PROVINCIAL AND NATIONAL GAMBLING BOARDS
COMMENTS ON NATIONAL GAMBLING BILL, 2003 NATIONAL PARLIAMENT - PORTFOLIO COMMITTEE

These comments have been drawn up by a consultative forum comprising representatives of the National Gambling Board and the Eastern Cape, Free State, Gauteng, Kwazulu-Natal, Limpopo, Mpumalanga and Western Cape Gambling Boards respectively. The comments address the major issues of principle deemed to require a response in the Bill in its current form. For purposes of brevity, minor and/or semantic drafting issues have generally not been addressed.

AD CLAUSE 1:
'cash dispensing machine' - The definition of this concept is too wide and would effectively preclude casino operators from making smart card machines available on licensed premises in a cashless gaming environment. This would render the cashless system nugatory. Issues associated with this concept will be further addressed in connection with Clauses 13 and 17.

'casino' - In paragraph (d) it is suggested that the words 'or provincial law' ace inserted after the words 'temporary licence' to cater for the legislative position in those provinces which do not authorise social gambling by way of a temporary licence.

'family member’ - It is recommended that the reference to brothers and sisters should be removed from the definition, many provinces having narrowed this concept in the light of practical problems encountered with its application. It deemed necessary in certain instances specific reference to brothers and sisters could be introduced as specific disqualifications.

'financial interest' - It is suggested that the words 'other than in consequence of an arms-length commercial transaction' be inserted into paragraph (c) after the words 'company, corporation or business'. The purpose of this is to remove from the net persons such as landlords, whose probity bears no relevance to the probity of the relevant licence holder.

'gambling machine' - the reference to totalisator machine in paragraph (a) should be removed, since these terminals have no impact on the outcome of the events on which betting is struck. In addition, there is no clarity as to what is meant by the words 'totalisator machine'.

'informal bet' - Please see the comments offered in respect of Clause 8(1)(c) of the Bill in this regard.

‘interactive game’ - it is recommended that the words 'excluding wide area progressive games and linked bingo games made available under authority of a licence be inserted at the end of the definition, since it is highly arguable that both these categories of gambling games qualify as interactive games. The following definitions are suggested:

'wide area progressive game means a game offered by a system in terms of which gambling devices on more than one premises licensed in terms of provincial legislation are electronically linked to each other and in respect of which one or more progressive jackpots may be won

'linked bingo' means a system in terms of which bingo games on more than one premises licensed in terms of provincial legislation are electronically 'inked to each other

'open bet' - it is recommended that the definition be expanded by the insertion of the words 'and includes a bet in respect of which the payout 5 determined, after the outcome of the contingency on which such bet is struck has become known, with reference to dividends generated by a totalisator.


AD CLAUSE 4:

It is recommended that the words tbeing a player' be deleted from sub-clause (2)(a) and that sub-clause (2)(b) be deleted in its entirety, because bookmakers do not take bets with other bookmakers by agency of the totalisator and, where they do place bets on the totalisator, would already be covered by the reworded sub-clause (2)(a).


AD CLAUSE 6:

It is recommended that the words ‘other than an event involving, in whole or .n part, the playing of a gambling game’ be inserted after the words 'a sporting event in sub-clause (2)(b).


AD CLAUSE 8:

In respect of Clause 8(1)(c) of the Bill, it is anticipated that inordinate evidentiary problems will be encountered in the enforcement of this provision bearing in mind that in criminal proceedings, all elements of a charge require proof beyond a reasonable doubt. The corollary of this proposition is that, it a reasonable possibility exists that any of the parties to an informal bet intended to establish an enforceable contractual relationship at the time of the transaction, an acquittal will be indicated. It is highly probable that parties to an informal bet would intend the bet to be honoured in the vast majority of cases. Failing this, there would be no purpose in taking such a bet. Despite the intended policy, it would appear that this provision does little to advance the interests of private persons who enter into bets for their own amusement. since such parties would never be able to enforce any rights pursuant thereto unless they had abandoned them in the first instance.

Against the backdrop of the above comments, it is suggested that the provision for the "informal bet' (together with the definition of the concept contained in Clause 1) be dispensed with.


AD CLAUSE 12:

On the basis that it is inherently undesirable that minors, as defined, should participate in any gambling activity, it is recommended that the words "restricted gambling activity", wherever they appear in the Clause, be replaced with the words "gambling activity".


AD CLAUSE 13:

It should be taken into account that the prohibition in respect of the extension of credit is likely to have a significantly negative impact on a variety of classes of licence holders, who depend on the extension of credit for the day-to-day operation of their businesses. This would in turn affect revenues generated as well as the proper fulfilment of bid undertakings, including those pertaining to empowerment and job creation, made by licence holders. It is also foreseen that the prohibition against credit, seen together with the prohibition in respect of cash dispensing machines on gambling premises (as opposed merely to the area specifically designated for gambling), might well enhance the potential for criminal conduct on and around licensed premises.


AD CLAUSE 14:

It is recommended that, for practical purposes, the role of the National Gambling Board should be restricted to the maintenance of a database in respect of excluded persons.


In addition, it will not be cost effective for the persons contemplated in subclause (2) to make use of the High Court as a vehicle for the exclusion of problem gamblers.

It should be noted that it is unclear from sub-clause (9) what degree of diligence will be required from licence holders to ensure that excluded persons do not enter designated areas, particularly in the case of the larger casinos. It is recommended that this sub-clause be reworded to specify more clearly the nature of the measures to be taken.


AD CLAUSE 15:

It is unclear from the use of the words ‘gambling premises' in sub-clause (2) whether the intention is to require the prescribed statement in respect of all ancillary facilities located on or around licensed premises, which it is submitted would be impractical and unenforceable.


AD CLAUSE 16:

It is recommended that the investigation contemplated in sub-clause (4) be undertaken by the relevant provincial licensing authority, and that the payments contemplated in sub-clause (3) to be made should likewise be payable to such authority.

In addition, the High Court procedure contemplated in sub-clause (4)(b) is n conflict with the provisions of certain provincial laws dealing with the same subject matter and not a cost effective manner of addressing the issue.


AD CLAUSE 17:

It is foreseen that sub-clause (1) will be extremely problematic to apply, particularly in cases where:
Schools are built within the prescribed area after the commencement of licenced operations on the relevant premises; or
Schools already exist adjacent to licenced premises

In respect of sub-clause (2), please refer to the comments made in connection with Clause 13. The same considerations should be regarded as applying in respect of sub-clause (3).


AD CLAUSES 19-23:

Clause 20 of the Bill is, with a few minor additions, the Clause formerly suggested by provincial licensing authorities and the National Gambling Board in its previous comment on an earlier draft of the same Bill. As such, it is recommended that it be retained. However, Clauses 19 to 23 inclusive put n place a registration procedure which is to all intents and purposes practically unworkable and adds no value if its aim is (as it appears to be) reliably lo track the movement of restricted gambling devices.

It is accepted that all devices should be certified and approved before being distributed and that prescribed devices should be licensed or registered In the sense currently contemplated in provincial legislation) before being exposed for play. This is the purpose (and purport) of Clause 20 of the Bill. It is, however, impractical to insist on all prescribed devices being registered in the manner contemplated in the Bill. This is all the more so if regard is had to the definition of 'gambling machine", since all gambling machines are prescribes gambling devices, and as such subject to registration. The definition of "gambling machine is wide enough to cover the software (including small electronic components, such as chips) housed in gambling machines, as well as roulette wheels and similar gambling devices. It will be impossible to comply with the proposed registration procedures in respect of computer chips. These cannot have badges and labels attached to them, as contemplated in the Bill.

It is recommended that the manufacturer should be required to keep a record of the devices ab initio, with registration taking place only at the time of transfer of possession or ownership of the devices, as is the case with firearms and motor vehicle licences.

The proposed registration regime (to the extent that it is aimed at controlling the movement of physical machines, will in any event add no regulatory value for the following reasons:

(i) Software and other vital components of gambling machines are constantly being upgraded or altered subject to regulatory control by the provincial licensing authorities.

(ii) All gaming machines have unique serial numbers permanently affixed to them at the time of manufacture which can be used for tracking purposes in the same way as the registration number contemplated by the Bill. (See for instance SABS 1718-paragraph 4.2 and SABS 1718-2 paragraph 4.3.1 which require this for all gambling machines before they can be certified).

(iii) The register has no purpose if it is only intended to be used to control the movement of cabinets, irrespective of the individual components thereof. The cabinets are merely physical structures which house the vital software controlling all relevant aspects of the games offered.


AD CLAUSE 25;

In respect of sub-clause 25(2), it is agreed that the SABS should issue letters of certification in respect of devices tested by licensed testing agents provided that the analysis of the results does not involve a duplication of functions between the SABS and the testing agent, or retesting of the devices tested by the testing agent.


AD CLAUSE 38:

It is recommended that Clause 38(2)(b) be amended to read '?o work for t/)e holder of a national licence within the gambling industry The reason for this is that generally only the employees of national licensees will operate in more than one province and it therefore makes sense for them to apply for a national employment licence. However, in respect of other employees these are essentially provincially based and the regulatory demands of the environment in which they work may well differ from employer to employer and province to province. For example, a dealer licensed at one casino cannot simply transfer to another casino without it being ensured that he or she is adequately trained to comply with the internal control standards of his or her new employer.

In addition, members of the public will easily be able to determine with which regulatory authority any complaint regarding that employee should be lodged. Furthermore, it is a prerequisite for effective control of a licensee that a provincial licensing authority has effective jurisdiction over the licensee's employees and knows who is employed by such licensee or exercises control over such licensee, something it can only do if such persons and staff are registered by it against that licensed employer.

Additionally, employees who work at provincial licensees are generally employed for substantial periods, so frequent movement between licensees will be the exception, rather than the rule and, even in these cases, information sharing, contemplated by Clause 36(4) of the Bill, would ensure that duplicate investigations and the like are avoided.


AD CLAUSE 45:

It is submitted that the provisions of the existing National Gambling Act in respect of the maximum number of casino licences both provincially and nationally, adequately address the needs of the market, and that to allow alteration by regulation would create uncertainty and serve no material purpose.


AD CLAUSE 53:

It is recommended that the words 'At every anniversary of the issuance of a licence' be replaced with the words 'At least once a year', since provincial licensing authorities which renew licences annually would generally consider the renewal some time prior to the expiry of the licence.

In addition. the words 'other than an employment licence' should be inserted after the words 'issuance of a licence', since employment licensees have none of the commitments contemplated in sub-clause (1).


AD CLAUSE 65:

It is proposed that, if the comments made herein in respect of Clauses 19-23 are taken into account, it will be necessary to delete sub-clause (1 )(c)(iii).


AD CLAUSE 66:

It is recommended that Clause 66(2) be amended to provide that only the Member of the relevant Executive Council or a provincial licensing authority may request engagement with the Board on the subject of illegal activities, so as to ensure that the Board is not potentially flooded with requests of this nature from a variety of sources.


AD CLAUSE 67:

The concepts 'partner' and 'associate' have not been defined in the Bill. The following definitions are suggested for these concepts:

‘partner’ means a person with whom one has entered into a partnership agreement with the intention of making a profit.

'associate' means:

(a) an employer:

(b) a co-shareholder of a private company contemplated in section 20 of the Companies Act, 1973 (Act No.61 of 1973);

(c) a co-member of a close corporation contemplated in section 2 of the Close Corporations Act, 1984 (Act No.69 of 1984):

(d) a person to whom one has granted or from whom one has received a general power of attorney"


AD CLAUSES 74 & 75:

The provisions of Clause 74(2) to (6) are a repetition of the provisions of the Public Finance Management Act, Act 1 of 1999, and therefore superfluous.


AD CLAUSES 81 & 82:

It is suggested that it is inappropriate for all instances of failure to comply with the Act to be criminalised. A distinction should be drawn between conduct which would appropriately be the subject of a criminal prosecution and other conduct. in terms of which, for example, regulatory authorities are seized with certain routine or administrative functions.


AD CLAUSE 83:

It is proposed that the administrative penalty provided for in sub-clause (2) should not exceed the maximum fine of R10 million contemplated in sun clause (1), on the basis that it is not desirable that the power of a regulatory authority to impose a penalty should exceed even that of a criminal court. In addition it is suggested that sub-clause (2) should specify that the administrative penalty contemplated therein is to be imposed by the provincial licensing authority which issued the relevant licence.


AD TRANSITIONAL PROVISIONS:

ITEM 2(1)(b) - It is recommended that Regulaton 3 be included in the list af Regulations to be repealed1 on the basis that it does not create a norm 0 standard.

ITEM 3 - This paragraph may be deleted in its entirety, since the mater prompting this provision has been resolved.

ITEM 6 - It is recommended that Item 6(2) be reworded by replacing the word "may" with the word "must". Item 6(5) should be reworded by substituting the word must with the word "may".

ITEMS 7 & 8:

See the previous comments in respect of Clauses 47 and 14 respectively

It is trusted that the above comments will prove to be of constructive assistance to the Committee.