New research shows that financially stressed South Africans are increasingly resorting to online gambling platforms — not for entertainment but in a desperate bid for funds as their incomes come under unprecedented pressure.
The latest Old Mutual Savings and Investment Monitor says as many as 40% of working South Africans admit to gambling frequently, while Stats SA says that 55% of what is considered recreational spending at a national level now goes towards gambling.
Keri-Lee Edmond, head of business intelligence at Old Mutual Corporate, described the findings as “highly significant ... because what it tells us is that this behaviour is becoming normalised.
“What we are seeing is that this is a sign of South Africa’s workforce being under growing financial strain,” she said.
Edmond said the financial stress causing employees to resort to gambling extended into daily life and the workplace, showing itself in reduced focus, less engagement, lower productivity and higher absenteeism.
She said the pressures on employees were becoming operational concerns and costs for businesses. The research conducted by Old Mutual showed that employees appreciate guidance and benefit systems that help them manage financial pressures while building long-term stability.
The National Treasury has proposed a 20% tax on the gambling sector as part of its efforts to boost the fiscus and address some of the social harms caused by excessive gambling.
Chris Axelson, the Treasury’s head of tax and financial sector policy, told parliament on Friday that South Africa had one of the most progressive tax systems in the world and the Treasury would work to ensure effective and fair inputs in the formulation of potential gambling taxes.
We will still have workshops on this issue and stakeholder consultations where we will get into the details of some of the concerns and see how we can address them. The aim is to have draft regulations ready by later this year
— Chris Axelson, Treasury’s head of tax and financial sector policy,
“On the gambling tax, there were concerns about the rate local industries [could face] and potentially pushing the public to illegal operators. We will be looking at this,” he said.
The comment period ended on February 27.
“We will still have workshops on this issue and stakeholder consultations where we will get into the details of some of the concerns and see how we can address them. The aim is to have draft regulations ready by later this year,” Axelson said.
Wayne Lurie, CEO of the Safe and Responsible Online Gaming Association (Saroga), said licensed operators recognise that gambling must remain a form of regulated entertainment, not a solution to financial pressure.
“The South African regulated industry already operates under strict consumer protection requirements and continues to strengthen responsible gambling safeguards through both regulation and self-regulatory initiatives.”
He said the industry was now advancing three practical player protection initiatives:
- the expansion of free counselling and support services;
- a unified deposit limit framework to control spending; and
- a unified private exclusion database to integrate the National Self-Exclusion Register across the regulated ecosystem.
“These initiatives are aimed at ensuring that players have meaningful tools to manage their gambling responsibly while strengthening somewhat dated and lacking protections within South Africa’s regulated betting environment arising from 30-year-old legislation in desperate need of a revamp.”
Sean Coleman, CEO of the South African Bookmakers’ Association (Saba), said the legal market had safeguards available to mitigate excessive use by financially stressed users, such as voluntary self-exclusion procedures that bind licensed operators to make contributions to the South African Responsible Gambling Foundation (SARGF) based on gross revenue.
These contributions were being ring-fenced for gambling treatment and harm reduction, he said, while drawing attention to the lack of safeguards in the illegal market.
“I’m not saying that South African citizens who find themselves in financial stress are only turning to illegal gambling platforms. As a responsible industry, we grapple with customer behaviour, because none of us can control that, but we try to put guardrails in place to make sure that people can resist that temptation.”
The financial impact is staggering. Illegal operators are estimated to be diverting over R50bn in gross gambling revenue offshore annually, depriving South Africa of significant tax income and social contributions
— Sean Coleman, South African Bookmakers’ Association CEO
Coleman said online operators had implemented safeguards to allow users to limit the amounts they can bet in any given period and to include cooling-off periods. AI was also being used to create algorithms that assessed play records and play durations on platforms to then generate interactive messages with the user.
He said Saba and other gambling bodies were directly opposed to the Treasury’s tax proposals but had not heard anything about additional consultations at this stage.
In a recent report, Saba said illegal online gambling accounted for about 62% of all online gambling, posing a threat to consumers, legitimate operators and the broader economy.
“While much of the recent public and media debate has focused on the growth of legal online betting, the existential crisis lies in the scale and impact of illegal offshore operators that continue to target South African consumers unchecked,” Coleman said.
“These illegal operators pay no local taxes, contribute nothing to responsible gambling programmes, have no enforceable self-exclusion mechanisms and pose serious risks to vulnerable players. Every rand spent on these offshore sites is money that leaves the South African economy, undermining jobs, tax revenues and community investment supported by the legal betting industry.
“The financial impact is staggering. Illegal operators are estimated to be diverting over R50bn in gross gambling revenue offshore annually, depriving South Africa of significant tax income and social contributions that would otherwise support local communities, responsible gambling initiatives and public programmes.”
Most of the illegal operators are hosted in offshore jurisdictions and use aggressive digital marketing, affiliate and influencer networks to reach South African consumers, Saba warned.
Business Times
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