National Treasury must undertake rigorous economic modelling and meaningful consultation before finalising its proposed national online gambling tax, to avoid unintended consequences for South Africa’s government revenue, consumer protection and the regulated gambling industry.
This is according to Wayne Lurie, gambling law expert at Lurie Inc Attorneys, who says Finance Minister Enoch Godongwana’s announcement in last week’s Medium Term Budget Policy Statement (MTBPS) should not be mistaken for the introduction of a new tax.
In his MTBPS address on 21 October, Godongwana confirmed that consultations are continuing on the proposed tax’s design, its relationship with the existing regulatory framework and its implications for provincial governments and the regulated gambling market. He said the final design would be announced in the February 2027 Budget.
The Minister also noted that submissions received by Treasury generally recognised the need to address the growth of online gambling and its associated harm.
“The Minister has confirmed the next step in the policy process, not the introduction of a new tax,” says Lurie. “The proposal still needs to be finalised, subjected to appropriate scrutiny and enacted through Parliament before it can take effect.”
National Treasury’s November 2025 discussion paper proposed an additional national tax of 20% on gross gambling revenue (GGR) from online betting, over and above existing provincial gambling taxes. Treasury estimated that the combined national and provincial tax burden would amount to approximately 26% to 29% of GGR, before taking account of VAT. With the additional VAT burden of GGR, the effective tax on the industry would be in the range of 40%, which would make it untenable.
Lurie cautions that GGR, which represents stakes received less winnings paid out, is not equivalent to an operator’s profit. It is calculated before operating expenses, including salaries, technology, regulatory compliance and other costs.
“Any assessment of the proposed tax must consider the cumulative burden on licensed operators, rather than looking at the national tax in isolation. A rate that appears sustainable when applied to gambling revenue may have a very different effect on profitability, investment and employment,” he says.
Although the public consultation period on Treasury’s discussion paper closed in February 2026, Lurie believes more detailed economic analysis and engagement are needed before a final decision is taken. It appears that stakeholders that responded to the proposed tax are not going to be consulted, which in its itself is a flawed process.
“Recognising the harms associated with excessive gambling does not necessarily mean supporting the proposed tax or its rate. There is broad agreement on the importance of responsible gambling and consumer protection, but the question is whether this particular measure will achieve those objectives without creating new problems.”
A central concern is the potential movement of customers from licensed South African operators to illegal offshore gambling platforms, which operate outside the country’s regulatory and consumer-protection framework.
“If higher taxes undermine the competitiveness of licensed operators, the result may not be less gambling. Consumers could simply migrate to illegal offshore sites, where they have fewer protections and where the South African government receives no tax revenue,” says Lurie.
He argues that Treasury should assess the likely impact of different tax rates on customer behaviour, employment, investment, provincial revenue and the sustainability of the regulated market. The modelling should also account for the potential erosion of the tax base if customers move to unlicensed operators.
Lurie emphasises that the February Budget announcement will not, in itself, bring the proposed tax into force. Under Section 77 of the Constitution, legislation imposing a new national tax must be introduced in Parliament as a Money Bill and considered through the prescribed parliamentary process.
The Bill would be scrutinised by the National Assembly’s Finance Committee, with opportunities for public submissions and hearings. The National Assembly can amend or reject the proposed legislation. If passed, the Bill must also be considered by the National Council of Provinces (NCOP), which can approve it, propose amendments or reject it. Where the NCOP proposes changes or rejects the Bill, the National Assembly must reconsider it but retains the final say. The legislation would then require presidential assent before becoming law.
“This is a significant policy decision with potentially far-reaching economic and social consequences. Parliament has an important role to play in scrutinising both the proposed rate and the evidence underpinning it. The legislative process provides a further opportunity for stakeholders to make submissions and for credible alternatives to be considered,” says Lurie.
He believes a more effective approach would combine a sustainable tax rate with stronger enforcement against illegal offshore gambling operators and measurable investment in responsible gambling initiatives.
“The objective should be to reduce gambling-related harm while maintaining a viable regulated market that protects consumers, supports jobs and contributes to the fiscus. Treasury still has an opportunity to develop a balanced solution, but that requires transparent assumptions, proper economic modelling and meaningful engagement with affected stakeholders.”