Recommendations to combat illicit gambling include interventions such as issuing cease-and-desist warnings to illegal unlicensed foreign operators followed up by prosecution in SA courts. (Photo: iStock) 
More than 2,000 illegal gambling operators actively targeted South Africa in the 2023/24 financial year, according to a report by Yield Sec, a tech company that specialises in investigating the depth of illegal gambling markets across the globe.
“Illegal betting” is best defined by the Council of Europe Macolin Convention on the Manipulation of Sports Competitions: “Illegal sports betting” means any sports betting activity whose type or operator is not allowed under the applicable law of the jurisdiction where the consumer is located. If an online operator accepts bets from a consumer in a jurisdiction where the operator is not licensed, then this is “illegal” betting.
The National Treasury recently released a discussion paper, calling for a 20% national tax on the gross gambling revenue of all licensed and unlicensed online gambling activities, which the Treasury reckoned could add up to R10-billion to the fiscus.
Read more: Odds are National Treasury’s proposed 20% online gambling tax will fuel illegal operators
Commenting on the tax proposal, Garron Whitesman, founder of Whitesmans Attorneys and a leading expert in gambling law, said it is “constitutionally unacceptable in fact and in law and totally flawed in its logic”.
“It fails to recognise the clear jurisdictional boundaries of and limits on the national government on the regulation and taxation of gambling and betting in South Africa.
“Taken together with the National Gambling Board’s recent complete misstep in relation to the Supabets case, National Treasury’s actions raise serious constitutional concerns about fiscal centralisation.
“The National Treasury’s proposal is particularly concerning because, amongst other things, it proposes a punitive tax rate that is way out of kilter from any balanced approach to taxation of gambling activities.
“Imposing a national tax at this level will mean that operator licencees will be required to pay provincial betting tax, a national gambling tax, VAT at 15% on bets, corporate taxes, withholding taxes, employment taxes and more. We must also not forget the substantial BBBEE, upliftment and CSI contributions made by the industry.
“Business will become unsustainable for a meaningful part of the industry and lead to business closures and job losses not just for operators but many parties in the industry supply chain. The negative fallout will be massive,” he said.
What happens when you win on an illegal gambling site?
In South Africa, the National Gambling Act does address the forfeiture of unlawful winnings.
Winnings from gambling activities should not be paid to minors, an excluded person, or any other person who won the money in an unlawful gambling activity.
An excluded person is someone who is legally barred from participating in gambling activities. This typically refers to individuals who have been placed on an exclusion list – either by their own choice or by order of an authority – due to risk, vulnerability or misconduct.
Instead of making payments to any of the above, the casino or gambling company has to remit the winnings to the relevant gambling board to be held in trust, pending a decision.
The gambling board that has jurisdiction will then investigate the circumstances, and either deliver the winnings to the person who won them, if the board is satisfied that the gambling activity was lawful, and the winner was not a minor or excluded person at the time of the activity; or apply to the high court for an order declaring the winnings forfeit to the State.
Read more: ‘I cried for the first time because of gambling’: A 24-year-old’s struggle with addiction
Which are the illegal gambling sites to watch out for?
While the Yield Sec report flags more than 2,000 illegal gambling sites, a few are singled out:
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In some cases, the names of the illegal sites seem to have been chosen deliberately. For example, you might think that “springbok casino” was located in Springbok in the Northern Cape, and you would be very wrong.
It is only online, and inspection of the website shows that it is owned by Quadgreen NV, which is located in Curacao and is licensed by the Curacao Gaming Commission. The website is operated by another company called Enneagon, situated in London. The fine print on the website says that “Springbok Casino is restricted to individuals of legal age who are residents of jurisdictions where the use of Springbok Casino and its games are not prohibited by law. All Springbok casino games are void where prohibited by law.”
This seems pretty straightforward, but the use of the .co.za domain signals that the website belongs (or at least is registered) under South Africa’s jurisdiction – giving it a local identity, which tends to build trust for South African audiences. This is misleading, to say the least.
What steps can/should be taken?
In a presentation to Parliament, Sean Coleman, chief executive officer of the South African Betting Association (Saba), suggested the following interventions:
1. DNS blocking: This works by intercepting requests to specific domain names and preventing them from resolving to their actual IP addresses.
2. IP blocking and geo-fencing: These are standard tools that restrict access to unlicensed gambling sites based on a user’s geographic location
3. Deep packet inspection and layer-7 filtering: This goes beyond surface-level data by scrutinising the actual content of internet traffic to identify and block specific activities, such as access to unlicensed gambling sites.
4. Payment blocking and merchant code filtering: These are widely used to cut off the financial infrastructure supporting unlicensed gambling operators.
5. Domain seizure and sinkholing: Represent more assertive tactics in the fight against illegal online gambling. Rather than merely blocking access, authorities legally take control of offending domain names, redirecting users to official warning pages or controlled servers known as sinkholes. MColeman’s presentation included legal interventions such as issuing cease-and-desist warnings to illegal unlicensed foreign operators followed up by prosecution in SA courts of law.
Saba has already taken pre-emptive action by concluding memorandums of agreement with the South African Banking Risk Information Centre (Sabric), the National Gambling Board and the formation of a banking sector task force to focus on meaningful banking interventions.
Sabric offered the following advice to consumers:
Be extremely wary of websites offering “guaranteed wins”, or free credits with large sign-up bonuses. Gambling on websites not registered in SA is an illegal activity. Use your banking app or contact your bank to block all unauthorised gambling transactions.
Mukundu Budeli, an associate of the Free Market Foundation, recommends that advertising be constrained to protect children and young people.
“Rules should restrict gambling advertising in family‑oriented public spaces, ban gambling ads during programming with significant youth audiences, and require clear disclosures for influencer and celebrity endorsements,” she says.
Budeli says payment rails should be adjusted to reduce impulsive micro transactions.
“Financial service providers can offer optional spending limits, cooling‑off periods and real‑time warnings for accounts exhibiting gambling behaviour, while safeguards protect privacy and consent.
“Treatment and early intervention services need expansion: accessible helplines, community screening, school awareness programmes and employer‑linked support recognise problem gambling as a health issue requiring clinical and social responses rather than moral censure,” she said. DM