Comments on Gambling Amendment Bill,
August 2007
(Based
upon comments received from public hearings)
Detailed list of issues |
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Clause/ Provision |
Comment |
Received from |
Response |
Recommendation |
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Amendment Bill vis-à-vis separate legislation to regulate Interactive Gambling. |
Casino Association of South Africa |
Interactive Gambling (IG) is already provided
for in the Gambling Act No 7 of 2004. See definitions of interactive game and
interactive provider. Section 11 also contemplates the provision of this activity
in terms of the principal Act. No sufficient motivation was provided for
separate legislation. Regulatory principles of the current Act apply to all
forms of gambling and these principles will also apply to IG. Further, IG
will be regulated by the same regulatory body that is responsible for the
overall regulation of all forms of gambling, and preferably in the same
Act. The national Lottery belongs to the state and
is governed separately therefore the two can’t be compared. The UK also accommodates IG as part of the
main gambling legislation |
Leave as is |
|
Technological development and issue of separate Bill |
|
There are strong policy arguments that issues
of technological advancement (technology package) should not be dealt with in
the Bill but in subordinate legislation (regulations and technical
standards). |
Leave as is |
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Separate Money Bill in respect of taxation |
|
It is a constitutional requirement. A
provision that imposes taxes, levies, duties, etc makes the Bill a Money Bill
(i.e section 77 Bill). Constitution requires a Money Bill to deal with
nothing else but tax matters and it has to be introduced into Parliament by
the Minister of Finance. |
Leave as is |
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Insufficient research + consultation |
|
The 2005 Interactive Report that forms the basis
of the Bill clearly analyses the legislation of IG in other jurisdictions.
Extensive consultations took place during the process of the research.
Further there was wide consultation on the drafting of the policy where
outcomes and recommendations of the research were conveyed to stakeholders.
Provinces were afforded an opportunity to comment on the policy before it was
submitted to National Gambling Policy Council. The draft Bill was published
in the government gazette for public comments. |
Leave as is |
|
Consultations |
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CASA: Comprehensive comments were submitted by CASA
and thoroughly considered by the dti drafting team. A meeting was also held
with CASA. There were many issues of disagreement and CASA offered
suggestions which mostly conflicted with the policy objectives and we could
not agree with them. They offered to assist with clarifications and the dti
agreed that should there be a need for same, further engagements will be held
with them in that regard, possibly through another meeting. There were no issues that needed further
clarification as CASA was lobbying for a business-oriented model. FIC: Comprehensive
comments were also submitted by FIC and thoroughly considered by the dti
drafting team. A meeting was also held with FIC. When we met with FIC they
indicated satisfaction with our clarification of the issues and as far as we
were concerned there were no other outstanding issues with FIC. FIC also had meetings with the NGB in
respect of these issues. Unfortunately the meetings occurred with different
people from the FIC who did not convey the meeting outcomes to their
colleagues. Provinces: Comments were also submitted by three
provinces on the Policy and Bill and thoroughly considered by the dti
drafting team. A formal meeting with the provinces was delayed as we had to
obtain a legal opinion on some issues that were raised by them, in order to
ensure that the Bill does not fall foul of the Constitution. There was
disagreement with the provinces on the main issue of licenses. |
We
are engaging with FIC on the issues. |
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Automatic license to land based casino operators + Responsibility of providers |
|
The process must be transparent, fair and open
to allow new players in the industry. IG operators will be expected to
contribute to the treatment of problem gambling by way of licensing
conditions. There is no jurisdiction
currently known that gives automatic licences. The argument that IG has
negative impact on land based casinos has no substance. There is therefore no
basis for the preferential treatment of Casinos in the awarding IG licenses. |
Leave
as is |
|
Verification of offshore players + |
|
The player registration process by the
interactive provider, as an accountable institution, would have to comply
with FIC requirements. Regulations for the verification of players to be
drafted in consultation with FIC to ensure that they meet FIC requirements. |
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US prohibit IG so we will not be attracting US market |
|
The objective of the Bill is not to make money
or ensure expansion of IG businesses. However it should be noted that players
from jurisdictions that permit IG will be allowed to play in SA. |
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Research into the financial viability and socio-economic impact
not conducted |
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The market will determine the financial
viability of IG business in SA. On the
social impact, according to research, only 2% engage in IG compared to over
80% of gamblers in land based casino activity. There is no apparent threat to the land
based casino from the interactive gambling. |
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EU Litigation |
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Issue not relevant for SA. |
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Taxation |
|
Currently the dti is consulting with National
Treasury on the imposition of taxes in respect of IG. The dti will endeavour
to provide for a level playing field in respect of IG vis-à-vis the
land-based casinos. In addition, consideration
will be given to the concerns raised on reducing the extent of gambling and
such taxation may be used to curb gambling activity. |
It is still work in progress with National
Treasury. An enabling provision for the payment of tax by IG
providers will be incorporated into the Bill. |
|
Exclusion of Person to Person betting exchanges |
Betfair |
There
is nothing in the Act that provides for Person to Person (P2P) betting
exchanges. The investigation and policy processes in respect of P2P are still
a long way from completion. The possible regulation of P2P has in any event,
always been a separate process as it was not contemplated to be part of the
IG process in terms of the Act. In terms of the Principal Act, P2P is not
part of interactive games as it is not a gambling game as defined in section
4(1) of the Act. |
The
existing exclusion on the definition of interactive provider is proposed to
be removed as Person to Person betting exchanges are currently excluded in
terms of the principal Act. P2P
may be provided for in the Act once the research and policy process on its
implication is completed. |
Section 11 |
Age Verification |
|
Section 11 (a) provides for the registration
and verification of players. The Minister will issue regulations detailing
the registration and verification process for all players. IG providers are also accountable
institutions in terms of the FIC Act, and would consequently have to comply
with FIC in respect of age verification etc. There is a two stage
verification process which we believe is very tight. |
Will, however, consider tighter provisions to
place responsibility on the provider for identity verification. |
|
On shore requirement to ensure monitoring and inspection of
service providers for FICA purposes. |
|
The Bill provides for servers to be located in
the Republic. Records of financial
transactions should be kept in SA therefore operators will have to provide SA
physical address for domicilium purposes.
FIC Act will apply to IG operators like
any form of gambling. The companies
will still need to comply with other requirements through licencing
conditions. In terms of the Companies
Act external companies have to lodge their articles of association and a form
advising of business address in SA, with the Registrar of Companies. Refer to
definition of external company in Companies Act. |
Leave as is |
|
Money Laundering |
Financial Intelligence Centre |
FICA requirements require verification of
identity of account holder before transfer of money to nominated account. In
addition, the registration process of a player addresses this matter. Winnings will be paid into the registered
nominated accounts, which have already been subjected to FIC verification. |
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An accountable institution in terms of FICA |
|
An accountable institution is currently defined as
a company that operates with a licence issued by a PLA. A proposal that the
wording should include the National Gambling Board be added to include IG
operators who operate with a licence issued by the NGB. |
An
Amendment to the FIC Act will be effected. |
Clause 1 (j) |
Nominated account |
|
The funds can only be moved to and from one
account. Cannot transfer funds from
that account to another account. All
winnings will be paid back to the originating accounts. The Bill provides for the process of
dealing with unclaimed winnings or credit.
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Picking up suspicious players + Jurisdiction |
|
The
IG operators will be required to report unusual and suspicious transactions
in terms of the Financial Intelligence Centre Act requirement which will be
detailed in their Internal Rules |
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The dti to ensure agreement
with FIC on prevention of money laundering. |
|
The dti met with the FIC and agreed on key
issues. |
Agreement
reached and issues raised will be taken on board in the Bill. |
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Licensing criteria can require providers to have guarantees |
|
1. A performance guarantee will be required; 2. A reserve will be required to ensure
demands of winnings are met at the required time; 3. Audit will look at the reserve to ensure
compliance. For instance, Clause 9. |
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Over-indebtedness |
COSATU |
Setting of daily, weekly and monthly limits to
gamble which is a requirement in terms of the Bill. The Bill prohibits the
granting of credit by service providers for purpose of interactive gambling
(Clause 13). |
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Long title |
Provide for a statement pointing to intention of the Bill
regarding control of Internet gambling. |
|
Purpose section of the Bill already provides
for the protection of minors/vulnerable persons and society from
over-stimulation of gambling. Will provide in the Long Title of the Bill a
statement providing for the curtailment of gambling as one of the main
objectives of the Bill. |
Amend
the long title and Purpose section of the Bill by providing for the
regulation and curtailment of interactive gambling in order to protect
society against the over-stimulation of the demand for gambling; prevent
money laundering etc. |
Clause 15 (b) |
Restriction on Advertising |
|
The dti believes that there is a lot of merit
to the proposal to prohibit the advertising of gambling. This issue will
however be revisited in respect of the other forms of gambling that are
currently regulated. |
Amend
clause 15 to provide for no advertising of IG. |
|
Illegal advertising in South Africa by foreign jurisdictions |
|
We recommend closing this loophole in the Act
to prevent illegal operators from promoting gambling in South Africa. |
Amend
section 15 to exclude illegal activities that are carried out by operators
from other countries or jurisdictions |
|
Capacity of the Board to supervise compliance |
Western Cape Racing and Gambling Board |
The Board has no specific capacity but this
can be created within a reasonable/specified time. PLAs have themselves
experienced staff turnover but could still deliver and build capacity.
Currently inspectors exist and can be trained and used for the required
skills. Capacity on IG regulation is a new phenomenon and will require some
kind of training even if PLAs take over all responsibilities. Also, given the borderless nature of IG, it is critical that IG be in
the auspices of a national entity. |
|
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Giving too much power to the Minister to prescribe certain
matters |
|
The Minister does make regulations in
isolation. There is a comprehensive consultative process involving the
National Gambling Policy Council which is represented by all the provinces
and the public consultation period is lengthy; +45 days for public comment.
The fast pace of technological development which might affect for instance
the manner of identity verification requires flexibility in terms of
amendments and is properly placed in regulations rather than the main Act.
The dti will, in collaboration with the State Law Advisors, look into all the
identified clauses providing for the powers of the Minister. |
Amendments
being considered. |
|
Licenses + capacity |
|
Given the borderless nature of IG, it is critical that IG be in the
auspices of a national entity. |
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Ministerial power with respect to setting of license conditions |
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Minister will prescribe minimum criteria or a
framework of subject matter for the setting of such conditions by the
Board. |
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Other technical issues |
PLAs |
Will be attended to in collaboration with the
State Law Advisors. |
Amendments
being considered. |
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Delegation Section 31 (2) |
|
This
is a constitutional requirement of cooperative governance. In certain instances probities done by
provinces may be relied upon instead of repeating processes. This is not a
new principle as it is already contained in the principal Act with regards to
the PLAs. This is also an empowering provision that is standard in most laws
dealing with matters of a concurrent nature. |
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Oversight on NGB |
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The
NGB carries out its functions under the direction of the Council |
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Technical standards |
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Minister sets generic /criteria / procedure not
necessarily technical requirement. Technical standards are set by the SABS
technical standards committee. |
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Moral issue within society and should be
treated like theft |
JASA |
Gambling
is not generally recognised as a moral concern across the board such as
theft. No society views theft as a positive moral issue. The two can’t be
compared. |
|
|
Bill leaves out crucial aspects such as
fees and licence requirements to the discretion of the Minister |
Gauteng Gambling Board |
This
will be provided in the regulations. Ministerial powers in this regard will
be reconsidered together with other technical issues |
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Definition of gambling device is limited
with respect to determination of results |
|
It
is a broad issue that does not necessarily relate to IG. To be discussed and
finalised between the NGB and the PLAs first. |
Leave as is |
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Definition of manufacturer, supplier,
should provide for licensing of software |
|
The
Act provides for licensing of gambling devices. IG software/equipment is
considered to be a gambling device. Therefore no need to provide for a
separate licensing regime for IG software/equipment. |
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Section 3. Application |
Regulation should extend to unlicensed
gambling activities |
|
Proposal
considered inadvisable and dangerous. Unlawful gambling falls within the
general offences clauses. |
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There should be an independent research
body |
Civil Society for South Africa Advisory
Council: Dudley Baylis |
The
NGB has the function to conduct the research as provided for by the Act. It
is in any case accountable to Parliament.
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Insufficient
research done |
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Covered
above. |
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Cellphone usage |
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There
are stringent registration requirements, in addition to access to internet
and nominated account requirements in order to play. This will ensure
prevention of exposure to minors. |
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Those licensed should contribute to
outreach programmes |
Jewish Board of Deputies |
Providers
will contribute to responsible gambling programmes in the same way as
land-based Casinos. Will have to
contribute to social responsibility as part of BID commitments.
Responsibility of regulator to ensure compliance with licence
conditions. |
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The enforcement should be strict |
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IT
compliance and security are examples to ensure protection from hackers and
viruses. Technical compliance audit and financial audits will all be part of
compliance monitoring. |
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Regulations on IG to be brought to the
Committee for consideration. |
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Agreed. |
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