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South Africa To Regulate Money-Spinning Online Casinos

by Lisa Ugur, Tax-news.com, London

24 May 2001


According to a report in South Africa's Daily Mail & Guardian, the National Gambling Board of South Africa has paid an Australian firm, DGS, more than R900,000 to draft a framework for the regulation of Internet gaming.

The National Gambling Board has latched onto the fact that Internet gaming is a dollar-earning export business. It was in 1999 that the Board instructed the National Centre Cape Town for Academic Research to conduct an interim report into the implications, costs and opportunites offered by online casinos. It concluded that estimates of a 25%-33% share of a US$7bn industry for South African-based Internet gaming businesses within two years were not unreasonable, given the right policies. It also said it was not unreasonable to expect these earnings to be sustainable, provided businesses operating out of South Africa establish themselves before those of other credible and competing countries.

It is true that South Africa needs to compete globally and is no longer able to rely on mining – and other traditional sectors - as a sufficient means for doing this. E-commerce seems the natural solution, and the South African government is treating online gaming as any other form of online business. The 1999 report stated that the introduction of a sound regulatory environment for Internet gaming would lead to the development of South Africa as a thriving centre for e-commerce businesses generally. It also said that in considering the legalisation and regulation of Internet gaming, the South African government must think of itself as acting on behalf of "South Africa Incorporated", an enterprise which will be internationally competitive and successful.

The report recommended that South Africa must seek to make itself the jurisdiction in which Internet gaming providers operate and pay taxes in preference to key online gaming centres. It mentioned Antigua, Australia, Europe, the Channel Islands and 25 other jurisdictions in which online gaming is legal. Chris Fismer, chairman of the National Gambling Board of South Africa, said this week that the country is 'confronted with the fact that online gambling cannot be prohibited.' He was quoted in the press as saying: 'It is clear that the only viable option is to ensure that online gambling is regulated and monitored by the gambling board.'

Under the planned regulatory framework, South Africa's major casino operators could apply for a licence to offer online gambling services. The government would keep records of the activities of the online casino to impose taxes and other regulations. Regulatory proposals will be presented to Parliament later this year, and the new regulatory framework is expected to be finalised by 2002.


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