Zimbabwe will impose a 10% withholding tax on sports betting winnings starting January 2025, tax experts warn that the policy has "social regressiveness," potentially increasing the burden on low-income players and pushing gambling activities to the black market. Finance Minister Mthuli Ncube implemented this tax to increase national revenue, expecting to generate $15 million annually. However, the design of a uniform tax rate without exemption thresholds is criticized for being unfair to vulnerable players, and operators need to invest substantial costs to upgrade systems for compliance. Experts suggest adopting the South African model, taxing only large winnings and setting a threshold to balance revenue goals and player protection. The country's mobile network penetration rate exceeds 100%, and the internet penetration rate reaches 81.8%, with online gambling growing rapidly, policies need to prevent users from moving to offshore platforms.
Policy Background and Implementation Goals
Zimbabwe's Finance Minister Mthuli Ncube proposed a 10% withholding tax on sports betting winnings in the 2025 budget, aimed at regulating the gambling industry and increasing tax revenue to meet budget needs. The policy takes effect on January 1, 2025, and applies to all local betting stations and physical gambling companies operating online platforms.
The government expects the gambling industry to generate $150 million in annual revenue, with this tax bringing in $15 million annually.
Industry Size and User Characteristics
Local media reported that in 2023, Zimbabwe's gambling industry generated about $120 million in revenue, with online gambling contributing $45 million. In 2024, approximately 300,000 people participated in online gambling, a 15% increase from the previous year, with 60% of players aged between 18-35 years.
The industry's growth benefits from increased internet penetration and smartphone promotion, with over 5.2 million devices in use nationwide.
Operator Compliance Costs and Challenges
WTS Tax Matrix, a tax consulting firm, pointed out that operators need to establish or upgrade transaction and reporting systems to automatically calculate and deduct the 10% tax, with each platform system upgrade costing up to $50,000. Small operators face higher compliance costs, with annual tax reporting expenses of about $20,000.
Compliance requirements also include strengthening accounting processes, employee training, and cash management, requiring significant time and financial investment.
Tax Fairness and Social Impact
Experts note that the design of a uniform tax rate without exemptions has "social regressiveness," impacting low-income and casual bettors more significantly, possibly squeezing operator profits and forcing odds adjustments. In low-income economies, this tax system could increase the burden on impoverished players and push gambling activities to unregulated platforms.
The policy may accelerate the shift of users from physical betting points to unregulated offshore platforms.
International Experience and Improvement Suggestions
Experts suggest adopting the South African model, taxing only winnings over 25,000 rand at 15%, setting a minimum exemption threshold to protect ordinary players. South Africa's total gambling revenue was $3.4 billion in the 2023-24 fiscal year, expected to increase to $4.3 billion in 2024-25.
The Kenyan government also switched to a 5% withdrawal tax instead of a 20% net winnings tax, expecting revenue to more than double.
Economic Environment and Policy Balance
Deloitte, a consulting firm, pointed out that in an economic environment with high unemployment and high living costs, a balance between revenue generation and social security needs to be achieved. Considering 13 years of inflation, the minimum tax threshold should be reset to avoid impacting low-income groups.
Well-designed withholding taxes can achieve balance, preventing users from turning to illegal platforms.
Technology Development and Market Trends
Zimbabwe's mobile phone penetration rate rose from 101.39% in the first quarter of 2025 to 102.64% in the second quarter, and the internet penetration rate jumped from 76.19% to 81.83%. Technology proliferation makes online betting more convenient, requiring only a mobile phone, computer, and internet connection.
This trend accelerates the shift of users from physical gambling halls to online platforms, posing challenges to traditional operators.
Regulatory Challenges and Illegal Platforms
The use of employer computers and networks for online gambling is increasing, and these platforms are not subject to local regulations, including the new tax regime. Parliamentary documents indicate that a uniform tax rate may dampen the enthusiasm of casual participants, pushing users towards offshore platforms.
Regulations need to address challenges brought by technological developments, preventing market fragmentation.
Implementation Impact and Industry Response
An anonymous operator stated that the implementation of the withholding tax coincides with local players turning to unregulated offshore operators. Physical gambling halls may face reduced customer flow, leaving only a few older customers without smartphones or outdated technology.
The industry is concerned that the policy may accelerate the shift from offline to online, and traditional operators need to adapt to changes.
Policy Adjustments and Future Outlook
Experts suggest adopting a more progressive structure, introducing a minimum exemption threshold or accompanying social protection measures to make the system fairer. The South African government postponed implementing similar tax measures due to industry opposition, showing the need to balance various interests.
Zimbabwe needs to consider local economic characteristics to develop a more suitable gambling tax policy.
