The most advanced economy in Africa faces a fundamental debate over the online gambling tax scheme. The South African government proposes applying a 20% tax on gross gaming revenue (GGR) to online betting operators. However, the industry warns that this figure does not tell the whole story: combined with existing provincial taxes and value-added tax (VAT), the effective tax rate could climb to 39%, making South Africa one of the gambling markets with the highest fiscal pressure in the world.
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A burden that accumulates on top of existing taxes
Licensed betting operators in South Africa already pay taxes on two simultaneous fronts: they pay a 6.5% provincial tax on their gross revenue and a 15% VAT on GGR. When adjusting for the recovery of taxable expenses, the effective combined rate already stands between 18% and 19% before any reform.
On that basis, the government proposes adding a 20% national tax. Sean Coleman, CEO of the South African Bookmakers’ Association (SABA), which represents 109 operators, was direct in his assessment: if the new levy is applied as proposed, the total effective tax rate will jump to between 38% and 39%, a level that, as he pointed out to public consultation bodies, exceeds that applied in all surveyed international jurisdictions, except four.
Coleman also questioned the comparison the government itself used to justify the tax. The National Treasury argued that several international jurisdictions apply rates higher than 20% to online gambling, but the SABA executive warned that this comparison omits a crucial fact: in most of those countries, the gambling tax operates independently, without the additional burden of VAT. Of the 50 jurisdictions analyzed, 44% do not apply VAT to gambling, and in the remaining 48%, there is no information available on whether transactions are subject to that tax.
The official argument: reducing gambling addiction, not collecting more
The South African National Treasury announced the proposal in late November 2025 with a stated objective that surprised many: it would not, in principle, be a revenue-raising measure, but rather an instrument to discourage gambling addiction and its negative social effects.
«The primary objective of the reform would not be to increase revenue, but to discourage gambling addiction and its harmful effects,» the agency noted in its discussion document. The tax, if implemented, would generate about 10,000 million South African rands (approximately $596 million dollars) for the treasury in the corresponding fiscal year.
Christopher Axelson, Deputy Director-General of Tax and Financial Sector Policy at the National Treasury, specified that the funds will not be allocated to a specific program, but will go directly into the national revenue fund. «If this tax reduces online betting, we would be happy, even if it reduces revenue,» he stated, as reported by the local publication MyBroadband.
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The industry rejects the social justification for the tax
That argument did not convince industry players or independent organizations. The Free Market Foundation (FMF) urged the government to withdraw the proposal, arguing that it does not include any allocation of funds for gambling harm reduction programs. Ayanda Zulu, policy head at the FMF, also pointed out that the boom in online gambling in South Africa is largely a response to the country’s socio-economic crisis, where many people turn to betting as a way to generate income.
Coleman was even more direct in questioning the consistency of the official proposal: if the motivation is not explicitly revenue-raising, why does the discussion document not propose allocating the funds to concrete and verifiable measures to alleviate the symptoms of gambling addiction? «This is a weak motivation for a national fiscal appropriation,» he told iGB.
The real risk: pushing players toward illegal platforms
Beyond the debate over the tax burden, the industry warns of a side effect that could be counterproductive to the government’s own goals. Wendy Rosenberg, director of digital media and electronic communications at the law firm Werksmans Attorneys, noted that the tax would be paid by operators, not players, so there would be no direct incentive for users to reduce their activity.
In that scenario, the most likely result would be that players migrate to offshore platforms that operate outside the South African regulatory framework and do not pay local taxes, weakening both revenue collection and the consumer protection offered by the licensed system.
The legislative path ahead
The public consultation on the proposal, which was initially scheduled to close on January 30, 2025, was extended by the government until February 27. A workshop between officials and industry representatives is expected to precede the formal drafting of a bill, which will then follow the usual legislative process. The industry, meanwhile, does not consider the debate closed and maintains its position: applying a 20% tax without dismantling previous burdens does not combat gambling addiction, but rather punishes those who operate within the law.
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