Could South Africa’s Gambling Reforms Drive Bettors Offshore?

During the COVID-19 lockdowns, South Africa learned a difficult lesson about consumer behaviour. Banning the legal sale of tobacco and alcohol did not eliminate demand. Instead, illicit markets flourished, a challenge the country is still grappling with years later. As lawmakers prepare the biggest overhaul of online gambling laws in South Africa in nearly two decades, one question deserves careful consideration: could history repeat itself?

South Africa is entering a defining period for gambling policy. Parliament, the national regulator, National Treasury and the courts are all reshaping the rules at once, and the direction of travel points toward tighter control over what licensed operators may offer online, and how heavily they are taxed. Most would agree with the goals behind this shift. Protecting consumers, reducing gambling-related harm and strengthening enforcement against unlicensed operators are legitimate and necessary aims, and the social costs of a poorly governed market are real. A recent submission to Parliament on gambling reform warned that students are gambling their allowances and that low-income households are spending disproportionate shares of income on betting ¹. A 2026 survey of South African online gamblers found that a majority, around fifty-seven percent, had sacrificed essentials such as groceries to fund betting, and that almost a third had borrowed money to gamble ².

So the case for firm regulation is strong. But there is a separate question that any serious reform of online gambling laws in South Africa should confront directly. If certain online betting products are restricted or priced out of the licensed market while consumer demand for them persists, where does that demand go? This is not an argument against regulation. It is an argument for designing regulation with consumer behaviour in mind, informed by a policy experiment that South Africa has already run.

Where online gambling laws in South Africa stand today

The framework rests on the National Gambling Act of 2004. Under section 11 of that Act, interactive games, the kind of casino-style play usually associated with slots, roulette and card games online, are prohibited unless authorised by national legislation. Because no interactive gambling licences have ever been issued, online casino gambling is effectively banned in the country ³. The one lawful route into remote play is online betting offered by a provincially licensed bookmaker, mainly on sports and horse racing, which the National Gambling Act treats as a bet on an uncertain event rather than an interactive game ³. National Gambling Board data shows how large this market has become: roughly R1.5 trillion was wagered in the 2024/25 financial year, up more than thirty percent year on year, with betting accounting for about three-quarters of that turnover ⁴.

The intended fix has been stalled for years. The National Gambling Amendment Act, which was designed to regulate interactive gambling, was assented to in 2008 but never brought into force by proclamation ⁵. Two legislative tracks are now trying to close that gap. The Democratic Alliance’s Remote Gambling Bill (B11-2024) proposes a national licensing system for remote gambling, along with player protections such as an eighteen-year minimum age, a self-exclusion scheme, deposit limits, a prohibition on operators extending credit, and stricter advertising rules ⁵, ⁶. Separately, the Minister of Trade, Industry and Competition is reviving a long-delayed National Gambling Amendment Bill to strengthen the regulator and give national government clearer powers over illegal online gambling and advertising ². Alongside the legislation, National Treasury has proposed a twenty percent national tax on the gross gambling revenue of online gambling, a point this article returns to below ⁷, ⁸.

Running alongside the reform debate is an enforcement push that pulls in the opposite direction. In October 2025, the Supreme Court of Appeal ruled in Portapa (Pty) Ltd t/a Supabets v Casino Association of South Africa that, under the Gauteng Gambling Act, a bookmaker licensed in that province may not offer fixed-odds bets on roulette, because roulette is not a sporting event ⁹. The National Gambling Board welcomed the judgement and argued that its implications extend to bookmakers across the whole country, calling on all operators to stop offering casino-style games as betting contingencies and warning that winnings from unlawful interactive gambling can be confiscated by order of the High Court ¹⁰.

It is worth being precise about the scope here, because it goes to the heart of the reform question. Legal commentators, and the South African Bookmakers’ Association, contend that the ruling is narrow and specific to Gauteng’s wording, and that the Board’s reading of it as a nationwide prohibition on all such products is contested and, in the view of one leading practice guide, in tension with the constitutional division of powers ³, ¹¹, ¹². In other words, South Africa has not simply “banned” these online betting products. It is actively debating whether to license them into a regulated market or to enforce and tax them out of it. That is exactly the kind of fork in the road where consumer behaviour deserves close attention.

A South African precedent: when legal supply was switched off

The country does not need to look abroad for a case study. During the COVID-19 lockdowns, South Africa banned the sale of tobacco for roughly five months, from 27 March to 17 August 2020, and imposed a series of bans on the sale of alcohol ¹³. The stated rationale was public health, easing pressure on hospitals and reducing risk. Demand, however, did not disappear.

Research by the University of Cape Town’s Research Unit on the Economics of Excisable Products found that the overwhelming majority of continuing smokers, around ninety-three percent, were still able to buy cigarettes despite the sales ban, paying a premium of roughly two hundred and fifty percent over pre-lockdown prices ¹³, ¹⁴. The unit’s peer-reviewed study concluded that the ban did not stop sales but instead further entrenched an already large illicit market, and that it inadvertently benefited manufacturers who had been disproportionately involved in illicit activity in the first place. The researchers described this plainly as an example of the unintended consequences of a temporary sales ban ¹³. Illicit cigarettes, which had occupied an estimated thirty to forty percent of the market before the pandemic, were found to make up roughly sixty percent of the market by 2021 ¹⁵.

The alcohol picture rhymed with it. Industry-commissioned research placed the value of South Africa’s illicit alcohol market at more than twenty billion rand and reported that demand during the bans drew more players into that market and pushed illicit trade to become more sophisticated ¹⁶. A separate survey found that a majority of respondents, around fifty-five percent, bought alcohol illegally during the restrictions, while home brewing rose to the point where the price of pineapples, a common fermentation ingredient, increased ¹⁷.

The lesson is not that gambling is the same as smoking or drinking. It plainly is not. The lesson is narrower and more useful. When demand for a product remains but the legal supply is cut off, a share of that demand can migrate into channels that are harder to see, harder to tax and harder to police. That is a general observation about consumer behaviour, and it is one South Africa has lived through recently.

British American Tobacco and the cost to legal business

The long tail of that experience is still visible. In January 2026, British American Tobacco South Africa announced that it would close its Heidelberg manufacturing plant in Gauteng by the end of the year, ending more than fifty years of local cigarette production and placing around two hundred and thirty jobs at risk ¹⁸. The company attributed the decision to the illicit cigarette trade, which it estimated at roughly seventy-five percent of the South African market, leaving the plant running at only about thirty-five percent of capacity ¹⁸. It noted that its sales volumes had fallen by around forty percent since 2020 and pointed to the COVID-era tobacco sales ban, a ban the courts later found to be unconstitutional, as a turning point from which the legal market never fully recovered ¹⁹.

Again, the analogy has limits and should not be overstated. Gambling operators are not cigarette manufacturers, and the two industries carry very different social profiles. What the Heidelberg closure illustrates is a mechanism rather than a moral equivalence: once an illicit market becomes entrenched and enforcement fails to contain it, legitimate, tax-paying, job-creating businesses can be squeezed out, and the state can be left with less revenue and less oversight, not more. That is the outcome regulation usually exists to prevent.

Could restricting online betting products push players offshore?

This brings the question back to online gambling. If popular online betting products were removed from South African betting sites through enforcement, or made uneconomic on licensed platforms, the demand for them would not simply vanish overnight. Broadly, three things could happen, and it is worth presenting them as possibilities rather than predictions:

• Some people may stop playing those products altogether, which would be a genuine harm-reduction gain.
• Some may switch to other products that remain legal on licensed betting sites.
• Some may seek the same products on offshore gambling sites that are not licensed in South Africa.

There is reason to take the third possibility seriously, and the clearest warning comes from the tax debate. National Treasury’s proposed twenty percent national levy would sit on top of existing provincial taxes of six to nine percent and VAT, pushing the effective rate on licensed operators toward forty percent by industry estimates ⁸, ²⁰. Tax specialists have cautioned that this could make licensed South African operators uncompetitive and drive players toward unregulated offshore platforms, pointing to Kenya, where a similar twenty percent wagering levy prompted operators to withdraw and saw tax revenue fall rather than rise ²⁰, ²¹. There is a contradiction at the centre of the proposal that sharpens the risk: because interactive gambling remains unlawful, taxing its revenue would draw offshore and illegal supply into the tax net while the licensed market absorbs the cost, blurring the line between lawful and unlawful play ²¹. The migration risk is not hypothetical either. The Minister of Trade, Industry and Competition has told Parliament that the National Gambling Board’s database already lists around ninety illegal, offshore-registered gambling websites serving South Africans ²², and the regulator concedes that shutting them down is a constant game of relocation, with operators changing internet addresses as fast as sites are blocked ⁴.

Why offshore sites raise the stakes

If a portion of demand does migrate, the destination matters a great deal, because offshore and illegal gambling websites change the risk profile for consumers and for the state. The concerns cluster into four areas:

• Consumer protection. The National Gambling Board warns that unlicensed operators do not pay out winnings reliably and that players who use them have no legal protection or recourse when a withdrawal is delayed, an account is frozen or a dispute arises ²³. Licensed South African betting sites, by contrast, are accountable to provincial licensing authorities that can act on complaints.
• Tax and revenue. Money spent on offshore sites contributes nothing to the domestic fiscus. Where the licensed market wagered around R1.5 trillion last year and feeds provincial and national coffers, offshore turnover flows straight out of the country and beyond the reach of the revenue service ⁴, ²².
• Enforcement. Offshore operators are difficult to reach precisely because they sit beyond national jurisdiction. The regulator is pursuing internet-level blocking with the Department of Communications and internet service providers, but the Internet Service Providers’ Association has cautioned that such blocking is easy to bypass with a VPN and should proceed only within a clear legal framework that respects constitutional rights ².
• Responsible gambling. Licensed operators are required to offer tools such as self-exclusion and deposit limits and to carry responsible-gambling messaging. Many offshore sites operate under far looser standards, and under South African law any winnings derived from unlawful gambling may be declared unlawful proceeds and forfeited to the state ²³.

Put together, these mean that a player who moves offshore typically ends up with less protection, not more, while the country loses both revenue and visibility.

The case for keeping players inside the licensed market

None of this argues for a permissive free-for-all. It argues for a specific design principle: effective regulation should reduce harm while minimising the incentives for consumers to migrate to unlicensed alternatives. Enforcement against offshore operators and a licensed market that remains a credible option for existing demand are complements, not opposites. The National Gambling Board’s own enforcement drive, including a verified operators portal that lets the public check whether a site is licensed, is built on the same logic of steering players toward regulated, accountable operators ²³.

This is also where the tax debate and the product debate meet. Analysts reviewing Treasury’s proposal have argued that, without a coherent national framework for interactive gambling and stronger enforcement, higher costs on compliant operators risk shrinking the domestic market and accelerating the shift offshore, weakening a provincial system that has held for nearly thirty years ²⁰, ²¹. The through-line is consistent. The more attractive and trustworthy the licensed market is, and the harder the unlicensed market is to reach, the smaller the share of demand that leaks offshore. Even Treasury frames its proposed tax primarily as a tool to discourage problem gambling rather than to raise revenue ⁸, which is precisely why its designers should want to avoid an outcome that pushes vulnerable players toward operators who answer to no one.

The challenge for lawmakers

The COVID-19 bans were an unusually clean natural experiment, and their central finding is difficult to ignore: prohibiting the sale of a product for which demand remained did not eliminate that demand, but redirected a large part of it into illicit channels, with lasting costs that are still being counted years later. That does not prove the same thing would happen with online betting products, and it should not be read that way. Gambling is a different product with a different social profile, and reasonable people can weigh the trade-offs differently.

What the experience does illustrate is why consumer behaviour belongs at the centre of the design of online gambling laws in South Africa, rather than as an afterthought. The goal of protecting South African consumers is best served by keeping as many of them as possible inside a well-regulated, well-enforced market, where operators can be held to account, revenue can be collected and harm can be actively managed. The real challenge for lawmakers is therefore not simply whether to restrict certain products, but how to do so in a way that reduces harm without handing a larger share of the market to operators who answer to no one. That is a harder question than a straight yes or no, and it is the one worth getting right.

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Sources and references

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2. ITWeb, “ISP blocking sought as gambling Bill remains stalled” (2026), including Yazi survey data on gambling-related financial harm and ISPA’s position on website blocking: https://www.itweb.co.za/article/isp-blocking-sought-as-gambling-bill-remains-stalled/JN1gP7OAEn1qjL6m
3. Chambers and Partners, “Gaming Law 2025 – South Africa” (practice guide): https://practiceguides.chambers.com/practice-guides/gaming-law-2025/south-africa
4. Moneyweb, “Regulators move to curb illegal online gambling and rampant ads” (interview with NGB acting CEO Lungile Dukwana, October 2025): https://www.moneyweb.co.za/moneyweb-podcasts/moneyweb-midday/regulators-move-to-curb-illegal-online-gambling-and-rampant-ads/
5. The Citizen, “‘Let’s make gambling safer’: New bill targets unfair online gambling practices” (3 December 2024): https://www.citizen.co.za/news/south-africa/lets-make-gambling-safer-new-bill-targets-unfair-online-gambling-practices/
6. Remote Gambling Bill (B11-2024), full text, hosted by the National Gambling Board: https://www.ngb.org.za/wp-content/uploads/2024/05/NGB4_Remote_Gambling-Bill.pdf
7. Bloomberg, “South Africa Weighs 20% Tax on Online Gambling to Curb Risks” (25 November 2025): https://www.bloomberg.com/news/articles/2025-11-25/south-africa-weighs-20-tax-on-online-gambling-to-curb-risks
8. National Treasury, “Discussion Paper: National Gambling Tax” (November 2025): https://www.treasury.gov.za/comm_media/press/2025/Discussion%20Paper%20-%20National%20Gambling%20Tax.pdf
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10. National Gambling Board, “NGB welcomes the Supreme Court of Appeal ruling on the bookmakers offering roulette games and casino games” (29 October 2025): https://www.ngb.org.za/latest-news/national-gambling-board-welcomes-the-supreme-court-of-appeal-ruling-on-the-bookmakers-offering-roulette-games-and-casino-games/
11. Mooney Ford Attorneys, “No, the SCA Has Not Banned Online Gambling: What the Portapa v CASA Judgment Actually Decided” (November 2025): https://www.mfp.co.za/company-corporate-compliance/no-the-sca-has-not-banned-online-gambling-what-the-portapa-v-casa-judgment-actually-decided/
12. Polity, “Supreme Court of Appeal clarifies boundaries between casino and bookmaker licences in the Gauteng province” (14 November 2025): https://www.polity.org.za/article/supreme-court-of-appeal-clarifies-boundaries-between-casino-and-bookmaker-licences-in-the-gauteng-province-2025-11-14
13. Van der Zee, Filby and Van Walbeek, “When Cigarette Sales Suddenly Become Illegal: Evidence From an Online Survey of South African Smokers During COVID-19 Lockdown,” Nicotine & Tobacco Research (2022), via PubMed: https://pubmed.ncbi.nlm.nih.gov/35511202/
14. “Tackling illicit tobacco during the COVID-19 pandemic,” Tobacco Induced Diseases (2021): https://www.tobaccoinduceddiseases.org/Tackling-illicit-tobacco-during-COVID-19-pandemic,137086,0,2.html
15. UCT News, “South Africa’s illicit cigarette trade is booming” (16 April 2026): https://www.news.uct.ac.za/article/-2026-04-16-south-africas-illicit-cigarette-trade-is-booming
16. News24, “SA’s illegal booze market now worth more than R20 billion, study claims” (28 May 2021): https://www.news24.com/business/companies/retail/sas-illegal-booze-market-now-worth-more-than-r20-billion-study-claims-20210528
17. “Alcohol consumption patterns, suppliers and online alcohol marketing: Before and during COVID-19 alcohol bans,” South African Journal of Science (2023): https://sajs.co.za/article/view/14543
18. Daily Maverick, “British American Tobacco stubs Heidelberg plant as illicit smokes snuff 230 jobs” (15 January 2026): https://www.dailymaverick.co.za/article/2026-01-15-british-american-tobacco-stubs-heidelberg-plant-as-illicit-smokes-snuff-230-jobs/
19. Cape Argus, “BATSA’s closure of Heidelberg Plant: Iconic brands face illicit trade crisis” (20 January 2026): https://capeargus.co.za/weekend-argus/2026-01-20-batsas-closure-of-heidelberg-plant-iconic-brands-like-pall-mall-and-peter-stuyvesant-face-illicit-trade-crisis/
20. BusinessTech, “Major new tax could backfire badly for South Africa” (7 April 2026): https://businesstech.co.za/news/government/855829/major-new-tax-could-backfire-badly-for-south-africa/
21. IOL / Forvis Mazars, “Understanding South Africa’s proposed online gambling tax” (April 2026): https://iol.co.za/personal-finance/financial-planning/2026-04-04-understanding-south-africas-proposed-online-gambling-tax/
22. Parliamentary Monitoring Group, written reply by the Minister of Trade, Industry and Competition on the identification and blocking of illegal gambling websites (2025): https://pmg.org.za/question_replies/15/ ; see also IOL / Cape Argus, “Trade Minister Parks Tau highlights the rise of 90 illegal online gambling in South Africa” (20 July 2025): https://iol.co.za/capeargus/news/2025-07-20-trade-minister-parks-tau-highlights-the-rise-of-90-illegal-online-gambling-in-south-africa/
23. Sowetan / National Gambling Board, “Protect yourself from illegal online gambling” (30 June 2026): https://www.sowetan.co.za/news/2026-06-30-protect-yourself-from-illegal-online-gambling/

Additional background: Moneyweb, “Treasury’s 20% online gambling tax stirs controversy” (January 2026): https://www.moneyweb.co.za/mymoney/moneyweb-tax/treasurys-20-online-gambling-tax-stirs-controversy/