Better laws equal bigger taxes: How gambling contributes billions to SA

Gambling – Google Free Image

South Africa has an extensive history of gambling, but only recently has it been regulated properly. One of the biggest contributors in this case is the Casino Association of South Africa, which speaks on behalf of the South Africa’s legal casino gambling industry, as well as representing the interest of the public the industry serves.

It’s not commonly known that the gambling industry is a big contributor to the country’s taxes. Believe it or not, 37% of the money collected in 2017 was spent on various taxes and levies imposed by the local and national governments.

As per the Casino Association’s report, 60% of its overall revenues were spent on employee salaries and taxes. As for the 40% left, it was reported to have been invested in various projects. Some of these include responsible gambling, sports, education, health and other ways of empowering the communities, which shows why gambling industry is an important part if South Africa’s economy.

The year behind us also brought some new laws and alteration to existing laws to support the gambling industry.

New laws and restrictions

As the gambling industry is not just online and land-based casinos, but also lottery, dog and horse racing and sports betting, the new South African Gambling Amendment Bill brought along a lot of changes. First of all, dog racing was declared illegal and the National Gambling Board became South Africa’s main gambling regulating body. Casinos endured stricter regulations, and they were also faced with the plans for limiting the number of gambling licences, as well as bingo machines.

Advertising was also regulated and limited to make sure it’s not unsolicited. Any winnings must be declared and investigated to ascertain whether they were obtained through legal or illegal activities, if the winner is a minor and similar.

Overall, the amendment was described as illogical, since it wasn’t detailed enough, and it left a lot of space for loopholes.

Yet, despite all the difficulties, misunderstandings and limitations, the country’s gambling industry prospered once again. Casino revenues rose by 3.5% compared with the previous year, contributing to the tax regime with an astounding sum of R1.6 billion from gross gambling revenues. In order for the figure to become even higher, the Casino Association required even stricter regulations to be implemented, especially when it comes to online gambling.

The story behind online gambling

South Africa is still somewhat of a novice when it comes to online gambling, but its convenience is making it more and more popular. The draft Control of Tobacco Products and Electronic Delivery Systems Bill is expected to see all a ban on all smoking enclosed public spaces. This will only add to the convenience the online gambling platforms provide.

The online casinos that accept players from South Africa are usually registered in Europe and comply to their laws, and pay taxes there. By regulating this industry properly, the country could benefit enormously. The overall impression is that supported by online gambling, the revenues will rise. By some projections, South Africa’s gambling revenues are to reach R30 billion in 2019, which is almost R4 billion more than the 2016 revenue.

Regulating online gambling

Therefore, with obvious benefits of online gambling and such large gambling revenues, the country introduced new gambling laws and new regulating bodies. The latest gambling act, the National Gambling Amendment Act 2018, is expected to resolve three major issues in order to speed up the processes of awarding licences. The act focus was on:

  • Expanding the National Central Electronic Monitoring System;
  • Renaming the National Gambling Board to the National Gambling Regulator; and
  • National Gambling Policy Council’s problems with governing.

In a nutshell, new bodies were founded for better regulation of online gambling, and stricter punishments were introduced for those online gambling operators which didn’t have a proper license for their activities. This is the reason why so many South Africans were baffled about the fact whether online gambling is allowed or not in the country, as it is hard to tell whether the website has been approved and gained all the necessary permissions.

As well as that, not all types of online betting are allowed. For instance, online casino games and poker for money are not permitted, while online sports and race betting are allowed.

One of the main obstacles to faster regulations of online gambling, especially online casinos is the fact that land-based casinos are their fierce competitors, and they are slowly losing the battle. You don’t have to use your real name when playing online, as there is a stigma surrounding the word “gambler”.

Second, it’s very easy to play whenever you feel lucky, which means online casinos are probably more frequently visited than land-based casinos. People who try out their luck live all around South Africa, and they don’t have access to casinos. Despite their ongoing antagonism, land casinos will eventually have to comply and maybe even launch their own online casino. Online casinos will probably reap even more success.

What follows?

Considering the fact that amending and adding gambling laws was the trend in 2018, it can only be deduced the trend is about to continue. Gambling is a great financial source for the whole country, though the laws and bills regulating it are far from perfect. The Casino Association is already pressuring the government to either regulate or enforce the law on unlawful gambling activities.

However, the better the laws, the greater the taxes the government is entitled to, so this appears as an excellent motive for efforts in gambling regulations. It seems that South Africa may follow suit as other countries such as USA did when it comes to online gambling and legalise, regulate and benefit from it completely.

There is still a lot of work to be done, and it’s not going to be easy either. South Africa still has to introduce better laws, and only then does the real battle begin – putting them to practice without exception. But, if there is one thing we could vouch for, it is that gambling industry will continue to bring money.

  • David Burke is a freelance blogger.