• The general principles which govern gambling legislation and whether, in the light of these, South Africa needs a new National Gambling Act
• Individual items concerning which I believe the government’s proposals could be improved, including problem gambling;remote/internet gambling; slot routes; the lottery; casino exclusivity; co-operative governance
• The political appropriateness of the timing.

Gambling laws are of two main kinds: those which are primarily designed to make it harder for people to gamble; those which are primarily designed to make it easier for people to gamble.

Traditional legislation around the world has been mostly anti-gambling designed to stop people indulging in an activity deemed by governments to be either wicked or unacceptably dangerous. Some current legislation (such as the Kyle bill in the US intended to curb internet gambling) is of this kind.

Most modern legislation, including South Africa’s 1996 legislation and, for example, the current legislation being contemplated by the UK, is designed to make it easier for adults who wish to do so to gamble at well-regulated commercial venues.

Amongst the most important reasons why modern governments introduce new gambling laws of this second sort are:

• To recognise the rights of adults to decide for themselves how they will spend their own time and money in the pursuit of enjoyment
• To eliminate an illegal industry which cannot be realistically suppressed through normal law enforcement processes
• To ensure that commercial gambling is conducted fairly
• To minimise the harm caused by excessive gambling
• To raise comparatively unresented taxes for funding public interest projects
• To attract tourists
• To remove deficiencies in existing legislation e.g. by resolving incoherencies or by addressing specific forms of gambling activity not covered by previous legislation – e.g. introducing a national lottery, regulating remote gambling via the internet, cell phones and interactive TV

The existing act was passed in South Africa primarily to deal with the massive illegal industry which had proliferated throughout the Republic and secondarily as a way of raising relatively popular taxes or quasi-taxes to fund public interest projects via provincial gambling levies, the good causes fund of the lottery and the tourism infrastructure such as conference centres which casinos were required to contribute to as a condition of licence.

The act in its implementation has been, for the most part, highly successful in achieving these goals: the illegal industry has been virtually eliminated, substantial revenues have been raised for the state and substantial investment in infrastructure – much of it related to non-gambling, tourism-enhancing projects – has been attracted. Moreover, operators in South Africa meet international standards in respect of probity requirements; their operations are regulated so as to ensure that customers are treated fairly; and South Africa has pioneered an effective structure for addressing problem gambling which other countries, including the UK and parts of North America, are now seeking to emulate.

Where the act is arguably deficient is in that:

• it does not address internet and other forms of remote gambling
• it does not spell out responsibilities for problem gambling
• by stipulating the maximum number of casinos per province it inadvertently authorises an effective indefinite exclusivity for some casinos
• its treatment of how concurrent jurisdiction between the provinces and the national government is to be implemented has not prevented conflict and confusion in this area and has led to an undue proliferation of licensing and other regulatory procedures.

If South Africa is indeed to have a new gambling act, then like all other acts, it should begin by setting out clearly what its objectives are and what its guiding principles are. The proposed bill does neither of these things. This makes it difficult to judge the individual clauses of the bill in respect of what they are trying to achieve. It also makes it impossible to know what general powers are being reserved to the Minister to further the objectives of the act.

The reason for this is, as indicated in the accompanying memorandum, that the proposed bill is really a compendium of amendments which are only being put together as an act because the body of amendments has grown to a point where it is deemed to have become too unwieldy to be introduced as a set of amendments.

A better solution would seem to me to be to slim down the body of the amendments to the point where they can be easily and successfully taken through parliament. Nor is this particularly hard to do provided government focuses very clearly on what it is trying to accomplish, i.e. to remedy the deficiencies in the existing act while retaining the vast majority of the provisions which have made the existing legislation, from most points of view, the equal of the best in the world.

In short, I see no need for a new act as opposed to some effective amendments to deal with the deficiencies identified above. If, however, the government does proceed with a new act it should spell out why it thinks such an act is needed.

Problem gambling in South Africa is, in fact, more comprehensively and coherently addressed than in other, older jurisdictions. Nor is it an issue which is well addressed in detail in an act of parliament.

On the other hand, legislators will rarely countenance relatively liberal gambling laws unless they are satisfied that the potential harm caused by excessive gambling will be minimised.

I recommend that this be made the responsibility of the Minister and that a relatively short clause be introduced in the act or as an amendment to the existing act which states:

"The Responsible Minister shall ensure that all appropriate steps are taken to ensure that the incidence of problem gambling is minimised, that high quality help is available to those who develop problems with excessive gambling and that gamblers and potential gamblers are adequately informed about the risks of gambling and about how to access help if they or those close to them develop problems with gambling."

The time is largely passed when jurisdictions can seek to turn internet gambling into an export business. However, the need to address internet and other remote forms of gambling including gambling via interactive TV and cell phones, remains pressing because people can already gamble at lightly regulated or unregulated sites abroad where there is no means of ensuring that the games are honest, no protection for children and other vulnerable people and no taxes paid to the SA government.

The bill proposes simply to make it illegal in SA either to supply or to consume internet gambling services and products,. This will have the effect of turning remote gambling into an illegal industry with all the problems of enforcement which are associated with illegal gambling re-emerging in an especially acute form. This is because remote gambling typically takes place in the home (or office). Consequently, if the police are seriously to enforce a law making it illegal to play virtual casino games via a server located in, say, Antigua it will be necessary for the police to raid private homes and/or rely on informers amongst people living or working in private homes. This is not likely to be perceived as an appropriate use of police resources.

A better solution would be to follow the practice which is increasingly being instituted in Europe of allowing licensed land-based operations to supply by remote means the games which they are already licensed to provide at their land-based venues. In this way it would be possible to insist on effective player identification procedures, anti problem-gambling strategies and high levels of player protection. Implementing such a policy would also generate some tax revenues for the state.

This could be accomplished by an enabling amendment to the existing act rather than by new legislation as envisaged, but not contained, in the proposed bill.

It seems to me likely that, at least outside Gauteng, it may be desirable for provinces to place slots outside casinos in a small number of venues housing up to forty LPMs rather than in a large number of venues housing five machines. It is not clear to me how this would be authorised under the distribution of authority proposed in the new bill.

My own (admittedly controversial) view is that it is better to subject all gambling, including lottery gambling, to a single law and regulatory authority. Governments typically don’t do this because they like to maintain the attractive fictions that lotteries are not gambling and the compulsory contribution to "good causes" is not taxation. This dissimulation is largely harmless but not entirely so. It leads in particular to:

• Incoherence in regulation as lottery boards are expected to promote the profitability of the business they regulate whereas other gambling boards are not
• Perceived inequities, e.g. about codes of practice in relation to advertising.

However, in South Africa, the biggest problem relates to problem gambling. While it is true that playing the lottery is, in general, the safest form of gambling because the amount staked is small and the opportunities to play are relatively infrequent, it is also true that social and personal problems resulting from excessive lottery play are considerably more common (probably between fifteen and twenty times more common) in South Africa than they are in countries where poverty is less widespread and where there is a welfare state. At all events, the same requirements in respect of social responsibility should be required by law of lottery operators and regulators as is required with those who operate and regulate other forms of gambling.

The proposal to allow the Minister to change retrospectively the duration of a licence is likely to raise all sorts of legal problems since casinos will argue that they made their investment decisions on the assumption that their licences would endure for as long as they did nothing to warrant withdrawal of their licence.

Presumably the point of this proposal relates not to a wish to require existing operators to prove after a certain amount of time that they are still "fit and proper" persons to be running casinos.but rather to the wish to prevent casinos from acquiring de facto exclusivity in perpetuity even though de jure the period of exclusivity is limited in the conditions of licence.

This would come about where the number of licences in a province is set by law so that after a period of, say, fifteen years when the initial exclusivity had expired, it would still be impossible for a province to license a new casino project (or re-licencse an existing one) and thereby secure a new set of economic benefits ("economic rents") because it could not add to the number of casinos licensed within its jurisdiction nor close down an existing operation.

This seems to me to be a legitimate concern for government to have and there seem to me to be a number of ways in which this concern could be met with the agreement of the casinos. However, to insert this provision in its present form and without negotiation with the casinos seems to me to risk a legal and constitutional challenge based, inter alia, on the right to fair administrative justice.

This has been by far the least successful aspect of the current South African gambling legislation. It has led to regular disputes, some of them involving litigation, between the Centre and the Provinces. It has led to incoherence in regulation between provinces, for example in respect of advertising. It has been wasteful of public money. It has also involved unnecessary duplications, for example of probity investigations. Above all, it has led to a situation in which South Africa has an inordinate number of people expensively employed in the regulation of a comparatively small gambling industry.

The reasons for this are historical and have little to do with good public policy in relation to gambling. Moreover, no-one would deny that an undue profusion of gambling regulators has been a small price to pay for South Africa’s constitutional settlement. Nevertheless, public policy in respect of gambling ought not to be driven by the need to accommodate sectional political interests if these amount to little more than a need to preserve the jobs of regulators or the desire of regulatory bodies to maximise their powers.

The proposed bill rightly identifies this as the major problem which needs to be addressed. Unfortunately, it addresses the problem by duplicating the work of regulatory bodies rather than by delineating clearly distinct functions for provincial boards, the national board and the members of Minmec and their officials in either its presnt form or with a proposed new composition.

It seems to me that this could be remedied by stipulating that:

• the politicians through Minmec and the associated officials should have responsibility for setting policy goals and for reconciling conflicts which may emerge between provinces or between provinces and the NGB
• the National Board should be responsible for licensing, regulating and assisting with law enfiorcement with regard to the issues which transcend provincial borders or need national co-ordination, including the licensing of individuals and companies as "fit and proper" to conduct gambling businesses; the licensing of gambling devices and their monitoring; assisting with the elimibnation of illegal gambling and money-laundering in interprovincial and international contexts; regulating advertising; overseeing norms and standards relating to problem gambling; researching issues and gathering, storing and disseminating information relevant to national concerns
• the Provincial Boards would retain responsibility for licensing, regulating and assistting with law enforcement in all matters which are specific to the individual province, including licensing premises, securing compliance with all rules of good conduct at premises within the provincial boundaries; addressing illegal gambling within the jurisdiction; researching issues and gathering, storing and disseminating information relevant to the province

All bodies should be encouraged to participate in policy-making – as is envisaged in the expanded Minmec - as they each will bring their own special concerns, experience and insights to this process.

It is worth also mentioning under this heading the work of the South African Advisory Council for Responsible Gambling (SAACREG). This body already serves a valuable function as the only forum in which all stakeholders, except at present government departments, involved with Responsible Gambling – National and Provincial Regulators, the Lottery Board, casinos, Uthingo, racing, bingo, slot routes, machine manufacturers and civil society have a right of representation. Although I do not recommend that SAACREG be established as a statutory body in the proposed national act, I believe it would be very useful if this body continued to function as a non-statutory advisory body. It seems likely that the Minister and DTI will find the existence of such a widely representative advisory body extremely helpful. Perhaps also it should extend its concerns to cover wider polciy issues relating to good conduct in the operation and regulation of commercial gambling.

8. Political Considerations and Timing

I conclude with a general observation which would apply to any legislation which might be brought before parliament in South Africa at the present time.

In every jurisdiction in the world where new law relating to gambling is proposed the public and parliamentary debate reopens and centres on the question not of how to improve the existing regulation of legal gambling but on whether it is desirable to have legal gambling in the first place. Moreover, the argument almost exclusively focuses on the issue of problem gambling and whether legalised gambling does not in fact ruin lives on a large scale and whether prohibition wouldn’t be a better policy.

In the light of recent commentary in the SA media as well as of the known concerns of many ministers and parliamentarians, it is clear that this is what would happen in South Africa. It is also relevant that gambling is an issue which politicians facing an expected general election and seeking to enhance their popularity with voters often seize on in a fairly simplistic way. I fear that in these circumstances emotion would overwhelm reason. A possible outcome would be that parliament will ask government to shelve the present legislation until it can bring forward measures to reduce the availability of commercial gambling or even to recriminalise gambling.

At all events I believe that bringing a gambling bill to parliament before the next election runs a substantial risk of causing the Government, the Minister and the DTI substantial political embarrassment.