A Nation of Gamblers | R50 billion vanishes offshore as illegal gambling ravages South Africa’s economy
Illegal online gambling is now draining South Africa’s economy of more than R50 billion a year
Image: IOL Graphics
Illegal online gambling is now draining South Africa’s economy of more than R50 billion a year, with unlicensed offshore operators now accounting for nearly two-thirds of all online gambling activity in the country.
This is according to the South African Bookmakers’ Association (SABA), which on Tuesday warned that illegal online gambling has reached crisis levels, threatening consumers, legitimate operators and the 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," CEO Sean 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.”
According to the Yield Sec South Africa 2023/24 Report, commissioned by SABA, around 62% of all online gambling activity in South Africa now takes place on illegal platforms, compared to just 38% handled by licensed, regulated local operators.
The report also found that "2084 unlicensed gambling websites actively target South Africans, with around 16 million people, or 27% of the population, estimated to have engaged with illegal platforms in the past year".
“The financial impact is staggering. Illegal operators are estimated to be diverting over R50 billion in gross gambling revenue (GGR) offshore annually, depriving South Africa of significant tax income and social contributions that would otherwise support local communities, responsible gambling initiatives, and public programmes"
Saba also revealed that most of these illegal operators are hosted in offshore jurisdictions such as Curacao, Malta, Gibraltar, and the Philippines, where ‘pseudo-licenses’ are issued with minimal oversight and use aggressive marketing to target South Africans.
"Local payment systems, including bank transfers, EFT gateways, and credit card processing through third-party payment providers, are frequently exploited by illegal operators to facilitate transactions, despite the clear prohibitions set out in Sections 8 and 11 of the National Gambling Act (2004), which make it unlawful to offer or participate in unlicensed gambling activities".
The organisation also revealed that it has signed a memorandum of understanding (MOU) with the South African Banking Risk Information Centre (SABRIC) and is working closely with the banking sector to curb illegal gambling transactions.
How to tackle the illegal online gambling problem according to SABA
- DNS blocking, IP blocking and geo-fencing to restrict access by users;
- Payment blocking and merchant code filtering to disrupt illegal transactions;
- Cease-and-desist actions and prosecution of illegal operators through coordination with provincial gambling boards; and
- Stronger inter-agency enforcement, following the examples of countries such as the UK, Australia, and Finland, which have successfully implemented payment and domain blocking regimes;
- Restrictions on affiliates and influencers driving traffic to unlicensed illegal markets; Public education campaigns to help consumers distinguish between legal and illegal sites.
IOL Business
mthobisi.nozulela@iol.co.za