South Africa Tax Dispute: Bookmakers Warn Against 20 Percent Levy

A significant conflict is brewing in South Africa between the government and the gambling industry. The country’s Treasury is planning to introduce a new national tax for online gambling at a rate of 20% on Gross Gaming Revenue (GGR). These proposals have met with fierce resistance from operators and industry associations, who warn of the potential destruction of the regulated market. The criticism is primarily fueled by concerns that the additional levy could drastically lower channelization rates, making legal operators uncompetitive against illegal offshore platforms.

The South African Bookmakers Association (SABA) has officially urged the government to rethink the proposal. According to the association, the cumulative tax burden placed on companies has not been adequately measured. At a time when many markets globally are struggling to balance tax revenue with player protection, the South African move appears to many experts as a risky experiment without an empirical basis. There is a threat of a situation where neither the state nor player protection benefits if customers migrate en masse to unregulated providers.

Numbers and facts

The mathematical component of the proposal is particularly explosive. The planned 20% is intended to be levied in addition to existing provincial taxes. In various regions of South Africa, these currently range between 6% and 15%. Adding these figures results in an effective tax rate of between 26% and 35% on GGR. Sean Coleman, CEO of SABA, emphasized during a consultation that there is no evidence the Treasury has understood the consequences of this burden. The association is therefore calling for the establishment of a technical working group and a data-sharing framework before the legislation is advanced further.

A cautionary real-world example was provided by Laurence Michel, Chairman of Betway Africa. He reported on experiences in Kenya, where aggressive tax policies led to an exodus of regulated providers. Betway itself was a participant in that market but decided to leave due to the unsustainable conditions.

"South Africa can’t afford to drive more gamblers into an already thriving illegal market here. We’ve seen that in Kenya. We were actually a participant in the Kenyan market at that point. We actually left. You know, we picked up our tools, and we employed about 100 people, and we left. Who benefited? Who benefited? Nobody." - Laurence Michel, Chairman at Betway Africa

Background

The Treasury’s reasoning officially rests on two pillars: generating additional revenue for the central fiscus and mitigating problem gambling. However, this is precisely where critics point their arguments. Garron Whitesman, an attorney representing Virgin Bet, described the tax proposal as neither rational nor well-founded. He warned that the new tax would irrefutably erode the tax base. If companies see reduced profits or exit the market, revenues from corporate tax, employee taxes, and withholding taxes will also decline.

Whitesman also drew comparisons to European markets like the Netherlands or the UK, where it has also been observed that excessive levies diminish the attractiveness of the legal market. The industry is now demanding that intervention must be designed around "evidence and measurable outcomes" rather than purely fiscal goals without regard for market structure. Collaboration between the national gambling board, the treasury, and operators is essential, as they ultimately need each other.

Why it matters for German players

The situation in South Africa may seem geographically distant, but the mechanisms of regulation are similar to those in Germany under the State Treaty on Gambling 2021 (GlüStV 2021). Taxation is a central issue here as well. In Germany, a tax of 5.3% is levied on stakes for online slots and online poker. While this sounds moderate compared to South Africa's 20% GGR tax, it applies to the stake, not the gross profit, which effectively results in a high burden as well.

For German players, an excessive tax burden often means lower Return to Player (RTP) rates at providers on the GGL whitelist. Nevertheless, protection in Germany is significantly stricter than in many other markets due to LUGAS, the cross-provider deposit limit of 1,000 euros per month, and the stake limit of 1 euro per spin. Migrating to MGA or Curacao casinos is risky, as they lack the legal certainty provided by the GGL. However, the South African case shows that governments worldwide must be careful not to overstretch, so that players do not leave the protection of the regulated space.

What it means for GGL-licensed casinos

German operators with a GGL license monitor such international developments closely. SABA’s warnings about the erosion of the tax base are also relevant to the German treasury. If legal offerings become too unattractive due to taxes and strict limits, the black market flourishes. GGL-licensed casinos already have to clear high technical and player protection hurdles. An additional tax burden, as discussed in South Africa, could jeopardize profitability in an already heavily regulated environment like Germany and counteract the channelization goals of the GlüStV 2021.