South Africa is seeking to modernise its tax framework in recognition of the thriving online gambling market.
The National Treasury has released a 24-page draft national online gambling tax discussion paper and invited public comment on proposals for a 20% tax rate on gross gambling revenue from online gambling activity.
This rate would sit alongside current provincial tax rates, which vary between 6% and 9% depending on the location and vertical, introducing an effective tax rate of between 26% to 29% for online operators.
These figures would bring South Africa’s financial burden in line with markets across Africa and further afield.
Outdated legislation
Data listed within the paper highlight the extent of South Africa’s growing gambling market, which is still governed by the 2004 National Gambling Act.
The National Gambling Board reported that R1.5trn (£66bn) was wagered in South Africa during the 2024 financial year, and gambling incidence has risen from 30.6% to 65.7% from 2017 to 2023.
Similarly, operator GGR rose to R74.5bn (£3.3bn) in FY24, a 25.6% year-on-year increase, primarily driven by betting activity, both online and retail, which has quickly outpaced land-based casino activity.
A 2008 amendment was intended to legalise the online casino vertical, but it has not yet been implemented, meaning only online sports betting is available within South Africa’s regulated market.
However, the introduction of a remote gambling tax may reopen these discussions and provide the push needed to push through iGaming reform.
The report stated: “Advances in technology have made online gambling more accessible, changing how people gamble and increasing the variety of gambling products available, which gamblers can now access from anywhere, at any time. It transcends the provincial boundaries and cannot be realistically and fully administered at a provincial level.
“Therefore, a unified national online gambling tax is proposed to streamline administration and improve compliance.”
Internalising external costs
Although the Ministry of Finance predicts that the tax would raise over R10bn in additional revenue, it emphasised that the main aim of the tax is to ensure that the “external costs associated with gambling, especially online gambling, are internalised by those that provide and participate in gambling”.
“The growth of online gambling also brings challenges, such as problem gambling and social issues, which require continued monitoring and responsive regulation,” the report continued.
“From a public policy perspective, there should be no problem with recreational gamblers as they do not place any external costs on society. However, to the extent that problem and pathological gambling impose a cost on society (externalities), it is in the public interest that such behaviour be regulated or reduced.”
The proposed national tax rate also seeks to avoid provinces competing against each other on the headline level of tax to encourage online operators to register with their provincial gaming board, therefore leading to a tax rate “below what is optimal”.
Growing trends
If implemented, South Africa’s tax rate would sit alongside the likes of Ghana, Uganda and Tanzania, which all levy a tax on operator GGR between 20% and 30%.
It would also join the growing list of countries around the world that are currently considering increasing taxes on the gambling industry. Yesterday (26 November), the UK became the latest nation to announce greater levies on the gambling industry, hiking remote gaming duty from 21% to 40% from April 2026 and general betting duty to 25% from April 2027.
As with other nations, talks of tax rises will no doubt invoke fears of strengthening the black market, and these concerns were acknowledged by the paper, which emphasised that an “inappropriate tax regime” could force legal gamblers and facilitators to “go underground”.
“This would hamper efforts to properly regulate the industry and may cause a larger externality than is currently associated with problem gambling. Legal gambling facilities may also choose to take their business oƯshore and thereby reduce the contribution of the industry to the economy and the fiscus,” stated the report.
The report pointed to the example of Kenya, where authorities were forced to repeal a 20% excise duty tax in 2020 due to several local operators exiting the market. The tax has since returned, however, at a lower rate of 5%.
Stakeholders have until 30 January 2026 to provide the Treasury with written comments via email.
