Online gambling is accessible at any time and can be done anonymously, which intensifies its consequences quickly.
The idea has gained political backing as well. Leaders such as the KwaZulu-Natal Finance MEC have publicly supported taxing online gambling to strengthen service delivery and diversify revenue sources.
However, there are real risks. If the tax burden becomes too high, players and operators could shift to offshore or illegal platforms. This is not a hypothetical concern; Kenya experienced exactly this when it introduced a similar 20% levy on wagers, resulting in operators pulling out and tax revenue dropping instead of increasing.
South Africa is even more exposed to this risk because interactive online gambling is still illegal at a national level. Offshore operators already serve local players without regulation, making it easy for gamblers to switch to unlicensed platforms if local taxes rise too sharply.
There are also governance challenges. Gambling falls under both national and provincial authority, and provinces already impose their own taxes. A national tax layered on top of the current system could lead to duplication, administrative inefficiencies, and potential legal disputes. Treasury has even suggested that a national licensing model may be needed to avoid this fragmentation.
Enforcement is another major hurdle. Illegal online gambling remains widespread, and the National Gambling Board has often warned about the difficulty of monitoring cross-border transactions, cryptocurrency gambling, and offshore platforms. Without stronger enforcement, legal operators could shoulder the costs of compliance while illegal operators continue with little consequence.
The social impact also needs careful consideration. Although the tax aims to reduce harmful gambling, gambling taxes are inherently regressive and can affect all players regardless of their risk profile. If the tax drives people toward unregulated offshore sites, the intended protective effect may be lost entirely.
Despite these challenges, the proposed national online gambling tax could present an opportunity for Sars to collect more revenue while this sector seems to be booming.
However, its success will depend on resolving several critical uncertainties:
The cards are on the table. The industry is expanding, the stakes are high, and the risks are real. A national online gambling tax may indeed be South Africa’s next “winning move”, but only if policymakers carefully balance revenue, regulation, and responsible-gambling objectives.
* Moodley is the senior manager and Soobyah is the head of tax at Forvis Mazars in South Africa.
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