Gambling winnings and SARS: casual punters, professionals and foreign wins

The starting point: capital or revenue

South Africa has no separate tax on punters' winnings. Whether SARS taxes a win depends on two ordinary questions of income tax: is the amount revenue (part of gross income) or capital, and if it is capital, does the capital gains tax (CGT) exclusion for gambling apply?

For most people the answer is straightforward. If you bet, play the Lotto or visit a casino for entertainment, your winnings are windfalls rather than income from a trade. A Deloitte tax commentary puts it this way: occasional gambling winnings for individuals are exempt from income tax because they are classified as windfall gains. A tax practitioner quoted in a George Herald article estimated that gambling as a hobby covers about 95% of cases, and called being treated as a professional "really the exception".

Not being taxed is not the same as not being disclosed. The same article advises that winners, including lottery winners, should still declare the amounts to SARS. If you file an ITR12, ask a registered tax practitioner how to show a large win.

When SARS can treat you as a professional

The line moves when gambling stops being entertainment and becomes a scheme of profit-making: systematic, organised and carried on to make a living. Then the winnings are revenue and form part of your taxable income. The Deloitte commentary notes that professional and highly frequent gamblers are taxed on the income they earn and can offset their losses against it.

There is no fixed test, no number of bets per week and no rand threshold that flips you from casual to professional. The question is one of fact: how systematic and organised your gambling is, and whether it is in substance how you make a living. Two consequences follow if SARS sees you as a professional:

• Net winnings are added to your taxable income and taxed at your marginal rate.
• Losses and genuine costs of the activity can be set off against those winnings.

A casual punter gets neither the tax nor the deduction: losses on recreational gambling are simply losses. If you think you are close to the line, speak to a tax practitioner before SARS raises it with you.

Local wins: the CGT exclusion in paragraph 60

Paragraph 60 of the Eighth Schedule to the Income Tax Act deals with gambling, games and competitions. The SARS Comprehensive Guide to Capital Gains Tax (Issue 9, section 12.9) explains that, as a general rule, capital gains and losses from gambling, games and competitions are not subject to CGT. The guide names horse racing, the National Lottery and casino winnings, and says it makes no difference whether the prize is cash or goods.

The exclusion has three exceptions. A gain is subject to CGT when it:

• is derived by a company, close corporation or trust;
• arises from foreign gambling, games or competitions; or
• comes from illegal gambling, games or competitions in South Africa.

SARS gives its reason: local gambling already contributes to the fiscus through betting taxes and VAT, and part of National Lottery proceeds goes to good causes, while foreign gambling contributes nothing. To protect the tax base, capital losses from gambling are disregarded in all cases, so a losing streak overseas cannot be used to reduce other capital gains.

A bet with a provincially licensed bookmaker is gambling authorised under South African law, the category the exclusion is built around. Winnings from an offshore online casino are a different story: such sites hold no South African licence, so on the guide's logic they fall outside the exclusion either as foreign or as illegal gambling. If you have such winnings, take advice. Our guide to checking a bookmaker's licence shows how to tell which side of the line an operator is on.

Worked example: a foreign lottery prize

The SARS guide uses the example of a punter whose Pick 6 and roulette wins are excluded, but whose R55,000 United Kingdom Lotto win is subject to CGT, with the cost of the ticket allowed as base cost. Here is how that could work out for an individual with no other capital gains that year. The figures for the annual exclusion (R40,000) and the individual inclusion rate (40%) are those used in the same guide; check the current amounts on sars.gov.za before you rely on them.

Two points to note. The annual exclusion is shared across all your capital gains for the year, so if you sold shares at a profit as well, less of it is left for the prize. And if the foreign country withheld tax from your prize, ask a tax practitioner whether any relief for foreign tax applies to you. The same R55,000 won on the National Lottery or at a South African racecourse would attract no CGT at all.

The winnings tax that never arrived, and the online tax now on the table

You may have read that South African punters pay 15% on large wins. That was a proposal, not the law. In the 2011 Budget Speech the then Minister of Finance announced a 15% withholding tax on gambling winnings above R25,000, including National Lottery payouts, to start in April 2012, SAnews reported at the time. Deloitte's commentary records that the proposal has yet to be implemented, because of opposition from the industry and administrative complexity. At the time of writing, no winnings withholding tax applies.

The current debate is about operators, not punters. In November 2025 National Treasury published a discussion paper proposing a 20% national tax on gross gambling revenue from online betting and interactive gambling, on top of existing provincial taxes, according to SAnews. Gross gambling revenue is what operators keep after paying out winnings, so this would be levied on the operator. It remained a discussion document; check treasury.gov.za for its status. For more on where online gambling law stands, see the remote gambling bill explainer.

Tax rules change and personal circumstances differ. This page explains the general position and is not tax advice: confirm your own case with SARS or a registered tax practitioner. If gambling is costing you more than you can afford, see our responsible gambling page or call the SARGF helpline on 0800 006 008.