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This is the third report in the series being prepared by H2 Gambling Capital (H2) on an optimum market structure for the Africa online gambling industry. This report focuses on an Optimum Tax Structure, specifically the importance of taxing operators – not players – with a Gross Gaming Revenue (GGR) or Net Gaming Revenue (NGR) based tax, at a reasonable tax rate level, and the reasons why other taxes including Withholding Taxes distort the market. As in our other reports in this series, only some, not all, of the recommendations provided herein are also applicable to the Africa landbased gambling industry, which by definition should be treated differently to the online sector by governments and regulatory bodies. Taxation plays a key role in online gambling regulation, offering governments a means to generate revenue while also enabling oversight and accountability. As the online gambling sector expands globally, taxation can ensure that a portion of its profits contribute to public services such as healthcare, education, and addiction treatment programmes. However, while taxation is essential for legitimacy and control, it can also introduce complications. When taxes are too high or poorly structured, they can inadvertently push operators and players away from regulated platforms and into offshore or black market alternatives. Unlicensed operators can offer better odds, with fewer restrictions, due to lower operating costs, making them attractive to consumers. This undermines the very purpose of onshore regulation — consumer protection, responsible gambling, and fair play — and can erode the tax base governments rely on. In our first report, H2 estimated that unregulated sports betting and iGaming markets across Africa will result in over $11bn of lost tax revenues leaking offshore over the next 5 years, based on a 20% GGR tax rate (the maximum that would lead to customers moving back onshore). Despite these drawbacks, when implemented thoughtfully, taxation can still support a well-regulated and competitive gambling environment. Optimum, well-calibrated tax rates encourage operator compliance, attract legitimate investment, and help maintain a level playing field. Combined with strong consumer protections, data transparency, and active enforcement against illegal operators, an intelligent tax policy can strike the right balance between economic benefit and social responsibility.

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