COSATU submission on the

National Gambling Bill

[B48-2003]

 

 

Submission to the Portfolio Committee

on Trade and Industry

19 September 2003

DO WE NOT WANT TO ENGAGE WITH THE PROVISIONS OF THE BILL AT ALL.

WHAT ARE WE CALLING FOR IN THE LIGHT OF SACCAWU’S CALL FOR ITS SUSPENSION

  1. Contradictory purpose and objectives of Bill in a sobering context

Whilst COSATU welcomes the opportunity to make this submission, it notes with great concern the introduction of the National Gambling Bill (hereafter referred to as ‘the Bill’). As it is currently drafted, the main objectives of the Bill attempt to re-enact many of the provisions of the National Gambling Act of 1996 ‘in a new form. It also adds provisions in order to introduce new policies for the concurrent national and provincial regulation of casinos, racing, gambling and wagering.

If the Bill remains uncontested and is enacted with little or no modification, it will:

In a report to Parliament in 2001, the Minister of Trade and Industry clearly reflected his awareness of the socio-economic Impact of gambling. He mentioned the need for ‘programmes to be established to alleviate the plight of children, the problems of regressive gamblers, and the broader socio-economic impact of gambling.’

In addition, experiences and socio-economic impact assessment studies by the various provinces are sobering and provides a clear warning to government about the negative consequences of gambling on the quality of life of the most vulnerable in our country. For example, the Mpumalanga province is not averse to granting casino licences, currently boasting 3 casinos in their province.

Yet, as far back as 1998, this provincial government’s own research findings found that ‘a sizeable displacement of household expenditure was felt to be attributable to the three licenced casinos’. Similar findings were reported in the Limpopo province.

The Northern Cape reported problems experienced such as ’pensioners who gamble with what little money they have, illegal casinos and numerous complaints from welfare organisations. Where does QUOTE END? In this sparsely populated province there has been the allocation of 2000 limited payout machines. Approximately one for every 300 people!

Further findings of the National Responsible Gambling Programme in February 2001 found, amongst other, that within the Northern Cape, Gauteng Eastern Cape, Kwazulu-Natal and Free State:

Similarly, research commissioned by Business Day in 2001, found that people spend about R2 billion a year on the lottery. Approximately 50% of adults in the urban areas buy tickets. About 40% earn between R800 and R4000 a month, and 11% earn under R800 a month. Some of them admit that they cut spending on necessities like food and clothing in order to play the Lotto.

Some players are clearly addicted to gambling: most of the biggest players, who spend over R625 a month on the Lotto, are single African men, mostly earning under R4000 a month. The poor pay for the lottery, but reap few of its benefits.

Abroad there are even more worrisome trends. One study found that pathological gambling is more prevalent among youths than adults and that gambling may be more addictive than alcohol, smoking and drugs amongst youth. It was found that between 5-8% of young Americans and Canadians have a serious gambling problem, compared with 1-3% of adults. They also found that ‘antisocial behavior, being male and frequent alcohol use seemed to increase the likelihood of the frequency of gambling’. ‘'With gambling becoming more accessible in U.S. society and having the first generation of youth be exposed to this widespread access, it will be important to be able to intervene in children's and adolescents’ lives before the activity can develop into problem behaviour.'

COSATU urges the Committee to seriously consider these findings. Opening the Pandora’s Box of gambling hasve thus far led to serious consequences, as highlighted above. In South Africa, it is not yet clear what the future impact would be on youth and adolescents.

Clearly, action to counter the negative effects of gambling, and to limit its proliferation, should not just be discouraged with confined to media adverts encouraging people to ‘gamble with their heads and not their hearts’; and providing counselling for people with gambling addictions. Such an approach could be compared to spreading a deadly disease, and providing people with sticking plasters to cover their wounds.

  1. COSATU’s position on gambling

Gambling has a long history in our country. The Wworking class communities engaged ofhave become enmeshed in gambling schemes as they a way of trying to survive the hard realities of a capitalist economic system brutality. These practices and schemes include such issues as horse racing, "umchina" schemes, etc. In the context of the high unemployment rate, many people have become discouraged from looking for work and are tempted to believe that gambling is their salvation. Abject poverty and desperation drives many poor communities to gambling.

Whilst we note that the legislation regarding the Lottery are not dealt with in the Bill, we see this as a key contributor to gambling in South Africa. Our submission therefore deals with the lottery as well as a component of gambling. As such, we do not believe that we should separate it from our submission.

COSATU's resolution on gambling and lottery was taken at its December 2001 Special Central Executive Committee (CEC). For several years, along with a number of religious and civil society organisations, COSATU has always criticised gambling and the lottery.

Cognisaant of the devastating impact of gambling on the poor, the nature of the lottery as a regressive tax, the problematic practice of government in sponsoring gambling both directly and indirectly in order to raise money, the CEC has resolved to, among other:

 

COSATU further believes that the approach of raising money through gambling preys on the desperation of our people. Millions of South Africans face grinding poverty that is rooted in soaring unemployment and low wages. Encouraging or creating an environment where gamblers think that they can only change their lives through luck, rather than helping us collectively solve the challenges we face, eventually leads to the destruction of these people and their families’ lives.

Even people with higher incomes and substantial disposable income are seriously being challenged by the negative consequences of their bad financial management, credit control, and other habits, including gambling.

According to the Indebtedness Report submitted to Parliament in June 2003,

there has been more than a 54% increase in judgements against debtors during the past eight years, while the average value of a civil judgement had fallen by twenty-one per cent in nominal terms to R5 500. It was found that cell phones and lottery tickets have taken spending away from other things. People have cut back on fast foods, and even on some day to day shopping to make way for new items. The Report states that the population is trying to address their aspirations, within an environment that has drastically changed against them.

Furthermore, of the 49 countries surveyed for the World Competitiveness Report, South Africa was lowest in economic literacy and second lowest in financial education.

  1. Perspectives from SACCAWU

One of COSATU’s affiliates, the South African Commercial Catering and Allied Workers Union (SACCAWU) is a major union in the Service Industry which serves sectors that include Hospitality, Gaming and Tourism.

Since 1993, this industry’s experience of restructuring processes was synonymous with retrenchments. According to SACCAWU, the implementation of the National Gambling Act of 1996, significantly contributed to over 10 000 jobs being lost by their members from about 4 major national chain hotels.

SACCAWU submits that, as the representative union in this industry, the Department of Trade and Industry (DTI) did not consult them about their perspectives of the National Gambling Bill. Their experience of ‘consultation’ was except with employers was that it often only took place at the stage where the latter wanted to justify retrenchments, by then a foregone conclusion. [ELROY: Link between above 2 sentences??].

SACCAWU proposes that the Bill should:

  1. DTI’s problematic inherent assumptions
  2. Whilst people have the right to spend their money in any legal way they see fit, it is largely the social cost and implications thereof that makes gambling such a controversial activity. Government plays an important role in ensuring that gambling does not adversely affect the lives of the citizens of South Africa.

    In October 2002, COSATU welcomed the Minister of Trade and Industry’s decision to delay the introduction of a daily Keno lottery. COSATU lauded the ‘minister’s action as a victory for logic and decency’, and encouraged the Minister to ‘prevent the rampant growth of even more innovative ways of taking money from the poor’.

    We cannot say the same of the DTI regarding the Bill. The rationale being applied at present by the DTI in promulgating this Bill is highly problematic. Whilst there are minimal improvements in the regulation of the gambling industry, there are far more problems with regards to some of the objectives of the Bill.

    The DTI and drafters of the Bill assumes that the Bill, once enacted will ‘provide for economic unity’, promote black economic empowerment (BEE), create employment, create new fixed investment and infrastructure, and generate revenue. We find this highly problematic and these assumptions go against the current realities being experienced.

  3. The response from capitalists to ‘debunk the myths of gambling’
  4. Abroad there has been the response of casino owners, and those with a vested interest in the gambling industry, have attempted to minimise or dispute the damning consequences of gambling.

    Some argue that people not only work hard through their labour, but also through the stock market, through interest on bank accounts, through inheritance, wagers at horse races, government-sponsored lotteries, and many other ways not directly related to labour. They further propose that gambling is a form of entertainment that would not change the basic economy.’

    Clearly these views emerge from those who have not directly experienced the debilitating impact of gambling, particularly on the disposable income of low-income earners, and the social costs of gambling. These perspectives should be strongly rejected.

    The South African reality of high income disparities cannot be disputed. Yet, the Department of Trade and Industry seems to be adopting elements of the rationale outlined above, viz. that gambling is not that harmful and that it is a viable and legitimate source of income.

  5. Recommendations and conclusions

In light of the above, COSATU therefore strongly objects to the flawed assumptions and motivations underpinning DTI’s presentation to Parliament on the Bill and cannot endorse this Bill, as it is currently drafted.

We argue that the Bill cannot be justified in a country with such skewered income distribution, where the majority of people live in poverty. The streamlining of licences, among other, does not ensure regulation of the industry, but we argue that it in fact promotes the industry in many respects.

Therefore, whilst the Bill now has reformulation that gives greater clarity, outlaws certain illegal activities, and claims to introduce standards to address problem gambling, these developments are clouded by some inherent assumptions that we consider flawed.

 

COSATU contends that it will indeed create new fixed investment and infrastructure. However, government subsidisation of private interests are unacceptable within the context of current cuts to the public service, high unemployment and socio-economic challenges facing government and serious development challenges that should address the pressing problems of unemployment, poverty, HIV/AIDS and food insecurity.

BEE objectives will benefit a few people, and is premised on a narrow-based interpretation, which COSATU finds unacceptable. We also seriously question the assumptions regarding job creation, given the experiences over the past few years in this sector. We argue that these are too few and problematic. They also come at a great social cost.

The current expansionary approach of gambling is problematic. We call therefore for the radical curtailment of gambling –it is for this reason that we have not engaged on specifics in the Bill.

Furthermore, the Bill merely recognizes the potentially negative socio-economic impact of gambling and the public policy objectives, but does not adequately address the mechanisms and resources to deal with the massive consequences and negative impact it will continue to have on people’s lives.