Online gambling is growing more and more popular among people all across the world. Of course, the biggest worry for most is always whether it is legal or not. Gambling of any kind has been frowned upon for decades, over the last couple of years however countries have started developing different opinions and changing the rules and gambling regulations.
South Africa is one of the few countries who’ve changed their mind regarding the legality of online gambling, sort of.
The biggest question remaining is whether online casinos are finally legal in South Africa or if it is still illegal to participate in online gambling.
By taking a look at the history regarding gambling and discussing the most recent actions towards online gambling in South Africa we aim to answer the often-unanswered questions.
Gambling History of South Africa
Since 1973 gambling has been heavily restricted in South Africa. The Gambling Act of 1965 made all forms of gambling except betting on horse races illegal. While casinos started operating in the homelands of Bophuthatswana, Ciskei, Transkei and Venda in the late 1970’s it was inaccessible to most citizens. It is believed that there were as many as 2,000 illegal casinos operating in South Africa by 1995.
It gets a little confusing seeing as the new democratic government that came into power in 1994 legalised all forms of gambling. The National Gambling Act of 1996 put a system of licensed casinos and a single national lottery in place while also categorizing horse racing as a gambling activity. The gambling industry has undergone a lot of changes since this act was implemented. The establishment of online gambling especially brought a whole new area of concern to light.
Entering the 2000’s
A National Gambling Act put in place in 2004 made it illegal to participate in any form of online gambling. Updates to the laws in 2011 made it clear that any form of online gambling within South African borders were considered illegal. Despite the fact that it has been deemed illegal, there are plenty of South Africans who indulge in online gambling. One of the biggest reasons for this can be that the law hasn’t quite restricted the players. The regulations provided focus more on online casinos than on the players themselves.
To be clear, online casinos are banned in South Africa but the law is directly aimed at banks processing these payments and the operators of these gambling sites. Many online casinos adhered to the rules and closed their doors to South African gamblers. Others stuck by their decision to offer their products to South Africans and have succeeded in doing so for many years.
Why online gambling should become legal in SA
Online gambling has taken the industry by storm and one could say that business is booming at the moment. Countries that have taken the steps to legalize online gambling are definitely reaping the rewards thereof. Making online gambling legal will also help the country regulate online activity more clearly. With the right gambling regulations in place, the country could legalize online gambling without having to lose out on any income to overseas providers. Drawing up new legislation that enforces online gambling controls will not only help the government gain a firm hold on the market, it will also increase the revenue generated from these activities.
It is safe to say that if a gambler wants to participate in online gambling they will find a way. It is therefore in the country’s best interest to legalize gambling not just to benefit from it but also to promote and support responsible gambling. A report by Pricewaterhouse Coopers (PwC) stated that gambling revenues in 2014 was at a solid R23.9 billion, this amount is predicted to raise to R30.3 billion come 2019. These figures are made up solely of legal gambling activities including sports betting and the national lottery. It’s a solid figure but there is opportunity to potentially double or even triple that figure with the legalization of online gaming.
Taxing of Gambling winnings
Since the beginning, legal gambling entities have been expected to pay their share of tax to SARS (the South African Revenue Service). While these operators and businesses have been paying their dues, there has always been uncertainty regarding taxes on player winnings.
In 2011 the government announced a national gambling proposal that would’ve taken effect in April 2012. It was proposed that all gamble winnings of R25,000 or above should be subjected to a 15% withholding tax. These tax rates would’ve ideally been applied to all winnings including those from the National lottery. It’s not a foreign concept as similar gambling taxes exist in other countries such as the United States and the Netherlands. The aim behind this tax scheme was to help discourage excessive gambling in South Africa.
These tax proposals have remained stagnant which is why a lot of uncertainty remains regarding gambling tax. The best way to explain the gambling tax situation in South Africa at the moment would be to say there is none. Not for players anyway. Businesses and legal operators are still expected to pay tax on their gross gambling revenue.
If you are a player that cashed in on a lot of winnings recently you don’t have to worry about paying tax. So far winnings are only taxed when you are actively trying to make a profit. It is strongly suggested that even though you don’t pay tax you still declare your winnings to SARS.
Is online gambling legal?
While operators are not allowed to operate within the South African borders, players who participate in online gambling on foreign sites have not been reprimanded. Until recently. According to law, online casinos are not legally allowed to offer gambling services to South African citizens but there are still a variety of top quality online casinos that keep their doors open to avid players. It seems that while nothing is set in stone, the government is taking a firmer stand on this subject and have even confiscated winnings from players. But again, these situations are sporadic and inconsistent.
Seeing as online gambling is overall classified as illegal in South Africa you will be playing at your own risk. Playing illegally also means that you are unprotected against any scams or theft.
Take a look at our top international online casinos to see which sites are offering their services to players in South Africa. Each of these sites have been thoroughly researched and tested.
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