If you have flown from any of Mzansi\u2019s airports, you already have a visual representation of how deep the pockets of these digital companies go. So deep, in fact, that the original gambling industry is getting concerned. This concern has now escalated into what the South African Bookmakers\u2019 Association (Saba) is calling an \u201cexistential crisis\u201d, but not for the reasons you might think.<\/p>\n
To the moon<\/b><\/p>\n
Although the national gambling market is experiencing exponential growth, posting a healthy R1.14-trillion turnover in the 2023\/24 financial year, the licensed, regulated local industry is feeling severely undermined. The culprit? Rampant, illegal, offshore online operators.<\/p>\n
According to Saba CEO Sean Coleman, the core issue is that the \u201cexistential crisis lies in the scale and impact of illegal offshore operators that continue to target South African consumers unchecked\u201d.<\/p>\n
Saba\u2019s research illustrates a lopsided battle. Illegal offshore operators are estimated to account for about 62% of all online gambling activity in South Africa, leaving local licensed operators with just 38%. These illegal operators are \u201cdiverting over R50-billion in gross gambling revenue offshore annually\u201d.<\/p>\n
An estimated 16 million people are believed to have used these illegal platforms in the past year. They face significant risks, as any winnings from unlicensed sites can be forfeited to the state under section 16 of the National Gambling Act, and they have no protection against fraud or non-payment.<\/p>\n
\u201cEvery rand spent on these offshore sites is money that leaves the South African economy, undermining jobs, tax revenues and community investment supported by the legal betting industry,\u201d Coleman warns.<\/p>\n
While illegal operators attack from the outside, the legal industry is also reeling from an internal collapse. The traditional totalisator (tote) industry, which once was the pillar of local gambling, has in effect been annihilated.<\/p>\n
In the 1990s, the tote commanded 66% of all betting in the country. By 2024 that figure had collapsed to a mere 0.3%. This didn\u2019t happen in a vacuum. As the tote imploded, licensed bookmakers saw their sports betting gross gambling revenue grow 55.3% in the 2023\/24 financial year. The tote\u2019s decline was an active, multi-decade process.<\/p>\n
The tote\u2019s primary listed operator, Phumelela Gaming and Leisure, suffered from strategy failures and insular management, leading directly to its insolvency and delisting in 2020. The accelerant for its 2020 collapse was the removal of a 3% levy on bookmaker winnings (worth R77-million in 2017 alone).<\/p>\n
This levy, paid directly to the tote licensee, was cut to zero by the Gauteng MEC for economic development in 2019 after a Public Protector report deemed the payments \u201cunjustifiably benefited from public funds\u201d. Phumelela\u2019s successor, 4Racing, is now in a legal battle to reclaim this levy, estimated to be worth R500-million or more in arrears.<\/p>\n
Disruptor bookmakers then pioneered the open bet \u2013 a practice that allows them to offer punters the same dividend declared by the tote, but without contributing the stake to the official tote pool. This tactic, sanctioned by the Supreme Court of Appeal in 2005 as legally permissible, created a death spiral by shrinking the tote\u2019s liquidity and starving it of revenue. But the tote was simply not allowed to compete. While bookmakers used provincial licences to offer a diverse arsenal of high-margin products such as Lucky Numbers and Betgames, the tote was legally blocked from offering them.<\/p>\n
Gold Circle, a legacy tote operator, stated in its 2023 annual report that \u201crestrictions on the ability to introduce additional product types due to licensing requirements [were] particularly inhibiting\u201d.<\/p>\n
The challenge of offshore operations is complicated by the global, interconnected nature of these betting giants. The saga of Supergroup (SGHC), Betway\u2019s parent company, is a perfect case study.<\/p>\n
In July 2024, Supergroup began a two-phased retreat from the costly US market, closing its Betway sportsbook in nine states. The US operations (Digital Gaming Corporation) were a financial black hole, posting operational losses of $128-million across 2023 and 2024. This exit caused mass retrenchments that incurred up to $49-million in \u201credundancy costs\u201d. The company completed its full retreat by July this year, blaming volatile tax regimes.<\/p>\n
But here is the South African link: although Supergroup shed its US skin, its profitable core operations in Africa and other global markets remain. These operations are serviced by DigiOutsource, a sister company to Betway based primarily in Cape Town.<\/p>\n
DigiOutsource functions as a service hub, providing 24\/7 technical, customer and operational support for Supergroup\u2019s global brands. In essence, a centralised, lower-cost South African base is being used to provide the engine for the group\u2019s global and offshore operations.<\/p>\n
A solvable problem<\/b><\/p>\n
The regulatory environment is struggling to keep up. Although online gambling from foreign-based sites is unlicensed and unlawful in South Africa, enforcement has been \u2013 how does one say? \u2013 largely a failure.<\/p>\n
A recent judgment by the Supreme Court of Appeal in the case of Portapa v CASA (October 2025) did provide clarity, upholding the principle that it is unlawful for bookmakers in Gauteng to offer fixed-odds bets on casino games, including roulette, regardless of the stream\u2019s origin.<\/p>\n
According to Saba, the legislative foundation to act already exists, but it must be enforced. The association is urging a multipronged offensive to reclaim the R50-billion gross gambling revenue leaking offshore. It suggests using payment blocking and merchant code filtering to restrict the flow of funds \u2013 to that end, it has already established a task force with the South African Banking Risk Information Centre to tackle this.<\/p>\n
The association is also calling for domain name system blocking, internet protocol blocking and geofencing to restrict access to unlicensed sites, and for gambling regulators to issue cease-and-desist warnings to unlicensed foreign operators, followed by prosecution.<\/p>\n
Education for the nation<\/b><\/p>\n
The silver bullet, it would seem (because we\u2019re not going to outlaw gambling anytime soon), is to run public campaigns to help consumers distinguish between legal sites, which by law must display provincial gambling board logos and licence numbers, and illegal ones.<\/p>\n
Coleman insists the problem is solvable. \u201cWe have the data, the technology and the partnerships to act,\u201d he says. \u201cWe also have good legislation in place with legal case law precedent. What\u2019s needed now is alignment between regulators, the government, the banking sector and law enforcement to protect South Africans from illegal gambling harm.\u201d<\/p>\n
In Daily Maverick\u2019s dive into the student gambling problem, clinical psychologist Dr Keitumetse Mashego warned that when it came to gambling addiction, \u201cwhat we see is when someone cannot make sound decisions, meaning that even when they\u2019re losing, they keep going back\u201d.<\/p>\n
She added: \u201cGambling is so accessible now, on the phone and TV. The use of influencers\u2026 they are the face of betting, and it\u2019s the same as how druglords use people\u2026 the influencers are being used by these companies to lure people in.<\/p>\n
\u201cPeople are unemployed, people don\u2019t have money, and the cost of living is so high, so people are always lured into wanting quick fixes or quick money.\u201d DM<\/b><\/p>\n
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.<\/p>\n
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