Submission by the Jockey Club of Southern Africa to the Parliamentary Portfolio Committee for Trade and Industry regarding the National Gambling Bill, B48-2003

Summary
1.For the reasons set out in more detail below it is the Jockey Club of Southern Africa's submission that the National Gambling Bill should not include any specific provision regarding the control of the sport of thoroughbred horse racing. This will not preclude the provisions of the National Gambling Bill regarding gambling, betting and wagering, from applying to the sport of thoroughbred horse racing.

2.The National Gambling Bill should therefore confine itself only to gambling and wagering, including gambling and wagering associated with the sport of thoroughbred horse racing.

3.The complexities of the control and regulation of the sport of thoroughbred horse racing should be dealt with in a stand-alone Act, similar to the South African Boxing Act, Act No.11 of 2001. The stand alone Act should provide for the establishment of a horse racing authority and horse racing board, with the power to make and administer rules for the control and regulation of the sport of thoroughbred horse racing.

Introduction
4.The sport of thoroughbred horse racing not only forms a part of South African culture and tradition but also provides the backbone for an industry that generates significant revenue and provides employment.

5.Tens of thousands of jobs are directly and indirectly created by the horse racing industry. Horseracing in South Africa, through various bodies including the Jockey Club, has become internationally renowned and a substantial export market for South African race horses is being developed.

6.The current National Gambling Act No.33 of 1996 does not expressly concern itself with racing. Instead it provides for the promotion of uniform norms and standards for casinos, gambling and wagering including, presumably, gambling and wagering associated with the sport of thoroughbred horse racing.

7.The National Gambling Bill, Bill 48 of 2003 ("the Bill") will replace the National Gambling Act No.33 of 1996. The Bill is devoted almost entirely at improving the national legislative framework regarding casinos, gambling and wagering. With three exceptions, discussed below, there is no reference to racing itself.

8.The purpose of these representations is to comment on the provisions of he Bill regarding the sport of thoroughbred horse racing and propose a framework to ensure the effective administration of the sport of thoroughbred horse racing in South Africa.

The Jockey Club of Southern Africa
9.These submissions are made on behalf of the Jockey Club of Southern Africa.

10.The Jockey Club of Southern Africa ("the Jockey Club") is a voluntary association governed by its constitution ("the JCSA Constitution").

11.The Jockey Club has administered the sport of thoroughbred horse racing for more than 120 years.

12.The objects of the Jockey Club, set out in the JCSA Constitution, include the regulation of the sport of thoroughbred horse racing in Southern Africa and the elimination of malpractice which may arise in the sport of thoroughbred horse racing. The regulation of the sport of thoroughbred horse racing also includes rules aimed at ensuring the safety of participants, the prevention of cruelty to horses and the detection and deterrence of prohibited substances (drugs). The Jockey Club is also the keeper of the Stud Book.

13.In terms of the JCSA Constitution, the Jockey Club is not responsible for gambling or punting, but does regulate its members (the privilege holders):

13.1.A distinction must therefore be drawn between the regulatory functions performed by the Jockey Club on the one hand and the betting and wagering activities of bookmakers and totalisator agency boards on the other hand.

13.2.As illustration, now that betting is permitted on other sporting activities, in addition to the sport of thoroughbred horseracing, such as soccer. cricket and rugby, it is surely illogical to subject those controlling bodies to statutory enactment through the National Gambling Bill.

14.The Jockey Club is empowered by its constitution to make and promulgate rules for the carrying out and implementation of all its objects. Over the years the Jockey Club has developed tried and tested rules for the regulation of the sport of thoroughbred horse racing in South Africa.

15.The exercise of disciplinary powers by the Jockey Club and its tribunals is subject to the principles of natural justice and review by the Courts.

Summary regarding provisions of Bill regarding horse racing
16.The Bill deals only peripherally with the sport of thoroughbred horse racing. Section
38(1 )(b) of the Bill requires the licensing of "horse racing authorities".

1 7.The Bill does not include any substantive provisions regarding the regulation of the sport of thoroughbred horse racing. Appendix 1 considers the provisions of the Bill in more detail.

18.The Minister may, in terms of section 87, subject to consultation with the Council and compliance with certain procedures, make regulations for the norms and standards for the manner and nature of the regulation and control of racing. The Minister may also make regulations regarding the minimum standards for licensing procedures.

18.1 We highlight that as there is only one Horse Racing Authority (the Jockey Club), reference to uniform norms and standards is inappropriate, as such terms are applicable where there are a multitude of organisations which are required to conform to the uniform norms and standards. This is another reason why the National Gambling Bill is not an appropriate regulatory tool in respect of the control of the sport of thoroughbred horse racing.

18.2.There are however a number of "horse racing operators" in the various provinces, which own or lease the premises on which racing events occur. The racing operators are the successors-in-title of what was previously known as the Racing Clubs and are the bodies which facilitate horse racing events.

19.We understand that the National Gambling Board intends proposing regulations which will be used to supplement the provisions of the Bill.

20.The Jockey Club has the following concerns regarding the legal framework contemplated by the Bill:

20.1The implications of the Bill on the sport of thoroughbred horse racing and the horse racing industry have not yet been thoroughly considered and debated.

20.2 Proper consideration must be given to the impact and interaction which legislation and regulations may have on the status and enforceability of existing rules, disciplinary structures and penalties regulating the sport of thoroughbred horse racing. Regulations which address some issues, while not considering others, will cast doubt on the status and enforceability of those rules not dealt with by the regulations.

20.3 Ill-considered legislation and regulations may undermine the existing administration and regulation of the sport of thoroughbred horse racing. This could have a detrimental impact on employment in the industry, as well as revenue and tax generated from the sport of thoroughbred horse racing.

20.4 The same licensing procedure proposed for testing agents who calibrate machines (section 38(1)(a)) is not an appropriate process for the licensing of an organisation regulating an industry with the complexities of the thoroughbred horse racing industry (section 38(1)(b)). There is only one horse racing authority. If the Jockey Club were not granted a licence then there would be a vacuum and the sport of thoroughbred horse racing in South Africa would cease. In the circumstances licensing is not an effective control mechanism.

20.5 The licensing process will effectively be used to implement policy. However, there is currently no defined policy to guide the National Gambling Board in the licensing process. If the Bill is passed in its current form the only possible policy guidance will be in the form of regulations. Until regulations are passed licensing will have to take place in a vacuum. In our view these important policy issues should properly be addressed by Parliament and not, it is respectfully submitted, by either the National Gambling Bill, or the Minister of Trade and Industry.

20.6 The Bill and contemplated regulations fail to consider and distinguish between the sport of thoroughbred horse racing and gambling and wagering associated with the sport of thoroughbred horse racing. Gambling on sports in South Africa and internationally is not limited to the sport of thoroughbred horse racing but includes a number of other sports such as boxing and cricket. It is submitted that what is really required is a proper framework for gambling associated with sport. The piece-meal approach proposed by the Bill is undesirable.

20.7 Part A of schedule 4 of the Constitution of the Republic of South Africa, No.
108 of 1996 refers to "Casinos, racing, gambling and wagering, excluding lotteries and sports pools" as functional areas of concurrent national and provincial competency. However, the Bill considers only casinos, horse racing, gambling and wagering. No other form of racing is considered by the Bill.

20.8 The Bill fails to properly appreciate and consider the complex Constitutional issues relevant to national and provincial legislative competency regarding the sport of thoroughbred horse racing:

20.8.1 "sports pools" are currently excluded as an area of concurrent competency - they are an exclusive national competency.

20.8.2 betting associated with the sport of thoroughbred horse racing could arguably fall within the ordinary meaning of a sports pool. For example "football pool" is defined in the Oxford Dictionary as "large-scale organised gambling on the results of football matches." This is equivalent to betting associated with the sport of thoroughbred horse racing. This is presumably why in the Lotteries Act gambling associated with the sport of thoroughbred horse racing is specifically excluded from the definition of "sports pools";

20.8.3 it is therefore quite arguable that while provinces have concurrent competency regarding racing, they do not have concurrent legislative competency regarding the betting associated with the sport of thoroughbred horse racing.

20.9 It is submitted that although the provisions regarding the horse racing authority are framed as laws of general application the effect of the provision is specific to the Jockey Club, the only horse racing authority in South Africa. This makes the Bill vulnerable to Constitutional challenge.

20.10 The Bill confuses the role of the horse racing authority with that of horse racing operators.

21.For the reasons set out below (and in addition to the reason given above), the framework proposed which promotes the use of regulations as a tool for regulating the sport of thoroughbred horse racing has a number of disadvantages.

21.1Regulations are more vulnerable to administrative review applications than legislation.

21.2Regulations may be held to be ultra vires where they seek to give greater powers than those contemplated by the original legislation.

21.3Regulations must be interpreted narrowly by the Courts, and in manner consistent with the original legislation in terms of which they are promulgated.

21.4The use of detailed regulations to establish rules for matters such as riders' responsibility and conduct in a race disregards the existing administrative framework of the sport. It could result in a number of practical difficulties and detrimentally impact on the management, administration and regulation of the sport.

21.5 Section 146 of the Constitution sets out circumstances in which national legislation will prevail over provincial legislation. It is doubtful that this section applies to regulations promulgated in terms of national legislation.

Framework proposed by the Jockey Club
22.It is the submission of the Jockey Club that the complexities of the sport of thoroughbred horse racing should be dealt with in a properly debated and considered stand alone Horse Racing Act, similar to the South African Boxing Act, Act No.11 of 2001.

23.The stand alone Act should provide for the establishment of a horse racing authority and horse racing board, with the power to make and administer rules for the control of the sport of thoroughbred horse racing. It should clearly set out the objects of the horse racing authority as well as the composition of the horse racing board, while addressing issues such as financial interest and conflict of interest.

24.The advantages of a clear national legislative framework should be combined with the existing advantages and flexibility of the regulation of the sport in terms of the JCSA's constitution and rules.

25.The approach seeks consistency with the recommendation by the Ministerial Task Team on Sport of July 2003 which submitted:

"If South Africa is to be successful in sport at the elite level it is absolutely essential that there be one authority charged by the government with responsibility to develop, co-ordinate and monitor a comprehensive system established in accordance with broadly agreed national strategy and run on strictly business lines."

26.It is submitted that this comment made regarding sports is equally true to the success of the sport of thoroughbred horse racing.

27.In terms of the legal framework the objects, status, powers and ability of the horse racing authority to determine and administer rules for the regulation of the sport should be established by national legislation rather than regulations.

28.Initially the Jockey Club considered drafting a new chapter to the Bill. However, in the course of drafting it emerged that the best manner in which to regulate the sport of thoroughbred horse racing may not be in a Bill intended primarily, as the name suggests, for gambling. The complexity and uniqueness of the sport of thoroughbred horse racing warrants an independent, stand alone Act focused on the sport itself. This is consistent with:

28.1 the approach adopted by the Government in other sports with specific public policy considerations. For example, boxing is regulated by the South African Boxing Act No.11 of 2001;

28.2 international practice most English common law jurisdiction countries have stand alone legislation. For example in New South Wales the thoroughbred racing board is established by the Thoroughbred Racing Board Act, 1996 while in New Zealand the Racing Act, 2003 provides for governance of the racing industry.

29.The legal framework proposed would seek to retain the contractual relationship between the horse racing authority and its members. The framework also provides a mechanism whereby the national horse racing authority could continue to develop and refine the existing rules developed by the Jockey Club. We have attached a draft Bill, illustrating the proposed framework as appendix 2.

30.There are several examples of legislation which expressly recognises an authority and provide for it to perform regulatory functions. For example, the General Council of the Bar is expressly recognised by statute even though it is no more than a voluntary grouping of constituent bars. Similarly, section 57 of the Independent Broadcasting Authority Act No.153 of 1993 provides that broadcasting licensees must adhere to the Code of Advertising Practice as from time to time determined and administered by the Advertising Standards Authority of South Africa.

Amendments proposed

31 It is therefore proposed that the definition of "horse racing authority" and, in particular, section 38(1 )(b) be deleted from the Bill. The reference to "racing" in section 87 must likewise be deleted.

32. If the proposal in { REF _Ref50419315 \r \h \* MERGEFORMAT } is not accepted then we suggest that, without limiting the rights of the Jockey Club, the following amendments should occur.

32.1 The definition of "horse racing authority" should be amended to read:

"horse racing authority" means the association which regulates the sport of thoroughbred horse racing on a national

32.2A "horse racing operator" should be defined to have a meaning similar to that ascribed in the current Bill to the "horse racing authority" that is:

"means a body or association other than a regulatory authority, [or the horse racing authority that facilitates horseracing events conducted on premises licensed by a provincial licensing authority"

32.3 Section 38(1) (b) be amended to read:

"0operate as a horse racing operator"

32.4 A new clause should be added which should provide:

'A horse racing operator shall comply with rules determined by the horse racing authority from time to time."

32.5 A new sub-section should be provided to section 48 which should specify that a provincial licensing authority may only impose conditions regarding a licence issued in terms of section 38(1 )(b) if "the condition is necessary for the effective control of gambling."

32.6 The reference to "racing" in section 87(2)(a)(i) be deleted.

32.7 The Bill should extend the functions of the National Gambling Policy Council, set out in section 62 of the Bill, to include "the determination' and establishment of a policy for racing including proposals regarding an appropriate legislative framework-"

32.8 The transitional provisions should be amended to provide that the horse racing authority at the time of the commencement of the National Gambling Act shall be the body that controlled horse racing as at that date.

Appendix 1
Provisions of the National Gambling Bill, B48 - 2003 regarding the sport of thoroughbred horse racing

1. The draft National Gambling Bill of 30 July 2003 ("the draft Bill") proposes to repeal the National Gambling Act, 1996, and re-enact many of its provisions in a new form, while adding several new provisions which introduce new policies for the concurrent national and provincial regulation of casinos, racing, gambling and wagering.

2. "horse racing authority" is defined in section 1 of the draft Bill as:
"a body or association, other than a regulatory authority, that officiates at horseracing events conducted on premises licensed by a provincial licensing authority"

3."Gambling industry" is defined widely in section 1 as:
"any matter regulated in terms of this Act, but does not include a regulatory authority"

This is a wide definition and is likely to include a horse racing authority, which is not included in the definition of a regulatory authority.

4. "Licensed premises" is defined in section 1 of the draft Bill as:
"specific premises that are named or described in a licence issued in terms of this Act or applicable provincial legislation"

5. "Provincial legislation" is defined as meaning an Act of a provincial legislature concerning the regulation of casinos, gambling, racing or wagering. Ordinances regulating racing are apparently excluded from the definition.

6.Section 28 requires the licensing of "gambling industry" employees.

6.1A person must not engage in any work within the gambling industry that is required to be licensed in terms of this Act or applicable provincial legislation, unless that person:

6.1.1 has a valid national employment licence permitting that work; or

6.1.2 provincial employment licence permitting that work issued by the provincial licensing authority in the province in which the person proposes to work, or does work.

6.2 A licensee must not employ a person, or permit an existing employee, to engage in any work within the gambling industry, unless that employee has a licence.

6.3 An employer of a person who is licensed, as required by the section, must disclose to the applicable licensing authority within the prescribed time, any prescribed information that concerns a licensed employee or agent of the employer.

7. The language used in section 28 is somewhat unclear and it is doubtful whether or not it is intended that employees of the horse racing authority and/or other employees engaged in the sport of thoroughbred horse racing should be licensed. Although it is submitted that this is not the intention of section 28, this should be clarified.

8. Section 38(1 )(b) provides that an applicant must apply to a provincial licensing authority for a national licence "if the applicant seeks a licence to ... operate as a horse racing authority."

8.1 According to section 37 a national licence, such as a licence to operate as a horse racing authority is valid throughout the Republic and authorises the licensee to conduct, engage in, or make available the licensed activities at any place within the Republic.

8.2It is a condition of every licence that the licensee comply with applicable provincial legislation.

8.3 According to section 40(1) upon receiving an application for a national licence, a provincial licensing authority must, amongst other things "conduct the investigations prescribed by this Act with respect to probity, technical competence, industry competitiveness or any other prescribed

8.4 The provincial licensing authority may refuse to grant the licence or grant the
licence "specifying any conditions of the proposed licence with such
conditions."

8.5 The provincial licensing authority must notify "each other regulatory authority' (that is the Board and the other provincial licensing authorities) if it proposes issuing a licence. If there are reasonable grounds for believing that the provisions of the Act have not been complied with or if requested by two or more provincial licensing authorities the Chief Executive Officer must direct an inspector to conduct an oversight evaluation of the application
report, and recommendations of the provincial licensing'(

9. Section 52 sets out a number of circumstances in which a "person must not hold a licence ... or 5% or more of the total financial interest in the licensee of such a
licence" This includes fairly standard circumstances such as where a person is a public servant or Political office bearer, younger than eighteen, an unrehabilitated insolvent, not a fit and proper person to be involved in the business concerned, mentally unfit or disordered, convicted during the previous ten years, in the Republic or elsewhere, of theft, fraud, forgery or uttering a forged document, perjury, an offence under the Corruption Act, No 94 of 1992 etc.

10.Section 53 requires that when considering an application for a licence, other than an employment licence, or when considering an application for the transfer of a licence, a provincial licensing authority must consider the commitments if combating the incidence, and social and economic consequences, of addictive and compulsive gambling and may impose reasonable and justifiable conditions in this regard. These commitments must be considered at 'every anniversary of the issuance of a licence" and the provincial licensing authority may impose further or different reasonable and justifiable conditions.

11.The Minister may, in terms of section 87, subject to consultation with the Council and compliance with certain procedures, make regulations for the norms and standards for the manner and nature of the regulation and control of racing. The Minister may also make regulations regarding the minimum standards for licensing procedures.

12.The role of the Jockey Club is not considered in Schedule 1, the transitional provisions of the draft Bill.