Calls to sin tax South Africa’s R1.1 trillion addiction

Political parties are calling for gambling to be sin-taxed in South Africa as the industry surges to a staggering R1.1 trillion wagered in FY2023/24 – a 40.2% leap from the previous year.

Gross gambling revenue also skyrocketed, increasing 25.7% to reach R59.3 billion.

But behind these booming numbers lies darker trends.

A recent Bettabets survey found that nearly half of gamblers do it in the hope of meeting rising living costs, like school fees and rent, with 70% gambling to supplement their income, not for entertainment.

Only 27% of those who win set aside part of their earnings for savings or investment, with most spending it immediately.

It said that this highlights South Africa’s socio-economic woes, low savings rate, and an irresponsibility of betting in the hopes of covering monthly expenses or paying off debts.

The group warns that it could lead to an endless and financially dangerous cycle.

Additionally, Rise Mzansi MP Makashule Gana has raised observations that during the COVID-19 pandemic, the distribution of the Social Relief Grant coincided with an increase in gambling activity and revenue.

This trend continues, and Gana told Parliament about seeing long queues at betting establishments on grant distribution days, raising questions about the potential link between social grants and gambling addiction.

In response, Social Development Sisisi Tolashe said that “the department only addresses addictions that are within its mandate.”

With gambling addiction escalating and millions drawn in by pervasive advertising, calls for tighter regulations are growing louder.

The RISE Mzansi MP, whose party is part of the Government of National Unity (GNU), is calling on Parliament to prioritise and harmonise two bills—the Remote Gambling Bill and the National Gambling Amendment Bill—when MPs are back in session in 2025.

Gana told BusinessTech that he believes the current National Gambling Act (NGA) “is inadequate” in tackling the current landscape, particularly in regulating online gambling and advertising.

He also proposes upping its tax rate, as well as adding gambling as a “Sin Tax”, much like tobacco and alcohol.

This is to disincentivise addiction while using the revenue generated for rehabilitation.

Gana said that he is particularly concerned about the pervasive advertising of gambling, which he believes fuels addiction.

He points to the overexposure of gambling ads during sporting events and the rise of “career gamblers.”

He is also critical of the use of social media influencers to promote gambling, which can create a false sense of consistent winnings while downplaying the risks of addiction.

“There is also a need to look at the influencers that are used by gambling companies without warning the public about the dangers of gambling addiction,” said Gana.

Proposals

To address these concerns, Gana proposes several key actions:

• Harmonising legislation:

Gana stresses the need to harmonise the Remote Gambling Bill and the National Gambling Amendment Bill to strengthen existing legislation and create a more robust regulatory framework for online gambling.

• Restricting advertising:

He advocates for stricter regulations on gambling advertisements, particularly on television and social media, to reduce exposure and protect vulnerable individuals.

Gana calls for restrictions on advertising times and spending, especially for online platforms.

• Implementing “Sin Tax”:

Gana proposes classifying gambling as a “sin tax” similar to tobacco and alcohol, with increased taxes funding rehabilitation programs for addiction.

Currently, gambling companies pay 8% of their Gross Gambling Revenue, totaling R4.9 billion of the R59.8 billion revenue – a 19.2% annual increase.

However, believes this tax structure is inadequate considering the social and health costs associated with gambling addiction and proposes a significant increase in the tax rate.

• Educating the public:

Public awareness campaigns to educate individuals about the dangers of gambling addiction could be highly beneficial.

He suggests using similar fonts and formats for warning advertisements as those used in promotional campaigns to ensure the message reaches the target audience effectively.

• Revenue Sharing Model:

Gana proposes exploring a revised revenue-sharing model between provinces, particularly for online gambling, to ensure a more equitable distribution of resources.

Speaking to Newzroom Afrika, he said that “as soon as Parliament opens…we want to work together [to] see what are…a few clauses that we need to strengthen so that we can hold the gambling companies accountable.”

“There’s no country in the world that has gambled its way to prosperity,” he added.

Looking at oversight, the National Gambling Board (NGB) is empowered by the NGA oversee licensing and monitoring of licensees.

It is mandated to enhance broad based public education, address illegality in the sector, and monitor socio-economic patterns of gambling activity within the country.

However, Daily Maverick reported in December 2024 how the explosion of gambling in South Africa “is happening at a time when the NGB does not, in fact, have a board — and has not had a board for a decade.”

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