Profits of gambling in South Africa - regulation of monopoly and taxes

Gambling in South Africa is allowed since 1994. There are more than 40 casinos operating in South Africa. Online gambling is illegal. During the 2015-2016 fiscal year, gross revenue from legal gambling amounted to R 26,3 billion (or USD 1.86 billion), most of the players take part in the national lottery – 78.9%. Only 10.6% play in casinos.

Official gambling is allowed in South Africa since the end of the XX century. However, this applies only to land-based venues. Companies that organise online casinos can be fined a tidy sum, individuals can receive a prison sentence.

This ambiguous situation implies the prohibition on slot machines online in South Africa since 2008. This does not prevent from using services of foreign operators and playing for money or for free. There are only two nuances.

Beginning from the autumn of 2016, the real money payout may be confiscated or retained by the government. Furthermore, virtual video slots can be blocked by the ISP. It can happen if the provider finds out that online slot machines are connected to gambling. List of all slot machines can be found in section free slots on our website.

Gambling in South Africa

South Africangambling is allowed since 1994. All forms of gambling are legalised except for online games. Online gambling is illegal. Only sports betting and betting on horse races online are allowed.

There are more than 40 casinos operating in South Africa. Most of all casinos are located in Johannesburg, Gauteng. There are 4 large casinos, which together contain more than 180 tables for card games, more than 5,200 slot machines and video poker.

The biggest casino – GrandWest Casino & Entertainment World – is in Cape Town. There are 79 tables for games, 10 poker tables, 2,500 slot machines and video poker.

The most well-known casino brands of South Africa are:

• Tsogo Sun – holds 14 licenses;
• Sun International – 13 licenses;
• Peermont Global – 8 licenses;
• London Clubs International – 1 license;
• Desert Palace Casino;
• Leithlo Resort.

Revenues from gambling in South Africa remain at the same level and are measured in billions of South African rands. During the 2015-2016 fiscal year, gross revenue from legal gambling amounted to R 26,3 billion (or USD 1.86 billion). The largest revenue is brought by casinos – 70.5% of gross income.

At the same time, most of the players take part in the national lottery – 78.9%. Only 10.6% play in casinos. Three-quarters of the population have ever participated in any kind of gambling. More than half of residents believe casinos or gambling games are quite worthy leisure activities.

Brief description of South Africa

South Africa – a parliamentary republic in southern Africa. It is the most developed country of the continent and the only African country in the G20.

The country recognises 11 national languages, it has a lot of white, Asian and black population. It was first colonised by the Dutch in 1652. South Africa has a turbulent past – in the 19th century, there were the Anglo-Boer Wars for diamonds and gold, in the 20th century, there was a long-term apartheid. All these have left its mark on the development of business conditions, the economy and society.

Currency – the South African rand. It is designated ZAR or R. The exchange rate in December 2016 was USD .0709 for ZAR 1 or ZAR 14.1 per USD 1.

The country mainly exports diamonds, gold, platinum, machinery and equipment. Import – oil and products. South Africa occupies the 39th place in the ranking of countries where business is convenient to do.

The history of gambling in South Africa

South African gambling industry was banned until 1994. The law called South Africa's Gambling Act passed in 1965 prohibited all forms of gambling except betting on horse racing. It was recognised sport.

Illegal casinos began to develop at the end of 1970. They worked in the Bantustans Bophuthatswana, Ciskei, Transkei, Venda.

Bantustans – it’s a special phenomenon in the history of South Africa. They are somewhat similar to reservations in the United States but have their own characteristics. These territories have been used as a reservation for the indigenous black population of South Africa. Some Bantustans gained independence and this made it possible to organise gambling. For example, a city of casinos Sun City was built in Bophuthatswana.

Only ethnic South Africans could live in Bantustans and the majority of citizens could not legally get into these places. However, in 1995, there were about 2000 casinos in total.

When apartheid ended in 1994 and a democratic government came to power, all forms of gambling were allowed. National Gambling Act regulations, released in 1996, adopted the casino licensing system and the state lottery. Horse racing has been recognised a form of gambling again.

Legislation of gambling in South Africa

The age limit for players of South Africa – 18 years. Minors are not eligible to play in gambling venues.

There are three acts that define the legal framework of gambling in South Africa:

• National Gambling Act 1996;
• National Gambling Act 2004 – supplements the previous one;
• National Gambling Amendment Act 2008 which determines the position of online gambling in South Africa.

National Gambling Act 1996 clearly prescribes how casino license must be distributed among the country's provinces. The total number of licenses is 40. They are distributed as follows:

1. Western Cape (Centre – Cape Town) – 5 licenses;
2. Northern Cape (Kimberley) – 3;
3. Eastern Cape (Bisho) – 5;
4. KwaZulu-Natal (Pietermaritzburg) – 5;
5. Free State (Bloemfontein) – 4;
6. North-Western Province (Mafikeng) – 5 licenses;
7. Gauteng (Johannesburg) – 6;
8. Mpumalanga (Nelsprёyt) – 4;
9. Limpopo or Northern Province (Polokwane) – 3 licenses.

According to the same Act, any entity (person or organisation) is not entitled to keep more than 16 casino licenses across the country or more than 2 licenses in a single province.

South African Gambling Act defines:

• gambling terminology;
• What is considered a gambling game;
• the mechanism of the National Gambling Board.

Regulators of gambling in South Africa

South African Gambling Board – a state gambling regulator in South Africa. Its responsibilities include:

1. determining the rules by which the gaming business operates;
2. carrying out investigations;
3. collecting statistics;
4. being responsible for the proper treatment of gambling addiction.

South African Gambling Board contact details and South African Gambling Board vacancies can be found on the official website of the regulator.

South African Bureau of Standards is responsible for standardisation, testing, analysis, calibration and certification of slot machines, electronic monitoring systems and other casino equipment.

Casino Association of South Africa

There is another player in the gambling industry of South Africa – Casino Association of South Africa (CASA). The Association was founded in 2003. Its co-founders were aimed at:

1. uniting casino operators and shareholders;
2. providing more information about casinos to the public;
3. achieving greater understanding and transparency of the gambling business.

The organisation brings together nearly all country's casinos. Representatives of the government hold 37% of the shares of various land-based casinos. Association members provide more than 100 000 jobs.

Legislation of online gambling in South Africa

National Gambling Amendment Act of 2008 has not yet been definitively adopted, though it recognises online gambling in South Africa partly illegal. Both the organisation of online gambling and participation in it is illegal. Partially, this is because not all forms of online gambling are prohibited.

The law prohibits the so-called “interactive games”:

• casino games;
• poker;
• bingo.

Allows:

1. online sports betting;
2. online betting on horse racing;
3. bookmakers – naturally, the organiser must have a license from the government.

Any entity, whether an organiser of a website or a bank, conducting transactions for online gambling is punishable by a fine in the amount of R 10 million (USD 709,000) and/or 10 years’ prison term.

However, the law does not provide for penalties for individual players. It follows that players can easily play in casinos which servers are located abroad.

Types of gambling in South Africa

National Gambling Board holds the following classification of gambling:

• casino – table games and slots;
• betting on horse races and sports which are offered in bookmakers and totalizers;
• slot machines with limited stakes and prizes – Limited Payout Machines (LPM);
• Bingo – traditional and through electronic terminals (Electronic Bingo Terminals, EBT).

South African casinos offer a wide choice of card games common not only for the European but also for the South African continent.

1. For example, game klawerjas is very popular in Cape Town – it’s an old Dutch trick-taking game, it is still popular in the Netherlands. The goal is to collect the optimal amount of tricks.
2. Game kalooki – it’s a kind of rummy. The goal is to collect certain combinations.
3. Thuni or Thunee – this is a game typical only for South Africa. It is mainly popular among Asians. The rules also require getting a certain number of points.

Other games that are popular in South Africa:

• cribbage – British card game;
• canasta – kind of rummy;
• samba – version of Canasta;
• skat – trick-taking game from Germany;
• spite and Malice – a form of competitive solitaire;
• shithead – game for the loss of all cards.

Revenues from the South African gambling business

During the 2015-2016 fiscal year, gross revenue from legal gambling amounted to R 26,3 billion or USD 1.86 billion.

1. the largest revenue is brought by casinos – 70.5% of gross revenue or USD 1.3 billion;
2. betting – 16.9% or USD 315 million;
3. LPM (Limited Payout Machines) – 9.0% or USD 167 million;
4. bingo – 3.6% of gross revenue or USD 66 million.

The provinces bring different gross revenue from gambling:

• gambling in Gauteng brings the mot – 40% or USD 745 million in the 2015-2016 fiscal year;
• the Western Cape is in second place – 15.6% or USD 291 million;
• the third place goes to KwaZulu-Natal – 18.5% or USD 344 million.

Gauteng produces the highest gross profit in casinos, betting and bingo. Western Cape receives the highest income in sector LPM – 30%.

The number of slot machines in land-based casinos of South Africa was 23 415 devices in 2015. Revenue from slots – USD 969 million.

The number of tables in 2015 in all the casinos of the country amounted to 932. The revenue from them – USD 237 million.

Taxation of gambling in South Africa

Contributions to the state budget are estimated in the millions of dollars. In 2015, the South African authorities received USD 262 million from gambling. This represents 28% of the gross revenue of casinos.

South African gambling tax includes three types of payments:

1. Corporation tax – it is collected from corporations. Its value is based on the income of the company.
2. Gambling tax – it is collected from license holders by provincial governments. The value is calculated according to the gross revenues of licensees.
3. VAT (value-added tax) – it is calculated basing on the cost added at each stage of production and exchange of goods and services. It is collected from casinos but not from players.

Online gambling in South Africa

Despite the fact that South African gambling online is banned, yet players are able to use the services of international casinos. They can invest in local currency, which simplifies the service.

But there is a caveat: since 4 October 2016, the authorities may confiscate the winnings of online players. The Department of Trade and Industry published a new amendment to National Gambling Amendment Bill. Under its provisions, the court has the right to seize and detain winnings of players.

Thus, you can play online, but there is no guarantee that you can get your winnings since even transactions within the country are prohibited.

The ban on online casinos

Online casino games, bingo and unlicensed lotteries were outlawed in 2010 when the court of Gauteng banned online casino Swaziland Based Pigg Peak. The precedent was established and since then, all domestic online casinos were clearly prohibited.

Only three kinds of online gambling are legal:

• online platform for the national lottery;
• sports betting;
• betting on horse races.

Everything else is considered so-called “grey market”. It is still unknown whether the government will continue to consider the legalisation of online business or not.

The Remote Gambling Bill

For a time, Remote Gambling Bill was discussed. It could legalise online gambling in South Africa.

Remote Gambling Bill considered:

1. licensing issues;
2. the size of awards and prizes;
3. provincial and the National Board responsibility;
4. standards for online casino equipment;
5. protection of the rights of the players.

The act, for example, ordered the following limits:

• forbidding a minor to play;
• prohibiting to lend players;
• restricting the limits of advertising and promotions of online casinos.

South African gambling news say that in May 2016, the project Remote Gambling Bill was rejected.

Representatives of the Department of Trade and Industry, which is also engaged in the affairs of the entertainment industry, believe that the bill pays enough attention to the social problems associated with online gambling.

When the 27 May 2016 bill was considered, the National Freedom Party member Shaik Emam argued the refusal to accept the bill:

“Careers of ordinary people are destroyed because they allow the white collars to cover their losses at their expense”.

This is the general feeling in the government. In fact, there is a fairly strong lobby of land-based casinos which do not like the fact that South African gambling sites are taking more and more participants away from them. Opponents of the bill observe the online gambling in Europe. For example, websites seized almost 20% of visitors of casinos offline.

A supporter of the bill and the representative of the Democratic Alliance Geordin Hill-Lewis believes this is a mistake:

“Regulation of the industry – that's the best way to protect the public Amendment 2008 (National Gambling Amendment Act) had still not been adopted. Due to this, online gambling suffers from confusion”.

Supporters of the legalisation of online business argue: the government is losing millions of rands with legalising web casinos. Casino Association of South Africa gives the following figures:

The country loses about R 110 million (USD 7,8 million) on illegal gambling in South Africa. The aggressive policy of online casinos makes land-based casinos to lose income as well. The growth of profits slowed to 0.6%”.

At the moment, the issue with the online business remains unresolved.

The best online casinos in South Africa

Below, there is a list of casinos in South Africa to play with all the amenities:

• Springbook casino;
• Yebo;
• Casino Las Vegas;
• Slots Magic;
• Thunderbolt;
• White Lotus Casino.

Slot machines in online casinos of South Africa

South African casinos offer popular five-reel video slots common for online portals:

1. Gladiator;
2. Gold Rally;
3. Safary Heat;
4. Everybody's Jackpot;
5. Hulk Jackpot;
6. Silver Bullet;
7. Halloween Fortune.

Demographic information of gambling in South Africa

According to the National Gambling Board in 2016, 15.3% of the total population constantly gamble.

Within five years, there was a slight decrease in the number of players in casinos, bingo, betting and LPM sector. Though lottery tickets sales increased.

For example, the following statistics was observed in April 2015:

• 78.9% of the players buy state lottery tickets;
• 11.2% play scratch cards;
• 10.6% – in the casinos;
• 7.1% – private lotteries;
• 6.2% – horse racing and sports betting;
• 0.4% – bingo;
• 0,3% – LPM;
• 17.5% are engaged in illegal gambling.

Playing in unlicensed institutions and online casinos is recognised illegal gambling. It should be noted, that the number of members of illegal gambling has decreased over the past few years. In November 2012, 41% of the players played illegally. In 2015-2016 – only 17.5%.

Gambling addiction is believed to characterise 9.9% of the total number of players. More black people began to play – 19.8% in 2015-2016. The number of players over 25 years is growing. South African gambling helpline can be found on the corresponding page of the National Gambling Board.