New tax could force some South African businesses to close
The SA Bookmakers Association has warned that the proposed 20% gambling tax could be the final nail in the coffin for many businesses that are already operating on thin margins.
This is the feedback from Sean Coleman, CEO of the SA Bookmakers Association, who said the industry believes the proposal is not going to work at all.
He argued that this will actually encourage illegal online gambling, create a better environment for it to thrive, and end up being counterproductive for bringing revenue to the government.
According to Coleman, the tax would not deter vulnerable consumers from gambling but push them to move to other platforms.
Coleman stressed that the headline 20% figure is misleading. In reality, he said, it would push the total tax burden on licensed bookmakers close to 39%.
Although Coleman noted that the association represents the majority, but not all, licensed bookmakers in South Africa, he explained that gambling is treated as a VAT-able supply.
“15% of R100 that I have a bet with a bookmaker on is deemed to include VAT. And so that money comes off the top and is paid over to the government.”
In addition to VAT, bookmakers already pay a provincial gambling tax.
“The current tax structure on a provincial basis requires that a licensed operator pay 6.5% to that provincial fiscus through the gambling board or the provincial licensing authority,” he said.
While VAT is set at 15%, Coleman explained that operators deduct VAT on expenses such as rent and other business costs.
“On our analysis, the average VAT amount in percentage that is paid over to the national government sits between 11 and 12%. So that’s the net amount that’s paid over.”
When this 11% to 12% effective VAT rate is added to the 6.5% provincial tax, bookmakers are already paying close to 18% before any new levy is introduced.
“So now we’re at 6.5 plus 12%, which is the VAT,” he said. Adding the proposed 20% gambling tax would push the total burden to around 39%.
The tax will make the real problem worse
He warned that the proposed tax is unsustainable and would act as the final nail in the coffin for many businesses that are already operating on thin margins.
Beyond the direct financial impact on licensed operators, Coleman warned that the proposal would accelerate the growth of illegal online gambling.
He cited figures showing that 2,884 illegal operators are actively targeting South Africa. Defining what “illegal” means, Coleman said these companies are not domiciled in South Africa and therefore do not hold a South African licence.
“They have licences issued out of the pseudo licensing jurisdictions like the Philippines, Malta, Curaçao, and they point their offerings to South African citizens,” he explained.
In terms of the National Gambling Act, it is illegal for South African citizens to participate in offshore betting sites licensed in these foreign jurisdictions.
The scale of the problem is significant. Coleman said a study conducted in late 2024 estimated that illegal operators account for roughly 62% of South Africa’s total online gambling market.
“We’re saying that in excess of R50 billion is still going offshore,” he said.
Instead of increasing taxes on compliant businesses, Coleman urged the government to focus on enforcement.
“Let’s close that border as much as we’re looking at our physical border. Let’s close that border down and let’s get that money rechannelled back into our existing economy.”
He called for a dedicated task team involving regulators, industry, and bodies such as the communications regulator and national gambling authorities.
As part of the solution, the association is engaging regulators on education and awareness campaigns. Consumers can check whether a site is legal by scrolling to the bottom of the homepage to see if it displays a South African gambling board licence and reference number.
Coleman also noted that winnings from illegal sites can be confiscated under existing legislation.
The National Gambling Board has the authority to seize funds remitted through the banking system, and the industry is working with banks to prevent such payments from reaching consumers.
Coleman said the focus should be on shutting down the illegal market before imposing additional taxes on compliant operators.
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