Online gambling taxation as a way of African economic recovery
The worldwide online gambling industry has been growing steadily for years. Africa takes a small portion of the world’s market but also shows a constant value increase. This continent also has a huge potential to develop further. That can benefit internet casinos and players, but are there ways for the economy to profit?
Some countries created a legal framework for online gambling. That increased the government revenue in this department while ensuring a safer player environment. Can internet gaming taxation help African economic recovery? This article discusses the current situation and potential benefits that online gambling taxes can have for the economy.
What’s the Current Situation Regarding Online Gambling Legality in Africa?
If you visit Casino HEX South Africa, you can choose between dozens of platforms available in this country. The majority of the total Africa gambling activity occurs in SA. But there are over 50 countries on the continent, and online gambling legality varies significantly.
We could group African countries into three different groups:
- Outlawed gambling. Countries with a Muslim majority don’t allow gambling at all.
- Unclear or non-existent laws. Many countries don’t have a clear legal framework for online gambling. The good news is most governments turn their heads the other way, so citizens can play at internet casinos.
- Legal gambling. These countries adopted laws that regulate the gaming market. That refers to land-based facilities and internet sites. Depending on the regulations, some countries might not allow particular gambling forms.
Countries with the Biggest Gambling Revenue in Africa
The data available suggests that South Africa, Nigeria, and Kenya top the list of countries with the highest revenue. It’s worth noting that refers to gambling in legal land-based and online facilities. Unfortunately, most African countries have problems with providers offering illegal gambling, which means the government doesn’t generate any revenue. Here is more information about the situation in each of the top three countries.
According to the World Population Review, South Africa has the highest Quality of Life index on the entire continent. That’s why it tops the list of countries with the biggest revenue, despite being fifth by population. The estimated revenue goes over $2 billion and will continue to increase.
The SA government passed a National Gambling Act that regulates the market. It allows land-based casinos, and you can find many throughout the country.
However, the NGA only considers online sports betting legal. While that means South African citizens shouldn’t visit internet casinos, the reality is different. You can find many platforms, including casinos located overseas, that welcome SA players to their websites.
The government seems to look the other way and doesn’t impose fines on citizens that gamble online. The only difference is the professionals and those who consider gambling their primary source of income. But if you are an amateur playing for fun, there should be nothing to worry about.
As for the taxation, all casinos who want to offer their services legally in South Africa need to pay taxes. The regulatory body is the National Gambling Board. Paying taxes, licenses, and other fees is necessary for the operator to offer gambling services legally. It’s worth noting that taxes on winnings in the games of chance are 15%.
According to the statistics, Nigeria is the most populated country in Africa, and it also tops the GDP list. That indicates its economy is doing well, but there is much room for progress. The Nigerian government understands the potential of online gambling for the economy. That’s why they legalized the internet and land-based casinos.
It’s not roulette or slots that are the most popular in this country. Nigerians prefer sports betting. If you count offline and internet sports bettors, Nigerians wager around $5.5 million daily. That comes up to over $2 billion yearly, which is impressive.
National payment systems in Nigeria used gambling legalization. Many local services, such as Paystack, process millions monthly. Apart from casinos, these companies also contribute to the national gambling revenue.
Nigeria’s problem seems to be a large number of illegal gambling platforms. They are mostly land-based, so you should be safe when playing online. Before you join a website, check if it has a valid gambling license to be safe.
Kenya has annual gambling revenue of around $50 million. More than a half ($29 million) comes from sports betting. They rank third in gaming income despite having only 50 million residents. It’s partially because they have a strict tax policy. Apart from the 20% win tax, there’s a turnover tax for the operators, and they also pay a portion of their net profit.
The government adopted a Gaming Bill in 2019, and it covers online casinos. They need to comply with the local regulations to offer legal services. However, the Kenyan gaming market is fairly regulated, especially when compared to other African countries.
How Can Gambling Taxation Be a Way of African Economic Recovery
The entire point is to maximize tax revenue, but what are the ways to achieve it? Here is what African countries could do to use the online gambling industry to benefit their economy!
Implementing a Legal Framework That Everyone Will Follow
Many African countries don’t have a regulated gambling market. That’s why it’s important to start with the basics, and that’s implementing a legal framework. It’s not enough for the country to legalize gambling to call the market regulated. It’s necessary to monitor the market and ensure that everyone plays by the rules. Some countries currently face illegal operators, which decrease their potential gambling revenue.
Players find the situation in many countries confusing. By regulating the market, players will feel safer. Although many countries are loosening the rules regarding the COVID pandemic, it’s still active. That’s why people spend more time at home. A safe playing environment could encourage them to try online gambling and increase the country’s revenue.
And even Muslim countries might have a way to benefit from online casinos. Egypt opened casinos in different locations, but they are only available to foreigners. If you want to enter the premises, you need to show your visa or passport. The estimation is that the government has around $200 million annually from gambling. If Egypt was to legalize gambling at any point, they could increase this revenue by at least 300%.
Restrict Foreign-Based Casinos or Impose More Severe Rules for Them
Operators based overseas offer services to players throughout Africa. In some countries, they don’t even have adequate licenses. Local governments can consider stimulating the domestic economy by restricting foreign-based online casinos.
A drastic measure would be to outlaw them completely. Some wouldn’t consider that democratic, so an alternative can be to impose more severe rules. That would include foreign casinos paying higher fees to operate in a particular country. That could increase revenue and benefit the domestic economy.
African governments need to realize that they can increase revenue and boost economic recovery with the help of online casinos. At the same time, they need to show responsibility to their citizens. Market regulation will also offer a safer playing environment that protects users.
Online gambling is a market with huge potential. African countries have only achieved a chunk of that potential, which is why they have maneuvering space. Legalizing online casinos but also regulating the internet and overall gambling market is a start. It can help with economic recovery, especially if the legal framework promotes domestic gaming-related businesses.