South African casino business profits could take a hit under new tax plans unveiled by the government. Nikki Forster, PricewaterhouseCoopers South African hospitality and gaming sector leader, called the extra 1 percent levy on gaming “extremely punitive” and added: “Profit margins will be squeezed significantly at casinos, particularly at smaller casinos.”
The country’s finance minister Pravin Gordhan put the new measure forward in February and it will see the industry taxed an extra 1 percent from April 1 next year. It’s less than the original proposal to tax anything above R25,000 at 15 percent and Forster added: “Undoubtedly it is a relief for the industry that the Government has scrapped plans to introduce a withholding tax as this would have had a negative effect on the sector, particularly high-stake gamblers.”
The gambling industry in South Africa does, according to the release from PwC, give a “significant contribution” to the state and any changes must be approached with “caution”. It’s the problem that some governments encounter when regulating the online gaming industry and could end up driving it into illicit hands.
In terms of future expansion, Forster recognized there’s “little room for further expansion” in the sector but thinks there will still be some investment in the market in the future.
After this they could do worse than look at regulating the country’s online gambling industry on a national basis. As it is, they’re in a similar situation to the U.S.A. with the industry operating on a state by state basis and only sports betting permitted. The hunger for gambling is definitely there and if regulated well the consumers would be see better protection whilst the government would make large amounts from the regulation.
