National Treasury has proposed a 20% national tax on gross gambling revenue from online betting and interactive gambling. The national tax would operate alongside existing provincial gambling taxes, bringing the combined burden to between 26% and 29%.
The proposal is contained in a discussion paper titled “The case for a national online gambling tax”, which was published for public comment on Tuesday. Written comments must be emailed to gamblingtax@treasury.gov.za by the close of business on Friday, 30 January 2026.
Treasury said although the tax measure is expected to raise more than R10 billion, revenue generation is not the central purpose. Rather, the primary aim is to “discourage problem and pathological gambling and their ill effects”.
The proposal seeks to address the sharp rise in online gambling activity and the social risks associated with it, while closing regulatory gaps created by rapid technological change.
According to the paper, advances in online communication mean gambling “is accessible almost anywhere, at any time, even in places where gambling is prohibited”. The shift has taken gambling far beyond the physical premises traditionally governed by provincial licensing regimes. It is in this context that Treasury argues for a unified national approach to taxation as a tool to internalise the social costs tied to harmful gambling behaviour.
The South African Responsible Online Gambling Association (SAROGA) has rejected the proposals advanced in the paper. It says Treasury is proposing to impose a national 20% online gambling tax in a field where provinces have constitutional authority and where interactive gambling is still illegal, effectively reshaping the regulatory settlement and taxing prohibited activity without first creating a coherent national legal framework.
Overview of the gambling sector
The discussion paper presents a detailed picture of the size, structure, and trajectory of South Africa’s gambling industry, drawing on the National Gambling Board’s statistics for the 2024/2025 financial year. The sector includes casinos, betting (both sports and horseracing), bingo, Limited Payout Machines (LPMs), and totalisator operations. At the end of the financial year, the NGB recorded:
- 36 operational casinos
- 2 546 LPMs
- 73 bingo outlets
- 325 totalisator outlets
- 553 bookmaker outlets
The NGB estimates that R1.5 trillion was wagered in 2024/25 – representing a growth of 31.3% compared with the previous year. Betting dominates this turnover, accounting for 75% (R1.126 trillion), followed by casinos at 19.5% (R292.8bn). The remainder came from LPMs (3.6%) and bingo (1.8%).
The paper notes that about 98.8% of betting turnover was sports betting and about 99.9% of sports betting was conducted through bookmakers.
Gross gambling revenue (GGR) – the key tax base for both provincial levies and Treasury’s proposed national tax – was R74.5bn, marking a 25.6% year-on-year increase.
Statistics South Africa’s reporting reinforces the picture of a shifting gambling landscape. Between 2018 and 2023, enterprises offering bookmaker and online gambling services experienced income growth of 72% a year, while income from casinos and gambling houses declined by 3.3% a year.
Treasury highlights that gambling already accounts for 1.6% of total household spending in the CPI basket, placing it as the twelfth-largest expenditure category, just behind beer.
Correcting negative externalities
Treasury frames taxation as a market-based tool to correct negative externalities arising from harmful gambling behaviour. The paper explains that externalities occur when “the actions of an individual impose a cost on society for which it is not compensated”. Problem and pathological gambling fall within this definition, given their potential consequences for productivity, family welfare considerations, and criminal activity.
A tax on gambling seeks to internalise these externalities by reflecting the true social cost in the price of gambling activity. According to the document: “The main aim of a market-based (tax) intervention by government is to reflect the social costs (negative externalities) that the gambler imposes on others in the price of gambling.”
The paper sets out two channels through which taxes may influence consumption:
- Price signalling – a tax increases the cost to players, discouraging excessive gambling by highlighting that the costs to the community are higher than the private costs.
- Operator-focused taxation – imposing tax obligations on providers, although in most instances, the incidence still falls on consumers.
The document acknowledges that such taxes unavoidably fall on all gamblers, not only those experiencing harm. It describes a tax on recreational gamblers as akin to an excise tax on luxury goods.
Treasury also notes the risk that an inappropriate tax regime could drive activity underground or offshore. However, the framework could apply even to illegal operators.
“Gambling taxes also can be designed to apply to the services as described in the tax with the liability falling on the person offering the services, without limitation to licensed providers. This ensures that illegal gambling operations are equally subject to the requirement to register for tax purposes and remit tax on their activities. The regulatory framework does not prohibit the development of a tax instrument to address the externalities associated with online gambling.”
Need for a national approach
The paper examines the need for a national approach to online and interactive gambling, the limitations of the existing provincial tax regime, and the policy logic behind the proposed 20% national online gambling tax.
Treasury says online gambling transcends provincial boundaries and cannot be realistically and fully administered at a provincial level. Although the 2008 National Gambling Amendment Act envisaged online and interactive gambling as an exclusive national competence, the Act was never brought into effect. As a result, interactive gambling remains illegal, while online betting through provincially licensed bookmakers is lawful.
This regulatory vacuum contributes to inconsistent taxation, uneven compliance, and competitive pressures among provinces seeking to attract operators.
Provincial taxes on betting currently average 6% to 9% of winning bets or GGR. Treasury suggests these rates are insufficient to internalise the externalities associated with online gambling. Moreover, because provinces have limited taxation powers and rely heavily on national transfers, they face structural constraints in adjusting gambling taxes.
The paper warns that provinces may “compete with one another on the headline level of the tax to encourage gambling operators to register with their provincial gambling board”, a dynamic that “could artificially keep the tax rate below what is optimal from a social perspective”.
To address these issues, Treasury proposes a unified national online gambling tax of 20% of GGR (turnover minus winnings), aligned with the existing provincial base but extended to include interactive gambling. Treasury selected the rate of 20% with reference to international practice – 11 jurisdictions charge a tax of 20% on GGR, and a further 16 jurisdictions have a higher tax rate.
Treasury argues that a national approach would streamline administration, improve compliance, and reduce provincial tax competition. It would also close gaps arising from the illegality of interactive gambling by ensuring that any revenue derived from online or interactive gambling – legal or illegal – falls within the tax net.
‘Reshaping the gambling framework by taxation’
Wayne Lurie, the head SAROGA, says Treasury’s proposed national tax on online gambling revenue attempts to reshape South Africa’s gambling framework through taxation rather than law.
In an article published by News24, Lurie says the provinces were given primary authority over gambling, yet Treasury now wants to impose a large national levy on top of existing provincial taxes, effectively shifting fiscal power to the centre without openly revisiting the National Gambling Act or the constitutional settlement.
Lurie also highlights a legal contradiction. Treasury acknowledges that interactive gambling remains unlawful in South Africa but still proposes taxing revenue from those activities, which would invite illegal and offshore operators into the tax net and blur the line between lawful and unlawful supply.
He argues that Treasury’s reliance on “negative externalities” is unsupported because the paper provides no modelling of gambling-related harm and does not ring-fence any revenue for treatment, prevention or enforcement. In practice, he says, higher gross-revenue taxes are likely to be passed on to players and could make licensed operators less competitive.
Without first creating a coherent national regime for interactive gambling and aligning responsibilities between national and provincial regulators, Lurie says the proposed tax risks shrinking the domestic market, accelerating offshore channel shift, and weakening a provincial system that has held the line for nearly 30 years.
