While responsible gambling messaging floods sports broadcasts and social media feeds, South Africa’s sprawling informal gambling market continues to operate largely unchecked.
According to RelyComply, nearly 30% of the public is estimated to have accessed illegal gaming sites, with the economy potentially losing R10m per year as a result — and the true scale of these underground markets remains unknown.
What is clear, however, is that South Africans’ appetite for gambling is growing rapidly — whether through online platforms, casino floors, or horse racing. With that growth comes an expanding opportunity for illegal proceeds to be concealed and cycled through the sector. The digitalisation of gambling, now accessible via smartphones and laptops rather than traditional bookmakers, only deepens the threat by making it easier for criminals to exploit unregulated corners of the market.
For much of the past two decades, gambling-related financial crime risks have been broadly overlooked. Now, emerging money laundering typologies are placing the sector squarely in the crosshairs, making anti-money laundering (AML) a front-and-centre concern rather than a peripheral one. Gambling companies, along with the banks and payment providers they work with, must take a proactive stance against the warning signs of financial wrongdoing.
South Africa’s Financial Intelligence Centre Act (FICA) recognises the gambling sector’s contribution to the economy through job creation and financial flows, placing obligations on gambling institutions as accountable institutions.
Both financial institutions and their casino and gambling partners bear responsibility for detecting and reporting suspicious activity, regardless of where funds originate.
Yet the country’s gambling legislation has long been inadequate. All existing laws trace back to the National Gambling Act of 2004, with a planned 2008 update still stalled in government — well before the digital gambling tools now commonplace in everyday life. Nine provinces operate under their own separate gambling statutes, creating local nuances that banks and media partners frequently misunderstand. The National Gambling Board, meanwhile, lacks the tools to sufficiently regulate offshore operators.
In 2023, consultations led by the Financial Intelligence Centre (FIC) alongside the State Security Agency and the UK’s HM Treasury Technical Assistance Unit concluded that casinos posed a low risk for terrorist financing. Discussions have also taken place with the South African Banking Risk Information Centre (SABRIC) around restricting payment access to illegal gambling sites — but regulators need to intensify their around-the-clock monitoring of suspicious behaviour if they are to maintain risk-focused compliance. The National Gambling Policy Council, a joint industry-government body, has reportedly convened only twice in the past eight years.
More than 2,000 illegal gambling operators are currently targeting South Africa, promoted through affiliate clickbait sites designed to drive up betting volumes. Many operate from jurisdictions with weak AML and tax controls — including Curaçao, Malta, and the Philippines — complicating the auditability of cross-border transactions when they enter markets with differing regulatory frameworks and insufficient consumer protections.
The challenge is compounded by the country’s relentless growth in gambling activity, generating vast volumes of transaction data that is difficult to trace. Gambling turnover reportedly reached R1.5 trillion in the 2024/25 financial year, with 56% of bettors admitting to gambling out of financial necessity. Despite the government’s proposed 20% tax on online gambling — intended to raise revenue and reduce harm — unchecked adoption risks pushing users towards unlicensed offshore platforms.
Established laundering methods continue to thrive in the gambling sector, particularly where criminals can exploit regulatory grey areas, inconsistent regional licensing, weak AML controls around transaction monitoring, and the fragmented landscape of online casinos, apps, and site operators — all flagged as sector-specific threats by the FIC.
Where criminals can freely open multiple gambling accounts, their associates can layer smaller, frequent deposits — known as smurfing — across those accounts to evade detection thresholds, whether on regulated or unregulated platforms. Rapid fund movement is facilitated through transfers and withdrawals between legitimate business accounts and casinos.
Politically exposed persons (PEPs) and other high-risk or sanctioned individuals must be scrutinised against account details and transaction patterns, yet advanced identity verification (IDV) is difficult to execute within siloed AML systems. Some users may refuse to provide identification altogether, while criminal networks increasingly exploit stolen identities to conduct transactions through third parties.
Anonymity tools are also growing in sophistication, enabling fraudsters to circumvent biometric documentation and KYC checks on online gambling platforms. Virtual currencies can be shielded from monitoring through crypto mixers, threatening to render even basic IDV measures ineffective. If these early safeguards fail, criminals can scale laundering operations across online gambling channels unchecked — and the institutions responsible for flagging such activity face enforcement penalties for failing to do so.
As laundering techniques spread across digital gambling channels and regions, South Africa’s financial ecosystem must deploy enhanced due diligence and monitoring technologies capable of ensuring robust IDV and identifying unusual betting or transactional behaviour.
This responsibility extends beyond gambling companies — which are accountable for submitting Suspicious Activity Reports (SARs) to the FIC — to their cooperative third parties including payment providers, clearing houses, and banks, as well as government bodies and law enforcement agencies.
Greater openness to partnerships with RegTech providers would allow South Africa’s accountable institutions to close the compliance gaps currently exploited by gambling-based launderers, while remaining adaptable to emerging typologies such as crypto-based transactions, deepfaked identities, and decentralised finance.
Despite the growing volume of illegal gambling proceeds entering South Africa’s financial system, the national response has been too slow. Whether the issue stems from an underprepared collaborative detection framework or overreliance on legacy financial crime reporting systems, the time has come to treat the gambling sector as the high-risk threat it truly is.
Curtailing further laundering depends on financial institutions, FinTechs, and gambling operators developing a shared understanding of emerging typologies and deploying AML systems attuned to them. Doing so will not only satisfy the FIC’s increasingly critical scrutiny of the sector, but will also protect a market that seeks to safeguard individual players — rather than restrict them — while preserving the integrity of a financial system that has worked hard to improve its standing with the Financial Action Task Force (FATF).
A balance between smart regulation and robust AML intelligence can meet the online laundering challenge directly, creating the conditions for commercial and financial growth — once proactive gambling AML becomes standard practice, both at home and abroad.
Copyright © 2026 RegTech Analyst
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