The Finance Minister of South Africa confirmed that starting April 2012, a new fifteen percent withholding tax on all winnings over ZAR 25,000 (EUR 2,200) will take effect. Gambling industry executives, industry associations as well as casual gamblers expressed dismay, anger and fear after the Finance Ministry confirmed the tax increase, which was first mentioned during Minister Pravin Gordhan’s annual Budget Speech. The new tax hike, in conjunction with strict South African gambling laws, may cause massive job cuts and severely damage the country’s gaming sector.
Lisa Haines, the director of South Africa’s biggest sportsbook, SporsBet, called the new tax ‘ridiculous’, as players already pay a six percent provincial gambling tax as well as the VAT. The CEO of Casino Association of South Africa, commented that this third and newest tax was put forward without any consultation with industry players, as well as approval of Parliament. He also noted that the government failed to reply to any letters sent by the Casino Association, which included scientific data and expert opinions of leading industry insiders. The poker industry is likely to be hurt as well, with South African poker rooms and tournament directors discuss different approaches of dealing with the new tax increase.
South Africa’s horse racing industry is unlikely to survive the impact of the new tax as gamblers who regularly bet on sports in South Africa will begin using foreign sportsbooks. Rian du Plessis, CEO of Phumelela, one of country’s largest horse racing organizations, issued an open letter asking to meet the Finance Minister. He is certain that once Mr. Gordhan sees the unintended damage the tax hike will have on horse racing as well as the potential loss of thousands of jobs, he is sure the Finance Minister will find an acceptable solution for all parties involved.
The Finance Minister agreed that the tax will be considered a controversial measure saying – ‘Despite the obvious merits of this argument, I expect vigorous debate during the Parliamentary process,’ and added: “I hope it will assist in discouraging excessive gambling.’