Major threat to shopping malls in South Africa

Shopping malls in South Africa face an increasing threat from online gambling, with a decreasing share of disposable income available for retail spending. 

This is due to the immense growth of the online gambling industry, with gambling participation rising to 65.7% at the end of 2023 compared to 30.6% in 2017. 

It is estimated that R1.5 trillion was wagered by South Africans in 2024, which significantly erodes the ability of individuals to spend elsewhere. 

Owner of Canal Walk and Hyde Park, Hyprop Investments, warned that the growth of online gambling is adding to the difficult operating environment in South Africa. 

This was revealed in the company’s pre-close operational update for the four months ended 31 October 2025. 

Hyprop is one of South Africa’s largest landlords, with it being the largest specialised shopping centre real estate investment trust on the JSE. 

It holds major stakes in shopping malls across South Africa and Eastern Europe, including Hyde Park, Canal Walk, Somerset Mall, and the Rosebank Precinct. 

The company said that during the four-month period, both its South African and Eastern European portfolios delivered strong growth in turnover and trading density. 

It said this is largely due to the locations of its malls, its curated tenant mix, and consistently differentiated experiences for shoppers. 

Hyprop owns nine retail centres in South Africa, with the majority (57%) being located in the Western Cape and 43% in Gauteng. 

The company said its shopping malls continued to perform well during the period, despite South Africa’s tough economic environment. 

Hyprop singled out the rise in online gambling as a new threat to the company, with the activity’s strong growth reducing discretionary income available for retail spending. 

Online gambling has surged in recent years in South Africa, with CEOs beginning to warn of the impact on their businesses as consumers have less money to spend elsewhere. 

Pick n Pay CEO Sean Summers has been the most vocal of these critics, saying the industry is highly extractive and has the potential to seriously impact the country’s economy. 

The companies making significant money from this form of gambling, such as Betway and Hollywoodbets, have come under increasing criticism for the extractive nature of their businesses. 

Critics argue that most of the money flows to shareholders overseas, with the industry providing little to no benefit to the South African economy.

Online gambling tax

To curb the rise in online gambling, the National Treasury has proposed the implementation of a new national tax on online gambling revenue. 

Estimated to raise R10 billion for the state, the tax’s primary aim is to discourage online gambling and its damaging effects on society. 

“The way we look at this is that it is closer to a sin tax. The mechanism is not quite the same. It won’t be taxed like alcohol or tobacco on a per-drink or per-cigarette basis, but we are going to tax the companies,” National Treasury’s Christopher Axelson told Newzroom Afrika. 

“We look at it like a sin tax. If there is a reduction in online gambling because of this tax, we would be happy with that, even if it reduces tax revenue.” 

Overall, the National Treasury estimates that it will generate significant revenue from this tax at around R10 billion a year. 

“This is a good thing. This is good for social expenditure, good for development, and it might mean that there is less pressure on other taxes in future,” Axelson said. 

“But our main aim here is to try to deter activities and reduce the amount of online gambling that is actually taking place in South Africa.” 

The revenue generated by the tax will go into the National Revenue Fund and will be split in the Budget as all other kinds of state revenue currently is. 

“We are not proposing any type of earmarking of this. Some previous proposals called to link the revenue from a gambling tax to efforts to promote responsible gambling. We will consider that, but at the moment, it will go into the general pot,” Axelson said. 

“The revenue may go to services such as healthcare, police, education, and other things. It will add to all of those parts of the budget.”

The Treasury has said the proposal will ease the administrative burden in South Africa by requiring local online betting operators to share the same information they currently give to provincial gambling boards with the national government. 

Whether this eases or increases the administrative burden on companies is beside the point, considering the immense social and economic impacts online gambling has in South Africa, Axelson said. 

“We think the social cost is quite severe. There are many studies being conducted on problems of addiction, mental health issues, and financial distress,” Axelson said. 

“Part of this consultation is to get more evidence regarding the impact of online gambling in South Africa and how it can be addressed.” 

“But, of course, the industry does not want this tax. They are going to criticise it and try to prevent it from happening. With the consultation, we want to hear the inputs from everybody.”