Sun International Warns Against Flawed Online Gambling Policy in South Africa
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Key Takeaways:
- Sun International CEO warns against poorly designed online gambling policy.
- Policy risks driving South African players to unregulated offshore operators.
- South African Reserve Bank data clarifies gambling spending is 'relatively insignificant'.
- National Treasury proposes a 20% national tax on Gross Gaming Revenue.
- Regulated operators could face a total tax burden of up to 44% of GGR.
- South Africa's online channelisation rate is approximately 83%, according to H2 Gambling Capital.
Sun International CEO Ulrik Bengtsson has issued a warning regarding potential online gambling policy changes in South Africa, cautioning that well-intentioned regulations could inadvertently lead to detrimental outcomes. Bengtsson emphasised that any policy response must be grounded in a thorough understanding of the issue and supported by accurate data to avoid ineffective measures.
Policy Context and Data Clarification
The discussion around online gambling policy in South Africa arises amid increased online betting activity and concerns about problem gambling. However, Bengtsson highlighted a significant clarification from the South African Reserve Bank (Sarb) regarding widely cited figures. The R1.5 trillion sum often mentioned represents wagering turnover, which is the cumulative value of bets placed and recycled, not actual household spending on gambling.
Sarb data indicates that 90% to 97% of this R1.5 trillion is returned to players as winnings. Gross gaming revenue (GGR), which licensed operators retain, constitutes a small fraction of this headline number. In 2024, games of chance accounted for 1.3% of household final consumption expenditure, significantly less than food at 16.6%. Furthermore, Stats SA data shows that 76% of spending on games of chance was by the top five highest income groups, challenging assertions that South Africans are broadly spending essential funds on gambling.
Industry Impact and Regulatory Concerns
Bengtsson stressed that while problem gambling is a serious concern, not all gambling is problematic, necessitating precise regulatory approaches. He pointed to channelisation, the proportion of gambling activity through licensed gambling operators, as crucial for minimising problem gambling. H2 Gambling Capital reports South Africa's online channelisation rate at approximately 83%, meaning about one in six rands wagered bypasses local regulators and flows to offshore, unlicensed platforms.
These unregulated operators contribute no local taxes, fund no responsible gambling programmes, and offer no consumer protections. The South African Bookmakers’ Association identifies over 2,000 such platforms actively targeting South African consumers. Proposals to ban licensed domestic operators or impose high taxes could exacerbate this issue by pushing more players towards the unregulated market, as evidenced by Kenya's gambling experience with punitive taxation leading to a shift to unlicensed platforms and a decline in tax revenue.
National Treasury's proposal for a 20% national tax on GGR is a key concern. When combined with existing provincial taxes and a 15% Value Added Tax (VAT) obligation, the total tax burden on regulated South African operators could reach as much as 44% of GGR. This competitive asymmetry would create a structural incentive for consumers to migrate to unlicensed offshore operators, a trend seen across global online gambling markets, which face none of these costs, undermining player protection and regulatory oversight.
Sun International's Commitment to Responsible Regulation
Sun International is committed to regulatory reform, acknowledging that South Africa's current gambling legislation, dating from 2004, is inadequate for online gambling. The company advocates for a harmonised national legislative framework that protects consumers and draws activity into licensed, tax-paying channels, preventing funds from flowing to unregulated offshore entities.
As a founder of the South African Responsible Gambling Foundation, Sun International has supported public awareness and counselling programmes for 25 years, to which unlicensed operators do not contribute. The company also co-founded the Betting Industry Body to engage constructively with the government on these issues. Sun International has implemented robust age verification and self-exclusion tools and has benchmarked its player protection standards against international best practices, aligning with principles of safe casino sites. The goal, according to Bengtsson, is to ensure that consumers who choose to gamble do so within a protective framework, with support available for those who develop problematic behaviours, outcomes that regulated operators are uniquely positioned to deliver.
