Submission to the Portfolio Committee on Trade and Industry

15 September 2003

1. The South African Council of Churches (SACC) is the facilitating body for a fellowship of 23 Christian churches, together with one observer-member and associated para-church organisations. Founded in 1968, the SACC includes among its members Protestant, Catholic, Independent, and Pentecostal churches, representing the majority of Christians in South Africa. SACC members are committed to expressing jointly, through proclamation and programmes, the united witness of the church in South Africa, especially in matters of national debate.
2. The SACC welcomes the opportunity to make submission on the National Gambling Bill [B48-2003] (hereafter "the Bill") especially as gambling and the gambling industry remain, much like the liquor industry, morally and ethically problematic. While there is no common position on gambling amongst SACC member churches, we have shared concerns about the impact of the burgeoning gambling industry on the social development of poor and marginalised communities in South Africa.
3. The National Gambling Bill’s objects are twofold: the repeal of the national Gambling Act, 1996 (Act 33 of 1996) and the introduction of revised systems for regulating and monitoring an industry that generates annual revenues in excess of R6,8 billion, thanks in part to the proliferation of casinos. There is a compelling need to strengthen public control of the industry and to minimise any adverse impact on the poor. The Bill therefore aims to introduce reduce the harmful social consequences of compulsive and addictive gambling; to establish a common scheme of prohibited conduct relating to casinos, racing, gambling and wagering; to introduce a uniform scheme of national licensing; and to establish a new inter-governmental consultative body, the National Gambling Policy Council. Chapter 3 deals with the allocation of casino licenses. It authorises the Minister to establish, from time to time, maximum numbers of licenses using criteria that balance market forces, black economic empowerment, and the consequences of over-stimulation of gambling. Although black economic empowerment deals may fulfil legislative requirements, they do not automatically generate economic benefits for the wider black community. For this reason, we understand and welcome the restructuring of the industry, as well as the creation of a National Gambling Policy Council whose main functions are to consult on gambling policy, laws, national and provincial gambling matters; monitor gambling matters and resolve any disputes amongst provinces that might arise.
4. The SACC also welcomes the provisions designed to regulate expansion of the gambling industry and other aspects gambling, including the prohibitions on illegal gambling, gambling over the internet, and enforcing debt incurred by a minor or excluded person.
5. Whilst we recognise that the Bill must balance competing interests and appreciate its sensitivity to the potentially harmful social effects of gambling, we believe that further attention must be paid to the following issues:

• the social impact of gambling on the poor and the need for social responsibility programmes to go beyond a narrow focus on compulsive gamblers;
• community consultation in the issuing of gambling licenses;
• the posting of odds on all gambling devices and at gaming tables;
• the relationship between alcohol and gambling;
• the need for stricter national regulation on the roll out of limited pay-out machines; and
• the industry’s capacity to enhance broad-based black economic empowerment.

1. The Ecumenical Service for Socio-Economic Transformation (ESSET) tells us that the average South African gambler is likely to be 30 to 50 years of age, earning less than R2 500 per month, and spending more than 10% of his or her income to win less than R50. One in seven gamblers borrow money to gamble, and one in four gamble with money normally used for household purposes. By simple extrapolation it is not hard to work out that the gambling industry absorbs more than five times as much money as it pays back to the community (if we can assume that winnings paid to individual gamblers ultimately benefit the communities in which they live). Gambling not only exacerbates poverty, but recent studies also indicate that South Africans spend an alarming amount, per capita, on gambling in comparison to other developing (and even some developed) countries. South Africa is a gambling nation chasing after the mirage of quick and easy financial security. Dr. Stephen Louw, writing on the role of lotteries in South Africa, says the bewitching effect on the nation is like "Smoke and Mirrors". The same can be said of the gambling industry as a whole and, sadly, of its effect on the poor.
2. Recognising that poorer households tend to be most vulnerable to the social problems associated with easy access to gambling, the SACC is adamant that any national policy framework for legalised gambling must include the strongest possible measures to ensure that the industry behaves in a socially responsible manner.
3. With this priority in mind, the SACC welcomes several of the provisions of the Bill intended to shield compulsive gamblers from temptation and enhance their access to treatment. In particular, we applaud:

• The prohibition on gambling on credit [sec. 13(1)(a) and (b)];
• The prohibition on the installation of automated cash dispensers in premises licensed for gambling [secs. 13(1)(d) and 17(2)];
• Provisions for the preparation of a national register of excluded persons and the associated obligation on license holders to take reasonable measures to prevent an excluded person from gambling [sec. 14];
• The prohibition on 24-hour opening of premises licensed for gambling [sec. 17(3)]; and
• The requirement that gambling license holders post notices warning of the dangers of compulsive and addictive gambling [sec. 17(4)] and make available information on treatment of problem gambling [sec. 14(10)(a)(ii)].

1. At the same time, we believe that more can and should be done to minimise the social impact of legalised gambling, especially in poor communities. Currently, the Bill's social responsibility provisions are narrowly focused on addressing the problem of compulsive gambling. However, even people who are not necessarily gambling addicts may be tempted to wager limited household resources in a desperate attempt to achieve greater financial security. A proactive approach to social responsibility in the gaming sector must emphasise prevention rather than just caring for the afflicted.
2. We therefore urge that the National Gambling Policy Council (NGPC) be explicitly mandated to monitor the effects of gambling on different socio-economic groups, to assess the impact of social responsibility initiatives in the industry and to recommend new policies to mitigate the harmful effects of gambling. International evidence on the socio-economic impact of gambling and casino development is mixed, but even where casinos have been successful in creating jobs, many of the employment opportunities have either been short-term (such as construction) or very poorly paid with few benefits. There is even less evidence that casinos have helped surrounding communities to thrive, especially in impoverished areas such as Native American reservations in the United States. We recommend that the NGPC initiate similar studies in and around communities affected by the gambling industry, especially in areas around casinos. Proactive research could help to clarify the positive and negative affects of the gambling industry on family and community life in the South African context.
3. The NGPC must also give further attention to:

• The development of policies and programmes that prevent problem gambling, as well as fund treatment of damage on families, especially poorer households.
• Gambling patterns in different socio-economic groups, in order to discourage the proliferation of games that have particularly negative impact on poorer and more vulnerable groups.
• The initiation of treatment programmes for compulsive gamblers that go beyond helplines and telephone numbers.

1. In addition, when considering license applications a provincial licensing authority should be required to consider the applicant’s commitment to combating the negative social and economic consequences of gambling in general, not simply the incidence and consequences of addictive and compulsive gambling (as presently required by section 52(1)(a).

Community consultation in the issuing of gambling licenses

2. At present, the Bill does not require licensing authorities to solicit community comment on applications for the licensing of gambling premises or to take community opinion into account in the issuing of licenses.
3. Section 17(1) prohibits the operation of any licensed gambling premises within a prescribed distance from a school. While we support this provision, we believe that that communities may wish to establish gambling exclusion zones around other facilities, such as churches or community halls or even to prohibit the licensing of any gambling premises within the boundaries of a community. We propose that licensing authorities be required to publicise applications for gambling licenses, to provide a period for public comment, and to take any comments received into account before issuing licenses for gambling premises, including the situation of limited pay-out machines. Provision should also be made to allow communities to define exclusion zones for the awarding of gambling licenses or the placement of limited pay-out machines.

 

Duration of licenses

4. Section 48(5)(b)(i) requires that all national and provincial licenses specify the duration of the license. However, the Bill does not establish a maximum period of validity for gambling licenses. We believe that the Bill should establish a uniform national standard in this respect. Our preference would be for this licensing period to be as short as possible. Requiring license holders to apply for license renewal on a regular basis would enhance licensing authorities oversight of the industry, permit periodic assessment of the social impact of gambling and (if our above recommendations are accepted) allow licensing authorities to gauge trends in community opinion.

 

Duty to post odds

5. In line with the principle of full disclosure and as a deterrent to irresponsible gambling, we propose that license holders be required to post the odds of winning various prizes on every gambling machine or device and/or at every gaming table.

 

Alcohol and Gambling

6. Casinos are known for serving or selling alcohol in gaming areas. As alcohol tends to lower people's inhibitions, gamblers have a tendency to wager more recklessly the more freely they imbibe. Consequently, we welcome the prohibition [in section 13(1)(c)] on the provision by license-holders of drinks and other refreshment free of charge or at a discounted price.
7. However, the Bill does not explicitly acknowledge the relationship between drinking and irresponsible gambling, nor does it require license-holders to develop strategies to minimise alcohol consumption on licensed premises as a component of their social responsibility programmes. We therefore recommend that the Bill clearly require that the issue of alcohol consumption be considered as a component of all social responsibility programmes and that the NGPC be mandated to advise on appropriate measures to discourage drinking in gaming areas.

 

Limited Pay-out Machines

8. There is a concern that deregulation of the industry may well outstrip the regulatory capacity of mechanisms like the Council, the Board and Provincial structures. Already in the Western Cape communities are protesting the roll out of Limited Pay-out Machines (LPMs), approved at Provincial level by the previous government. Local communities, especially impoverished ones, complain that these gambling machines will create further social instability and degeneration. National government needs to establish clear conditions for the introduction of LPMs. This will also establish standards to which communities resisting the installation of LPMs can hold other spheres of government. In some Provinces, a more proactive social responsibility program will need to be devised to address the roll out of LPMs.

 

Black Economic Empowerment

9. The gambling industry's lack of impact on black economic empowerment (BEE) is matter of concern. If the industry does not clearly benefit historically disadvantaged investors and the (black) poor do not gain advantage from the industry, what is the rationale for creating a climate conducive to the expansion of the industry?
10. We propose that the National Gambling Board be charged with monitoring the structure of the industry and making recommendations to the NGPC on mechanisms to enhance the decentralisation of the industry and its capacity to promote broad-based black economic empowerment.