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Illegal online gambling ‘hits tax revenue’

13 January 2015   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (BDlive)

Although online gambling is illegal in SA, the trade has been growing and threatens the future of legal land-based casinos operating in the country, the Casino Association of SA (Casa) said in a statement published on Monday.

CEO Themba Ngobese said if only 5% of all gambling revenue was going into online, it would represent about R110m in lost tax revenue for SA in just one year.

In Europe online gambling is legal and generates between 26% and 28% of the gambling revenue market share, but it has resulted in a 20% drop in visitation to casinos.

"If a similar trend is followed in SA, the resulting tax and job loss in the industry could be devastating," Mr Ngobese said.

He expressed his concern about the growth in usage and operations of online gambling in SA. His association has launched a campaign to create awareness of the consequences of illegal online gambling.

"It may all seem like harmless fun to gamble online, but players are completely unprotected and operators are not registered or regulated to run a business in our country."

He believed illegal online gambling was already having a significant effect on the gross revenue growth of the gambling industry.

Revenue growth from casinos and horse-racing dropped to 0.6% for last year compared with 10% in 2012-13, Mr Ngobese said.

He was concerned about internet cafes that conducted legal businesses at the front, but engaged in illegal online gambling at the back, and urged South Africans to report any illegal gambling activities.

The latest statistics from the National Gambling Board indicate that the gross gambling revenue for last year was R21.8bn, with casinos contributing the bulk of the income. The gaming industry paid gambling tax of R2.2bn.

Due to the wide prevalence of illegal online betting it would be almost impossible to determine the tax losses, Mr Ngobese said.

People who are caught and prosecuted for operating or playing illegal online gambling, face a R10m fine, or 10 years in jail, or both.

Schoeman Attorneys director Daan Schoeman said it was uncertain what the financial losses were due to illegal online gambling. Given the online nature of the businesses, it was extremely difficult to trace them.

Mr Schoeman explained that professional gamblers — who gamble to make income — should pay tax on that income, irrespective of it being legal or not.

The South African Revenue Service (SARS) could make a "thumb-suck" income tax assessment if it found a person had received a regular income from illegal gambling, but had neglected to declare the income for tax purposes.

The same went for any business which had been deriving income from offering illegal online gambling activities, but had not declared the income to SARS.

Mr Schoeman said that a taxpayer who wins a one-off amount would not be taxed on the income, since the intention was not to generate an income and the amount would therefore be reflected as capital income.

This article first appeared on bdlive.co.za.


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