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Speaker 1: Now, this is one of those stories where the numbers

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Speaker 1: are just huge, but the real impact is much much

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Speaker 1: closer to home. Online gambling in South Africa has exploded,

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Speaker 1: and we're talking about an industry that's worth trillion in turnover.

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Speaker 1: It's happening quietly, it's happening on phones at all hours,

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Speaker 1: often out of sight. And now the government once in

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Speaker 1: a proposed twenty percent national tax on online gambling could

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Speaker 1: bring in more than ten billion round a year, which

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Speaker 1: of course is money that the fiscus desperately needs. Here's

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Speaker 1: the catch. How do you actually tax something that's digital,

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Speaker 1: that's borderless, in many cases not even legal. If you

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Speaker 1: push too hard, do you then risk driving that entire

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Speaker 1: industry offshore where it becomes even harder to regulate and

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Speaker 1: even easier to abuse. So is this a smart move

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Speaker 1: to regulate what is a booming sector or is it

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Speaker 1: a very very risky play that could back fire. To

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Speaker 1: unpack it with us, we have Deva Koliani Moodley, who

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Speaker 1: is the senior manager at forvest Maazaars, as well as

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Speaker 1: Anthea Subia, who is head of tax A very very

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Speaker 1: good morning.

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Speaker 2: Morning.

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Speaker 1: That's scared are both of you there? I just wanted

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Speaker 1: to check and make sure it's just me.

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Speaker 2: DEVS.

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Speaker 1: Oh is it just you? Devs?

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Speaker 2: All right?

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Speaker 1: Good, all right, Dev, Well, we are very very happy

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Speaker 1: to chat to you this morning. Can we start simple?

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Speaker 1: When we say a twenty percent tax on gross gambling revenue?

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Speaker 1: What does that actually mean in real terms for operators

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Speaker 1: and then for the rest of us that are that's listening.

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Speaker 2: So essentially, it's a twenty percent tax on the amount

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Speaker 2: that the operator keeps after paying out the winnings. It's

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Speaker 2: not the total amount that is waged. So if you

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Speaker 2: wager one hundred ran, for example, and eighty ran is

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Speaker 2: paid back to the player, it the tax is only

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Speaker 2: going to apply to.

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Speaker 1: The twet Okay, I got you. The number that really

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Speaker 1: jumps out here is one point five trillion in turnover?

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Speaker 1: Is that really how big online gambling has become? And

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Speaker 1: have policies makers maybe waited a little bit too long

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Speaker 1: to catch up.

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Speaker 2: So it's exploded over the last few years. So last

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Speaker 2: year it was estimated to be one point five trillion.

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Speaker 2: I think the approach and the ecosystem of online gambling

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Speaker 2: is a lot bigger than anybody anticipated. So there's a

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Speaker 2: lot of moving parts involved. So the proposal has come

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Speaker 2: in now and it's subject to comments and it's getting

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Speaker 2: pushed back as well.

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Speaker 1: Just explain to us ordinary folk that's listening, and you

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Speaker 1: say that that ecosystem of online gambling is quite complex.

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Speaker 1: Just pint us a little bit of a picture of

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Speaker 1: some of the things that we should be keeping in

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Speaker 1: mind with this ecosystem.

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Speaker 2: So currently gambling is taxed at a provincial level at

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Speaker 2: a certain percentage, So each province puts in a specific

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Speaker 2: percentage on the actual gambling operators. On top of that,

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Speaker 2: Treasury is proposing the twenty percent. But also what needs

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Speaker 2: to be kept in mind is the that that the

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Speaker 2: operators also pay. So there's a lot of moving parts involved,

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Speaker 2: and I think that from a South African perspectives, focus

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Speaker 2: needs to now be on how is it going to

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Speaker 2: be implemented, What is going to be implemented, and the

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Speaker 2: cooperation from the actual operators, the financial institutions and the

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Speaker 2: pay systems.

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Speaker 1: We're chatting to devil Keani Moodley, who is a senior

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Speaker 1: manager at Fourbst Bazaars. You highlighted in the opinion piece

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Speaker 1: a critical fork in the road taxing operators versus taxing

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Speaker 1: t actions. Can you unpack that for us a little

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Speaker 1: bit and tell us a little bit about which one

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Speaker 1: is more realistic in a country like South Africa.

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Speaker 2: From a complexity perspective, taxing our operator simplicity, it might

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Speaker 2: be easier to implement regulations and systems and put systems

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Speaker 2: in place to tax the actual operator as opposed to

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Speaker 2: the individual transactions. So each bet that goes across we

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Speaker 2: need to just bear in mind as well. They're currently

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Speaker 2: individuals to assess an extent maybe tax on betting, whether

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Speaker 2: they're considered to be trading or not. But the operators

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Speaker 2: themselves are different tax payers in their own right. So

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Speaker 2: I think what's going to be key is how is

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Speaker 2: it going to be implemented. Is going to be implemented

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Speaker 2: at operator level at the standard tax rate? Is treategyly

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Speaker 2: going to impose a withholding tax or is it not

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Speaker 2: going to be on their glass gambling revenue? More from

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Speaker 2: my turnover perspective, that is a bit unclear at the.

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Speaker 1: Moment which is more realistic for a country like South Africa.

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Speaker 2: So it just depends. I think when you're implementing a tax,

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Speaker 2: you can't look at it in isolation, so you can't

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Speaker 2: just look at the gambling industry in isolation. You need

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Speaker 2: to look at the entire tax ecosystem to see what

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Speaker 2: the ripple effects are going to be. And with any

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Speaker 2: tax on paper, it's twenty percent for the operators, which

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Speaker 2: seems simple on paper, but in reality that could trickle

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Speaker 2: down to the individual tax payers in the term in

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Speaker 2: the form of sort of pricing, et cetera. That all

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Speaker 2: needs to be considered.

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Speaker 1: I have a listener Alan asking a very interesting question.

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Speaker 1: He is saying, if you get taxed on profits, can

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Speaker 1: you also upset the losses?

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Speaker 2: So it just depends profits from specific gambling or profits from.

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Speaker 1: Gab industries from gambling.

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Speaker 2: So that it would depend on the legislation in place

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Speaker 2: at the time and what it's considered.

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Speaker 1: I want to ask a question about just how enforceable

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Speaker 1: all of this is. I mean, if banks or payment

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Speaker 1: platforms are expected to withhold this tax, is that actually

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Speaker 1: enforceable in this digital world of crypto and official betting

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Speaker 1: and digital wallets. I mean, this is really a borderless territory.

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Speaker 2: So that's going to be the very tricky part. From

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Speaker 2: the Treasury and Sara's perspective, They're going to need to

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Speaker 2: have cooperation and buy in from the license operators, the banks,

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Speaker 2: the payment platforms. It needs to be something that's agreed

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Speaker 2: on and cooperated with from all individuals, not something that

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Speaker 2: comes down as a heavy hammer.

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Speaker 1: I know, we've also seen this play art in Kenya.

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Speaker 1: Tax goes up and the operators actually leave and then

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Speaker 1: the revenue. So how much of how delicate is the situation,

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Speaker 1: I mean, how much of the ball is actually in

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Speaker 1: the operator's court?

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Speaker 2: Well, I think again it's going to have to involve

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Speaker 2: a lot of conversations and a lot of open mindedness.

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Speaker 2: Our focus and treasury should prioritize learning from other other

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Speaker 2: countries and the other countries' experiences and focus on designing

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Speaker 2: an effective tax system. The debate and the discussion should

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Speaker 2: be around focusing on how to address the local adm

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Speaker 2: and how to address the interaction between your provincial rates

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Speaker 2: that are currently in place versus this national rate that

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Speaker 2: they want to put in place, and how do we

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Speaker 2: enforce this so that it doesn't take away from the

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Speaker 2: good that it is intended to create.

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Speaker 1: Yeah, because for me, it seems like that is all

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Speaker 1: kind of in the space of those unintended consequences, right,

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Speaker 1: Just thinking about human behavior. You know, people don't want

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Speaker 1: to pay tax, So does that mean it could also

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Speaker 1: push users then towards platforms that are maybe not regulated.

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Speaker 1: You know, are we potentially making the problem worse because

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Speaker 1: there's a big social ills component I suppose when it

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Speaker 1: comes to gambling and online gambling, and while revenues are increasing,

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Speaker 1: what is also increasing is potentially the social ills and

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Speaker 1: challenges that come along with it as well, because it

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Speaker 1: says something else about the society that you're in. So

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Speaker 1: what is your take on the delicateness of the situation

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Speaker 1: in terms of, you know, walking that fine line between

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Speaker 1: wanting to raise money for the fiscurse but also wanting

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Speaker 1: to make sure that these things happen and are regulated

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Speaker 1: and not putting people at risk.

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Speaker 2: You know what, it's a very real risk the moment

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Speaker 2: you try to collect more revenue, the gamblers are going

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Speaker 2: to go off to, like you said, the illegal means,

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Speaker 2: and that often is offshore. But I think what is

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Speaker 2: key here is enforcement. How are you going to enforce it?

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Speaker 2: How are you going to create a policy that doesn't

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Speaker 2: allow for that and also benefits and helps the harms

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Speaker 2: that the industry does.

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Speaker 1: Cause for people who are listening. I mean, what do

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Speaker 1: you think of the most important factors that people should

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Speaker 1: be considering as we are looking at at this kind

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Speaker 1: of new proposed online gambling tax. What do you think

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Speaker 1: ordinary South Africans should be considering as we're going through this.

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Speaker 2: So, I think what you need to consider is accessibility.

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Speaker 2: From an individual perspective, if you are a gambler or

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Speaker 2: looking at going down that avenue, it's whether it is

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Speaker 2: going to benefit you from are you winning the amount

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Speaker 2: you winning? Is that actually adding to your household income

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Speaker 2: as much as you think? It is also causing more harm?

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Speaker 2: And then from an implementation perspective, again, it's enforcement. We

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Speaker 2: need to make sure that the enforcement gap closes from

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Speaker 2: the real risk that gambling imposes.

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Speaker 1: Is online gambling completely legal, so it's next.

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Speaker 2: Online betting through licensed bookmakers is legal and that's where

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Speaker 2: the most activity is. But online casino style gambling is

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Speaker 2: still illegal. But this happens anyway, and it's often happening offshore.

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Speaker 1: I mean, this just seems very messy all in all.

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Speaker 1: Later alone, to kind of it almost feels like the

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Speaker 1: sector needs to be cleaned up a little, but before

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Speaker 1: you can actually start taxing it. Because I mean, if

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Speaker 1: we in this blurred gray space, how do you how

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Speaker 1: do you regulate? How do you tax?

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Speaker 2: I think it's the same with any sort of sector

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Speaker 2: of this nature. It's the same with the alcohol sector

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Speaker 2: as well, because you also have the illegal alcohol traders

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Speaker 2: that you need to sort of regulate and get control over.

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Speaker 2: So we've got to start somewhere, and I think this

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Speaker 2: is where Treasury has identified it because it is massive

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Speaker 2: and this is the initial step. It is a discussion,

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Speaker 2: it's open for comments, et cetera. So hopefully where we

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Speaker 2: do land is somewhere positive that works for all parties involved.

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Speaker 1: And Devi's if you were advising Treasury directly, what is

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Speaker 1: the one thing that you would say to them that

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Speaker 1: they absolutely have to get right for this to work.

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Speaker 2: Enforcement. I think enforcement is key. I think you need

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Speaker 2: to understand all parts involved and you need to set

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Speaker 2: out a plan to enforce the tax in an efficient,

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Speaker 2: effective manner so that it doesn't cause more harm than good.

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Speaker 1: Thank you so much for chatting to us this morning

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Speaker 1: from Forvist maszaars In Sa devl Collierni Moody helping us

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Speaker 1: just to understand this proposed online gambling tax