Urgent Need for a Modernization of South Africa Gambling Law
Following the restructuring of gambling regulations within South Africa during the 1960s, the country has failed to build an efficient monetization model for the modern age. With the surge in popularity of online gambling across South Africa, and indeed all of Africa, the country must integrate these new mediums of casino and sportsbook gambling into their legal framework, or be at risk of massive revenue losses as customer turn to unlicensed alternatives.
Gambling laws in South Africa have reached a point where the country is handicapping the benefits it can win in terms of tax revenues. Unlicensed operators have eclipsed licensed gambling services, and a desperate need for modernisation of the current legal framework is needed. ©Aldk/Pixabay
The ongoing rise of unlicensed online gambling in South Africa is derailing the chances of legal entities from growing their customer base. This is due to the difficult restrictions placed upon them and the massive cost of navigating the regulations is leading to a worse customer experience for players at these unlicensed entities. South Africa has a long history associated with gambling, having regulated the activity as far back as 1670. It remains one of the largest gambling economies on the continent, but poor enforcement of regulations and laws is threatening its existence like never before.
The existing legal framework is grounded in decades of unchanged legal documentation; this inflexibility is a nightmare to navigate for new entities trying to disrupt the legacy approach to gambling. Online gambling is at the precipice of this problem, with regulators and lawmakers alike unable to find an adequate solution that will enable the industry to move past its outdated legal restrictions.
At the core of this issue remains the fact that unless the government seeks a new and future-proof way to control their domestic gambling market, huge amounts of revenues will be lost in tax receipts as gamblers seek unlicensed alternatives that disregard local laws in favor of better customer experiences, much similar to the online gambling status quo in LatAm. There are several approaches the government could take to tackle these issues, some of which we will unpack in the following sections.
Status Quo of Gambling in South Africa
The history of gambling in South Africa has not always been the most welcoming for punters, before the first draft of legislation was tabled some 350 years ago, heavy penalties were inflicted on those who broke the laws of the land. But during this time the first legislations were drawn up, and a formalization for how the country’s legal system would deal with wagering and games of chance was realized.
This system of regulation was relatively stable for the most part and it wasn’t until the late 1960s that problems regarding the regulation of new sports began to arise. When horse racing was introduced and the sport began to boom in popularity, previously outdated laws on gambling activities that would be permitted no longer made sense for this new phenomenon. Since that time, unlicensed gambling businesses have been cropping up all over the country and in modern times they occupy a far larger corner of the market than their licensed counterparts.
With the emergence of the internet and technology in the early 2000s, local gambling businesses began to move their operations online. However, according to the local regulations this was not strictly allowed, and the prohibition of all forms of the online casino still officially exists today. Despite this, unlicensed operators continue to circumvent these legislations and offer their services to hundreds of thousands of customers with state-of-the-art online platforms that completely disregard official regulations in South Africa.
The lack of motivation from local law enforcement to confront this huge underground industry is the reason it still continues to flourish to this day. Lawmakers and officials working for the Casino Association of South Africa are only able to highlight the issue, and yet not be able to bring about any real-world actions to tackle its surge in popularity. Most of these businesses openly operate in public areas and hire security teams to watch out for police and government regulatory officials.
Looking at the statistics it further highlights how this industry is going. Young South Africans report they are more interested in gambling than ever before, with sports betting on European football is one of the biggest revenue drivers in the market. Despite this growth in popularity, revenues generated from tax-paying, fully licensed, and legal gambling businesses have dropped by 2% in the past year. The shortfall can only be attributed to a mass migration of the customer base to unlicensed platforms that provide the user experience they are looking for.
A New Path Forward in the South Africa Gambling Debate
It is clear that a major shift in policy and attitudes is needed if South Africa is to effectively manage the situation of online gambling within its territory. As history tells us, it is almost impossible to fight the forces of economics when they are so overwhelmingly in favor of one particular operating model. The culmination of citizens’ lack of concern for committing the minor crime of using an unlicensed betting company and law enforcement dis-interest in tackling the activity means the situation is unlikely to resolve itself. Therefore legalization of the gambling landscape seems like the only way forward.
There are calls in South Africa for the government to adopt a British-style model for dealing with the growth of casino-based gambling. This system has proven itself to be an effective driver of revenues, a great way to clean up the nefarious parts of the industry and enable responsible gambling initiatives to be properly integrated into the industry.
Ultimately, a consistent and strong message is now needed from the regulators in South Africa. It makes no sense for the government to miss out on tax revenues from an underground industry they have no interest in stamping out. Therefore legalization of online gambling and the implementation of a strong regulatory body with experienced leaders will help South Africa charter a new path forward in the evolution of its domestic industry.
