Is it time for South Africa to properly regulate online casinos?

At the end of the financial year 2022/23, South Africa’s gambling industry witnessed a significant surge, with R815.1 billion wagered, a 45.6% increase from the previous year.

According to reports from the National Gambling Board, the Gross Gambling Revenue (GGR) soared to R47.2 billion, a 36.9% rise, with betting and casinos generating the lion’s share.

Despite this growth, the online casino segment remains in a grey area, technically illegal under the National Gambling Act of 2004, yet thriving due to regulatory ambiguities and creative workarounds by operators. This situation suggests that the GGR could be substantially higher if online casinos were legalised and properly regulated.

The state of online gambling in South Africa is complex. The current legislation is outdated and unclear and has led to a market where traditional casino games are rebranded to fit within sports betting regulations. This workaround has allowed for a semblance of online casino gaming, albeit not explicitly legal.

The Democratic Alliance’s proposal for a national regulatory framework for online gambling, although facing political hurdles, points towards a growing recognition of the need for reform.

The Phumelela case in 2020, although dismissed, further underscores the need for regulatory clarity. Moreover, the extensive process required for game and software approval, coupled with the autonomy of provincial regulators, adds layers of complexity to the industry.

Looking abroad, Brazil’s recent gambling regulation provides a compelling case study. Initially, online casino games were not included in Brazil’s gambling regulation framework. However, recognising the potential for significant tax revenue and economic benefits, Brazilian legislators decided to include online casino games in the regulation.

This move is expected to bolster the country’s economy through increased tax collections and create a safer, more regulated environment for players. The law introduces clear tax brackets for gamers with a 15% income tax on players’ winnings.

The potential expected benefits observed in Brazil—economic growth, player protection, and curbing illegal gambling—highlight the advantages of a properly regulated online casino market. South Africa, facing similar challenges and opportunities, stands to gain from a more comprehensive and up-to-date legal framework for online gambling.

Commenting on the recent regulation in Brazil, Andreas Bardun, CEO of KTO, stated:

“This milestone reflects a well-executed regulatory framework that effectively addresses key concerns within the industry…The new framework ensures enhanced safeguards for consumers, fostering a safer and more responsible gambling environment..”

As South Africa grapples with the complexities of its online gambling landscape, the example set by Brazil offers valuable insights. The significant economic benefits, coupled with the need for player protection and fair competition, make a compelling case for the legalisation and regulation of online casinos.

It might indeed be time for South Africa to follow Brazil’s lead and embrace a more modern, inclusive approach to gambling regulation, potentially unlocking a new era of growth and innovation in the gambling industry.

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