The Minister included a reminder in the Budget that public comments on National Treasury's discussion paper are due by 27 February 2026, following which workshops will be held with affected parties. Given the wide-ranging impact the proposed tax will likely have and the current media and public attention around it, it is expected that submissions will be many, and issues raised during workshops keenly debated.

As National Treasury puts it, this tax will be imposed in order to internalise the negative externalities associated with online gambling (i.e. to impose the negative social costs of problem/pathological gambling on the gambling sector). Many people will agree that most negative social costs should ideally be cushioned by those who create them but deciding how that is done is not simple.

It will be interesting to see if further consultations expand on the underlying rationale for introducing the tax. For example, to support such a tax, it would be expected that collected data would indicate that there has been an increase in problem/pathological gambling that has resulted in negative social costs (i.e. data should indicate whether there are negative externalities to be internalised to begin with).

Another important aspect that one hopes will come through during further consultations and engagement is how Government intends tackling the illegal sector. For example, this has been a primary issue where other behaviour targeting taxes have been implemented (most noticeably with the growth in the illicit tobacco trade).

Without clear, targeted interventions, there is always a risk that punters switch to illegal, untaxed operators. This would arguably defeat the purpose of the tax. National Treasury has indicated that South Africa’s exchange controls can largely tackle illegal operators, however, some operators may circumvent South Africa’s exchange controls or never deal in foreign currency.

Nevertheless, National Treasury has identified a problem against the backdrop of a keenly debated topic in the public domain. Being seen to be doing something may count more than that something having little impact on the possible problem. However, introducing a new tax requires careful thought for it to achieve its objectives without resulting in unintended consequences. This is one to watch.