Treasury's 20% Online Gambling Tax: A Policy That Will Cost More Than It Collects

National Treasury's proposal to impose a 20% tax on online gambling turnover has been met with near-universal criticism from industry stakeholders, legal experts, and policy analysts. Far from being a measured intervention, the tax threatens to undermine South Africa's legal gambling market, hand market share to illegal offshore operators, and ultimately reduce the revenue government collects.

As ITWeb reported, the proposed tax risks driving players underground — and with them, any hope of effective consumer protection or regulatory oversight.

An Industry Already Carrying Its Weight

Licensed bookmakers in South Africa already pay VAT and provincial gambling taxes totalling approximately 18–19% of gross gaming revenue. The proposed 20% national tax would be levied on top of these existing obligations.

The Scale of the Illegal Market

The numbers paint a stark picture. According to research by Yield Sec, cited by Sean Coleman of the South African Bookmakers' Association, 2,084 illegal gambling operators were identified targeting South Africa in the 2024/25 period alone. An estimated 27% of South Africans — some 16.3 million people — interacted with illegal gambling platforms. Offshore online casinos now account for roughly 62% of all online gambling activity in the country.

Online betting already makes up more than 49% of South Africa's total gambling activity. This is a market of enormous scale — and one in which illegal operators already enjoy a significant advantage. Adding a 20% tax to the cost base of legal operators would widen that gap dramatically.

A Revenue Grab, Not a Revenue Strategy

National Treasury expects the tax to generate more than R10 billion in additional revenue. But this figure rests on the assumption that the legal market will simply absorb the cost — an assumption that virtually every stakeholder has challenged.

The Free Market Foundation has called the proposal "a naked revenue grab that threatens the very existence of the legal gambling market." In a detailed submission, the FMF argued that "the proposed tax undermines provincial authority, overburdens legal operators and risks distorting the legal online gambling market."

The International Federation of Horseracing Authorities (IFHA) offered a global perspective: "When legal operators face tax burdens that significantly reduce their competitiveness compared to illicit alternatives, consumers migrate to unregulated platforms that offer better odds, higher payouts, and fewer advertising as well as marketing restrictions."

The IFHA also challenged the notion that higher taxes discourage gambling: "Gambling tax is not an effective policy instrument to discourage consumers from gambling as a means of lessening overall gambling harm." Players do not stop gambling; they simply move to platforms where the tax does not apply.

Enforcement: The Missing Piece

Perhaps the most damning critique concerns enforcement. Zulu highlighted a fundamental flaw in Treasury's logic: "The assumption that it would be possible to enforce a tax on offshore platforms despite the absence of any mechanism or enforcement infrastructure is fundamentally flawed."

This is not a hypothetical concern. The National Gambling Amendment Act of 2008, which was intended to regulate online casinos, was never promulgated. Online casinos in South Africa exist in a legal grey area — and offshore operators face no meaningful enforcement action whatsoever. The proposed tax would apply only to those operators who have chosen to operate within the law, whilst their illegal competitors continue to operate with impunity.

The Real Solution: Regulation, Not Revenue Extraction

If the goal is genuinely to protect consumers and bring order to South Africa's online gambling market, the answer lies not in punitive taxation but in robust regulation and enforcement. The illegal platforms that dominate the market operate without any form of Know Your Customer (KYC) verification, age checks, or responsible gambling safeguards. Players on these platforms have no recourse when things go wrong — no dispute resolution, no data protection, no accountability.

Effective identity verification is the foundation of a well-regulated gambling market. It ensures that operators know who their customers are, that minors are excluded, that self-excluded players are identified, and that suspicious activity is flagged. It is also, critically, the mechanism by which legitimate operators can be distinguished from illegitimate ones.

At WhoYou, we work with regulated industries to implement seamless, compliant identity verification — helping operators meet their KYC obligations without compromising the user experience. In the gambling sector, that capability is not a nice-to-have; it is the difference between a regulated market and an unregulated one.

The Bottom Line

Treasury's proposed 20% online gambling tax is a blunt instrument applied to a complex problem. It will not curb illegal gambling. It will not protect consumers. And it will not generate the revenue Treasury expects — because the legal operators who would pay it will lose market share to the thousands of offshore platforms that will not.

South Africa needs a gambling policy built on enforceable regulation, effective licensing, and modern identity verification — not a tax that punishes compliance and rewards illegality.