Gambling Tax South Africa

Many leading online casino operators are turning their attention to the continent of Africa as a lucrative region to expand their business in. Traditionally, Africa has always been thought of as a set of developing nations that mainly focused on agriculture and resource extraction. However, this old stereotype is finally beginning to lose steam, and rightly so. When you really begin to study the economic potential of countries such as South Africa, Nigeria, Uganda, Kenya, Ghana, and in particular, their enthusiasm for online sports betting, you will soon see the potential of this continent. The following article is aimed at providing information on legislation, taxation policies, popular trends and the development of online gambling across Africa.

1. Gambling Tax South Africa 2018
2. Gambling Winnings Tax South Africa
3. Gambling Tax South Africa News24
4. Gambling Tax South Africa 2020

Welcome to the sixth edition of Gambling outlook 2017-2021. This publication focuses on segments within the South African gambling industry, with detailed forecasts and analysis. For each segment, we give details about the key trends we have noted as well as key challenges and future prospects we have identified. The powers of South Africa are in full support of gambling in the country. The South African gambling industry – including casinos, sports betting, the National Lottery, limited payout machines and bingo – achieved gross gambling revenue of R26.3bn in 2016. The National Gambling Board is responsible for the oversight of the regulation in the gambling industry throughout the country and to preserve the integrity of South Africa as a responsible global citizen.

An overview of Online Gambling in Africa

Home to 1.3 billion people and over 50 nations, Africa is the second biggest continent in the world. It spans 30 million square kilometers, six time zones, and has eight different types of climate.

1. At present, in South Africa, gambling winnings are generally not subject to tax in the hands of the individual, unless gambling is that person‟s business or trade. Paragraph 60(1) of the Eighth Schedule of the Income Tax Act states that a.
2. In 2019, gambling revenue in South Africa reached a staggering R30 billion. That was up from R26.3 billion just three years earlier, suggesting that gambling of all kinds is not only alive and well in the country – it’s also growing at an incredible rate.

Traditionally it was always assumed that Africa was technologically limited and disconnected from the rest of the online world. This tide has been turning in recent years, however, and this is where you can find potential, especially as this fact is not widely appreciated or known to the majority of investors and online casino vendors.

One of the biggest factors influencing the development of iGaming in Africa is the rapid expansion of mobile internet connectivity. Over three quarters of the continent has a SIM connection and two thirds of the population have access to mobile broadband.

During 2018, six new 4G networks were launched creating a total of over 120 mobile internet networks across the continent. This new infrastructure, combined with increasingly cheaper smartphones, are helping drive the transition to widespread mobile broadband access. The population of Africa now represents 11.5% of all internet users (Q1, 2020). This is in turn allowing far more new African players access to both online sports betting and online casinos.

Sports betting in particular seems to be especially en-vogue with young Africans betting on European football leagues in increased frequency. The homogenization of culture is an effect that historically always happens when nations develop and begin to adopt western ideals. If you need an example, just think of this paradigm as being largely in-sync with the wide-spread translation of Hollywood movies, the opening of fast food restaurant franchises, and of course, the adoption of western music and fashion. The end result? The African sports betting industry was estimated to be worth $37 billion in 2018!

Of course, traditional brick-and-mortar casinos are still quite rare across the vast majority of the continent, but that shouldn’t be too surprising considering that the construction of a physical casino requires significant investment compared to setting up an online operation.

There are of course a few challenges to be overcome before online gambling can begin to truly flourish across Africa. In many areas, gambling laws are either vague, outdated, or just unenforced. That being said however, it is a fair statement to say that a great deal of Africans are in support of it, with very few places being culturally against gambling, unlike other parts of the world. For investors, entrepreneurs, and stakeholders of online casino operations, this is obviously very promising news.

The three biggest gambling markets in Africa are South Africa, Nigeria, and Kenya. We’ll look closely at these three markets, as well as three other key markets, Ghana, Uganda, and Tanzania.

Gambling Licenses by Country

South Africa

South Africa is the largest gaming market on the continent with some predictions estimating that South Africa’s GGR will reach $2.5 billion by 2021. South Africa has the second-highest GDP on the continent.

A report issued by South Africa’s National Gambling Board recorded GGR for 2018 to be $1.9 billion. In recent years, sports betting has seen the highest percentage growth out of all forms of gambling within the nation. It accounted for 21.3% of gambling revenue in 2018, at $405 million. It should be noted, however, that the most popular type of gambling is its national lottery.

It’s estimated that approximately 50% of South African adults place sports bets on a regular basis, with most placing bets at least once a month.

As recent surveys arguably prove, around three quarters of the population has gambled at least once in their lifetime. In the same survey, more than half of respondents declared gambling as an “interesting pastime”. Typical favorites include football, cricket, rugby, and golf. Some of the most popular online sports betting outlets in South Africa are Betway, Golden Race, Scorebet SA, Sportingbet, Betvictor, World Sports Betting, and Sunbet.

Despite all this good news, it must be noted that the development of the industry has also been hindered by the nation’s disjointed regional bureaucracy.

Most African countries have a centralized authority, or regulatory body, that oversees its gaming industry. However, South Africa’s nine provinces have their own gambling board which independently rules on the legality of gambling specifically within that province.

It should be noted that throughout the country, online gambling is illegal, except for the online branches of licensed, land-based bookmakers.

The types of commercial activities regarded as illegal are listed in the National Gambling Act of 1996 under the general notion of “interactive games”. These include bingo, poker, and the rest of “games of chance”, including slots.

The only types of gambling considered to be legal are online sports betting and horse racing. Land-based casinos have also been legal since 1994, however, there are only four big casinos (typically offering more than 180 tables for card games, as well as numerous slots).

For the aspiring online casino vendor, the only way to enter the market is to obtain a special license. According to current South African laws, money won in online casinos is considered to be obtained illegally. Such financial operations are tracked by banks and gamblers can be severely fined.

However, despite prohibitions and preventive legislative initiatives, South Africans still continue to gamble in both offshore and illegal online casinos or poker rooms.

According to the laws of September 2011, no online casino operator can legally offer gambling services within the borders of South Africa. However, there are still a wide choice of operators who continue to attract players from South Africa. Understanding this difference is crucial because finding “safe online casinos” will always still be a priority for South African gamblers.

Despite all of this, there have been a lot of discussions regarding the improvement and future legalization of online gambling within the nation’s borders. So, just watch this space.

For your reference, some typical tax liabilities include:

• Value-added tax accounting for 5-10%
• Tax from wins accounting for 15%
• Standard corporate income tax rate in Africa accounting for 29%

Uganda

Home to 43 million people, the land-locked nation of Uganda uses English and Swahili as its national languages.

For prospective online casino vendors, the good news is that online gambling within Uganda is typically regarded as a legal and commercial activity. Among its legal gambling activities, it mainly includes lotteries, casinos, and sports betting. Because of this, Uganda has more than 670 online casino operations and betting offices.

We know that the regulation of gaming in Uganda generated more than $3 million for the state budget in 2013-2014. According to statistical data, during 2016 this amount then rose past $5 million. Using this data, it’s easy to see how the region’s gambling revenues are exponentially growing.

On average, Ugandans spend $42 million on gambling annually. Gambling operators pay a tax of 20% on gaming revenue and withhold 15% of players’ winnings.

Much like South Africa, the most popular form of gambling is sports betting, usually on football. However, basketball, tennis, cricket, volleyball, and rugby are also very popular. Typical sports betting companies include Elite Bet, Worldstar Betting, Betin, SBA Uganda, ABA Uganda, and Simba bet.

As outlined in this article’s introduction, an increasing number of Ugandans are placing their bets online, as mobile connectivity and increased payment method options continue to expand across the country.

According to a report from the Lotteries and Gaming Regulatory Board, the Ugandan government received about $12 million in sports betting tax revenue in 2017-2018, compared to $3 million in 2013-2014 and $66,000 in 2003-2004. So again we are seeing the same upward trend in spending and player participation.

Recently a new law on gambling in Uganda has been adopted. According to this legislation, operators now have to obtain three licenses:

• License as a promoter
• License as an official distributor in Uganda
• License from the industry

License fees account for $300-$1500. At the same time, it is necessary to pay the National Lottery Directorate around $60 thousand as a deposit for future payoffs and tax liabilities. Apart from taxes, the corporate income tax rate on revenue equates to 29%.

Nigeria

Nigeria's GDP amounted to $410 billion in 2019, recording the highest gross domestic product in Africa. This figure is certainly understandable when you consider the population size is nearly double of any other African nation at over 200 million people.

Nigeria holds the second place in terms of share of gambling distribution in South Africa. A central hub of the African economy, Nigeria offers enormous potential for online casino and sports betting vendors. The nation’s appreciation for gambling has soured since its gambling ban was lifted in 2004.

According to a 2014 estimate, roughly 30% of Nigeria’s 200 million people place sports bets daily. That equates to roughly 60 million Nigerians, between the ages of 18 and 40, actively participating in sports betting every single day. Estimations are that Nigerians bet roughly $5.5 million every day, totaling about $2 billion a year.

As you may appreciate, that’s a very strong participation and turnover rate. These are great reasons why you should include Nigeria as a nation to focus on if you are considering expanding your iGaming enterprise into Africa.

In 2013 the first legal online casino was launched, which as you may appreciate, is still quite recent in the grand scheme of the iGaming world. The online sports betting and gaming explosion has also been fueled by locally developed payment systems.

One example is Paystack, a Nigerian fintech start-up. Paystack now processes over $11 million a month and became the most-used fintech system for those betting on NairaBet, Nigeria’s second-biggest online sports betting firm, after being added as a payment method.

Gambling Tax South Africa 2018

According to international accounting firm KPMG, Bet9ja has an average monthly turnover of $10 million and NairaBet has a monthly turnover of $3-$5 million. NairaBet alone has an estimated 2 million regular customers. Some other providers are Surebet 247, Merrybet, Betfair, Betway, 888sport, and Golden Race, which is available in 90% of Nigerian betting shops.

It’s no secret that European football is incredibly popular in Nigeria. A tremendous amount of sports betting focusses on leagues such as Spain’s La Liga and the UK’s Premier League.

Ghana

Ghana is home to 31 million people. Its capital and largest city is called Accra. The nation’s official language is English, and the Ghana Cedi (GHS) is its official currency. Ghana has three bordering countries, Côte d’Ivoire, Burkina Faso, and Togo.

Most importantly for prospective vendors, the nation’s gambling legislation allows for all types of land-based and online gambling.

Within the country, there are several casinos, lotteries, and betting offices. Citizens of Ghana are also legally allowed to access any foreign gambling websites that they wish. As a consequence, the popularity of online gambling in Ghana continues to grow year on year. We have to say though, online gambling is still in its relative infancy because of the nation’s slow adoption of internet connectivity. Wise online casino investors and entrepreneurs will understandably see this as a positive not negative.

The most popular type of gambling in Ghana is sports betting because much like Nigeria and South Africa, the nation has a serious love for European football. Betting providers accept bets both in betting offices and through online websites, as well as via telephone calls. The rest of the popular types of gambling in Ghana include online casinos, bingo, and online poker.

The official licensor is the Gaming Commission of Ghana. Three important notes on Ghana’s taxation include:

• Interest rate on gambling is 18%
• VAT on winnings equals 17.5%
• Corporate income tax rate on revenue in Africa equals 29%

Kenya

Gambling Winnings Tax South Africa

Kenya is a multi-ethnic nation located in the Great Lakes region of East Africa. It has a population of approximately 47 million people and uses two official languages, English and Swahili.

Most types of gambling are legal within Kenya, although much like Ghana, the online casino and iGaming world is largely in its infancy because of the nation’s slow adoption of mobile internet connectivity (but also like Ghana, this shouldn’t necessarily be seen as a negative thing, but as an opportunity to entice new players to your platform).

In 2018, according to data provided by PwC, the average growth of revenues from gambling in Kenya accounted for 6.8% (approximately $25 million USD). Also according to PwC, Kenya had a GGR of around $20 million in 2014, but that number was projected to hit over $50 million in 2020.

Like many other African nations, the most popular sport to bet on in Kenya is football, with the European leagues accounting for a huge portion of Kenyan betting.

Gambling Tax South Africa News24

According to a 2017 Geopoll survey, 79% of young Kenyan gamblers regularly placed bets on football. According to industry executives, 7 million Kenyans are currently registered for gambling services.

Some important notes on taxation include a new draft bill which outlines the following taxation conditions for online casino operators:

• 7.5% from net profit (betting offices)
• 5% turnover tax (lottery operators)
• 12% from revenues minus wins (online casino operators)
• 15% from gross turnover (lottery providers)

There are also the following types of taxes that need to be acknowledged:

• Taxes on winnings 20%
• Corporate income tax rates are 29%

Tanzania

Home to over 56 million people, Tanzania has also seen a rapid uptick in online casino and sports betting as its internet connectivity has increased. It has two official languages, English and Swahili.

The boom in sports betting has also been aided by the increase in the number of sports betting shops, which are present throughout the country, especially in Dar Es Salaam, the nation’s capital. Some of the most popular online sportsbooks are Sportpesa, Meridianbet, M-bet, Mkeka bet, Princess Bet, Premier Betting, and Throne Bet.

Sports betting revenues, which are taxed at a rate of 25%, provided the government with over $5 million in 2016. In that same year, sports betting revenue overtook casino revenue, generating over $15 million. In 2017-2018, gaming and betting brought the government of Tanzania $36 million in revenues.The gaming board of Tanzania projected that government revenues from gambling would reach almost $42 million in 2019, up from the previous year’s figure of $34 million.

Predictions for Africa

Having explored Africa’s Gambling Licenses and Taxation Legislation, we hope that you are now seeing the potential for online casino and sports betting participation across the continent.

We firmly believe that online gambling is going to develop exponentially in the upcoming years due to the following factors:

• Increase in disposable income as a bigger middle class emerges
• Enhanced connectivity combined with lower-cost computers and smartphones is allowing more people to get online
• Increased sociological gravitation towards western ideals, which would naturally include online gambling
• Improvement of gambling taxation and legislation overall

With all this in mind, combined with Africa’s generally open tolerance for gambling of all forms, we think it’s a fair statement to say that the entire continent holds huge potential for success within the iGaming world.

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Gambling Tax South Africa 2020

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