1. Purpose
The
purpose of this memorandum is to provide the inputs of the Mpumalanga Gambling
Board on the National Gambling Amendment Bill, 2007, which was published in the
Government Gazette No. 29489 for public comment.
2. Introduction
We wish to
reiterate our previous comments and concerns, in as far as same had not been
taken into account. With reference to
the Report on the regulation of interactive gambling, which to a great extent
informed the Policy, as well as the draft Bill, we wish to place the following
on record:
·
Generally,
a shortcoming in the report is that no reasons or motivations for proposals are
set out by the Committee. Furthermore, it does not appear that the impact of
the World Trade Organisation judgment on
·
It
must be noted that of the ten jurisdictions examined, only two, namely the
·
The
report does not give any solutions to the problems of underage gambling and
player protection. As far as player
identification is concerned, the report does not indicate the steps that the
interactive gambling operators must take to verify the identity, age and place
of residence of the persons registering to gamble on their websites.
·
The
Committee does not set out the reasons for its proposal that no prior limit
must be placed on the number of licences issued initially. In view of the fact
that the Minister limited the number of land based casinos in Provinces, as
well as the number of LPMs that can be rolled out by Provinces and that the
National Act provides for socio-economic impact studies to be conducted at
certain stages of the roll out of LPMs, it is not understood why interactive
gambling should be treated differently.
As far as draft
one of the National Framework for the regulation of interactive gambling is
concerned (we have not seen the approved Policy Framework), same is broadly
based on the above mentioned Report, and save for the comments, as set out
above, the following general concerns must be highlighted:
·
The
issue regarding bandwidth and the constraints arising form the
telecommunication structure remain a concern. Even though the Electronic
Communications Act, 2005 (Act No. 36 of 2005) may make provision for the
promotion of convergence in broadcasting, broadcasting signals and
telecommunication sectors, same has not taken place yet.
·
Even
though the draft Policy Framework states that the “regulatory approach” is to
be that “provincial authorities in which gaming servers may elect to locate,
would be mandated, through national legislation, to control, licence and police
interactive gambling, whilst the national authority would retain general
oversight and administration of this sector”, it states with regard to “regulatory
structure” that the national authority will, inter alia, “receive, consider and approve applications for
licences to operate within the interactive gambling”, whilst provincial
authorities will perform all of the other regulatory functions, for example
ensuring and enforcing compliance and collecting fees and taxes. Furthermore,
with reference to “conditions of licence”, it is stated that the provincial
licensing authority must set the conditions of licence. This is contradictory and untenable – only the
entity licensing a person or entity has the regulatory jurisdiction over such
person or entity to enforce and ensure compliance, etc.
·
As
far as the cost of regulation and monitoring is concerned, the draft Policy
Framework surmises that in view of the fact that the regulation of gambling in
our country is an area of concurrent national and provincial competence and
that there are existing national and provincial regulatory structures, the cost
of regulating and monitoring interactive gambling would not necessarily vastly
increase the required budgets of existing structures.
As far as the 2006
draft of the Bill, that was circulated to Provinces for comments/inputs, is
concerned, we wish to highlight the following concerns:
·
The
Bill is not in line with government’s broad policy framework for the regulation
of all forms of gambling, in that it does not take into account the provisions
in the Constitution regarding the concurrent jurisdiction between the National
Gambling Board (“NGB”) and Provincial Licensing Authorities (“PLAs”) to
regulate gambling in
·
Instead
of establishing uniform norms and standards as far as interactive gambling is
concerned and exercise general oversight, as is the purpose of the National Act,
the Bill reserves certain functions and duties relating to the regulation of
interactive gambling to the NGB exclusively, and contains provisions that PLAs
must somehow fulfil other duties and functions, with regard thereto.
3. Comments on the National
Gambling Amendment Bill, 2007
3.1 Insertion
of section 1A
We are of the
view that it is not necessary to insert this section, as this is a logical and
accepted process of interpretation of laws, when there are no precedents in the
South African common law or legislation.
3.2
Amendment of section 4
“Participates”
should read “participate”.
3.3
Insertion of section 5A
“(c)”
should be removed – this is not another paragraph.
3.4 Insertion of section 6B
In
view of our comments above and those to follow, the resolution of disputes
should be referred to the relevant PLA that should licence the interactive
provider and exercise regulatory control over it, and not the NGB.
3.5 Insertion of section 18A
We
are not sure what is meant by subsection (1); it is unclear why the NGB may
register a web site at which interactive game is conducted. If the intention is for the NGB to approve the registration of such a web
site, then our comment in 3.4 above is relevant, as the approval of the web
site will form part of the licensing process.
3.6 Substitution of section 32
The
provisions relating to the jurisdiction of the NGB is contrary to the draft
Policy Framework, that states that the “regulatory approach” is to be that “provincial
authorities in which gaming servers may elect to locate, would be mandated,
through national legislation, to control, licence and police interactive
gambling, whilst the national authority would retain general oversight and
administration of this sector”.
Furthermore,
the Bill is not in line with government’s broad policy framework for the
regulation of all forms of gambling, in that it does not take into account the
provisions in the Constitution regarding the concurrent jurisdiction between the
NGB and PLAs to regulate gambling in
More
specifically, in the current National Gambling Act, 2004 (Act No. 7 of 2004)
(“the National Act”), the NGB has no powers to issue national licences and the
PLAs in whose jurisdiction the applicants reside or conduct business, has the
power to issue national licences and exercise regulatory control over such
licensees.
Lastly,
in terms of Item 9 of Schedule 1 of the Financial Intelligence Centre Act
(“FICA”), an accountable institution is “a person who carries on a business in
respect of which a gambling licence is required to be issued by a provincial
licensing authority”. Therefore, if the
NGB is going to issue interactive gambling licences, the interactive provider
will not be an accountable institution in terms of FICA.
3.7 Substitution of section 33
The comments,
as set out in paragraph 3.6 above, are also applicable to this proposed
amendment.
Furthermore,
the typographical error in the word “acco0rdance” in section 33(h) must be
corrected.
3.8 Section 34
Should
the proposed amendments be effected and the NGB proceed to issue interactive
licences, then no provision has been made in section 34 with regard to the
entity that will exercise oversight functions over the NGB. The NGB cannot exercise oversight functions
over its own operations, functions and responsibilities.
3.9 Amendment of section 35
The
comments, as set out in paragraph 3.6 above, is also applicable to this
proposed amendment, in as far as the “the board” is included in subsection (1).
3.10 Amendment of section 37
With
reference to paragraph (b) of subsection (1A), see the comments made in
paragraph 3.6 above. Furthermore, it is
not understood why there is an option for PLAs to issue personal licences.
It is
also not understood why the proposed subsection (3) is included in this
section, which deals with the “authority of national licence”, as subsection
(3) deals with operational matters relating to interactive providers.
With
reference to subsections (4) and (5) – firstly, in all provincial legislation
it is the competence of the PLA to impose licence conditions; secondly, it is
not understood why interactive gambling licences are singled out, as licence
condition are imposed on all national licences; thirdly, in terms of the draft
Policy Framework the following minimum licence conditions must be imposed:
·
Identification
of licensee
·
Nature
of activity such licensee is entitled to engage in
·
The
type of licence awarded
·
The
duration of such licence
·
Nature
and specifications of operator internal control systems
·
Compliance
directions
·
Audit
requirements and approval of auditors
·
Financial
accounting
·
Maintaining
of records and reporting requirements
·
Monitoring
of activities
·
Technical
compliance and game testing
·
Any
other condition that may reasonable be attached in order to give effect to the
regulatory objective and/or for the effective regulation of this sector.
3.11 Insertion of section 37A
We refer to our
previous comments, namely that no reasons have ever been provided why no prior
limit must be placed on the number of licences issued initially. In view of the fact that the Minister limited
the number of land based casinos in Provinces, as well as the number of LPMs
that can be rolled out by Provinces and that the National Act provides for
socio-economic impact studies to be conducted at certain stages of the roll out
of LPMs, it is not understood why interactive gambling should be treated
differently.
However, even if the
number of licences are limited, in terms of the World Trade Organisation
Appellate Body Report on the United
States – Measures affecting the cross-border supply of Gambling and Betting
Services WT/DS285/AB/R, once South Africa allows internet gambling, it will
be compelled to allow an unlimited number of overseas internet sites to target
and advertise to South Africans.
3.12 Amendment of sections 38 and 39
We
wish to reiterate our comments, as set out above. However, if it is
acceptable that the NGB reserves the function of licensing the interactive providers,
then the Constitution needs to be amended to reflect this exception, and the
NGB must undertake the full regulatory responsibility with regard to
interactive gambling. It cannot be
expected that a provincial regulator who has not licensed a person, must
exercise some or other regulatory control over that person.
Furthermore,
similar to provincial legislation, all the substantive provisions relating to
applications must form part of the draft Bill and cannot merely be prescribed
by means of Regulations to the Act.
3.13
Amendment of sections 40 and 43
The
comments, as set out in paragraph 3.6 above, is also applicable to this
proposed amendment, in as far as the “the board” is included.
3.14 Amendment of section 48
Firstly,
the comments, as set out in paragraph 3.6 above, are also applicable to this
proposed amendment. Secondly, it is not
understood under which circumstances a temporary licence will need to be issued
to an interactive provider. Under normal
circumstances, temporary licences are issued mostly to casinos, pending the
completion of all undertakings in their bid commitments relating to the
construction of facilities.
In
addition, with reference to the proposed subsection (6), the comments relating
to licence conditions, set out in paragraph 3.10 above, are reiterated.
3.15 Amendment of section 53, 54, 56, 57,
58, 59 and 60
The
comments, as set out in paragraph 3.6 above, is also applicable to this
proposed amendment, in as far as the “the board” is included.
3.16 Amendment of section 65
With
reference to the proposed amendments to subsection (1)(a) and the provisions of
subsection (2) of section 65, the problems of the NGB also becoming a regulator
(by licensing interactive gambling) becomes clear. No amendments to subsection
(b), (dealing with the NGB advising Council on matters of national policy and
norms and standards) were proposed to include interactive gambling. Probably, because the regulator cannot advise
on national policy and norms and standards on a matter that it regulates and
one wonders, who will advise Council on national policy on interactive
gambling. This, once again, supports our
comments, as set out herein.
3.17
General observations relating to the
draft Bill
Save
for our comments, as set out above, we have the following general observations
regarding the absence of crucial sections in the draft Bill, if the NGB is
going to be the regulator in respect of interactive gambling, namely:
·
Application for licences
(qualifications, attributes, etc.)
·
Procedures
(time limits, prescribed forms, etc.)
·
Information
to be furnished
·
Advertisements
·
Objections
·
Investigations
·
Public
hearings
·
Consideration
of applications
·
Consultation
of other institutions
·
Decisions
and notification (with reasons)
·
Issuing
of licences
·
Application
and licence fees, as well as allocation of such fees
·
Penalties
for late payment of fees
·
Appeals
(grounds, procedures, appeal authority, powers of appeal authority, effect)
·
Conditions
of licence, limitations, restrictions or qualifications
·
Content
of licences (duration, transferability, review, renewal, amendment, suspension,
cancellation)
·
Prescriptions
relating to gambling devices and systems to be used
·
Financial
or controlling interests in business of licensee
·
Books
to be kept, information to be furnished by licensee, etc.
·
Register
of licences (duty to prepare and maintain, publication, etc.)
·
Inspections
(inspectors, power to enter and inspect, obtain answers and information,
protection, etc.)
·
Prohibitions
·
Disciplinary
proceedings
·
Offences
and applicable sanctions
·
Competency
to impose sanctions against licensees for contraventions of Act.
However,
the most glaring shortcoming in this regard is the fact that absolutely no
provision has been made for the payment of gambling taxes and levies by any
interactive provider. Although the
provision for taxes and levies are made in a money bill that has to comply with
the procedures and directives of the relevant sections in the Constitution, it
is still a requirement that substantive provisions in this regard be included in
the draft Bill, preferable under a chapter called “taxation and financial
arrangements” with sections dealing with the following:
·
Imposition
of taxes and levies on interactive gambling
·
Tax
payable upon conviction.
4. Conclusion
In
conclusion, we wish to clarify that we agree with Government’s policy that
interactive gambling be brought into the regulatory frame and that national
licences be issued to interactive providers.
We are, however, not in agreement that the National Gambling Board
should be the entity to licence and regulate interactive gambling, in view of
their current purpose and role in the gambling industry, as stated in our
comments above.
Furthermore,
it is our submission that the cost of regulating and monitoring the interactive
gambling industry will vastly increase the budget of the National Gambling
Board, that is not currently geared for the licensing and regulation of any
sector in the gambling industry. Whereas, if the licensing and regulatory
control of the interactive gambling sector is dealt with as all other national
licences is currently being dealt with, then we are in agreement that it will
not necessarily have a vast impact on the budgets of the provincial licensing
authorities, that are already geared, as far as personnel and infrastructure, are
concerned to deal with these functions and responsibilities.
We
are of the opinion. in view of the lack of detail for the findings and
recommendations in the Report on Interactive Gambling, the inconsistencies in
the draft Policy Framework, which is also not in line with the economic
objectives of Government and the shortcomings in this draft National Gambling
Amendment Bill, 2007, that sufficient stock has not been taken as to the
readiness for the regulation of interactive gambling in the country. We, therefore, propose that the draft Bill be
held back until all the above concerns are properly addressed.
We
will appreciate it if we could be afforded an opportunity to address the Trade
and Industry Portfolio Committee during the public hearings on the National
Gambling Amendment Bill, 2007, with regard to our comments, as set out herein.