Preliminary Report of the Portfolio Committee on Trade and Industry on
the Review of the National Gambling Legislation, dated 11 March 2010
1.
INTRODUCTION
The Portfolio Committee on
Trade and Industry received a request from the Department of Trade and Industry
(DTI) to provide input on the proposed regulations for the implementation of
Interactive Gambling (IG) in terms of the National Gambling Amendment Act, 2008
(Act No. 10 of 2008). The Committee welcomed the opportunity to study the
regulations and engage with the Department on the issues, especially since the
Amendment Act did not require this.
During the deliberations,
it became apparent that vulnerable members of the community whether youth or
those with gambling addictions were not adequately protected and/or supported
by the current legislation. Furthermore, the internet-based nature of
interactive gambling allows it to cross borders, which impedes enforcement of
compliance in the legislation including regulations.
The Committee requested a
legal opinion from the Parliamentary Legal Services relating to Parliamentary
processing of subordinate legislation. One of the concerns highlighted in the
legal opinion was the absence of the process of approving regulations within
the principal Act. Currently, there is no procedure in the Rules of Parliament
for dealing with and processing subordinate legislation.
After studying the principal
legislation, as well as points raised by the parliamentary legal adviser and
the Committee’s own researcher, it became apparent to the Committee that it
would not be very constructive to adopt a piecemeal approach to the interactive
gambling subordinate legislation. As a result, a decision was taken to embark
on a broader legislative review process which would include public hearings.
The focus of the review was on the vast socio-economic impacts of gambling on local
communities and society in general, the impact of
misleading advertising, the regulation of cross-border gambling, the efficacy
of the current regulatory environment and the implementation of the interactive
gambling legislation that had been passed in 2008.
2.
CONTEXTUAL
BACKGROUND
Gambling was restricted in
The prohibition of gambling
was ineffective with an estimated 2 000 casinos operating illegally in
In October 1994, the
Lotteries and Gambling Board, published an interim report chaired by Prof NE
Wiehahn which expressed a view that “the Gambling Act, 1965 (Act No. 51 of
1965) no longer reflects the true moral viewpoint of the majority of South
Africans and that the Government should legalise lotteries and gambling in the
Republic of South Africa”. (See Annexure A for further details)
The final Wiehahn Report on
Gambling (1995) recommended that all forms of gambling be regulated. In 1996, the
Wiehahn Report informed the National Gambling
Act (Act No. 33 of 1996). However by then, provincial lawmakers viewed casino
taxation as one of the few forms of independent revenue generation available to
them.
The National Gambling Act
(Act No. 7 of 2004) repealed the National Gambling Act (Act No. 33 of 1996) and
regulated various forms of gambling activities to:
§
Protect the public against the adverse effects of
gambling;
§
Limit, control and monitor possible proliferation
of gambling and illicit gambling activities;
§
Enforce responsible gambling operations by
requiring operators to contribute to social development initiatives, SMME
(Small Medium and Micro Enterprises) development, and facilitate empowerment of
HDIs (Historically Disadvantaged Individuals) and BBBEE (Broad-based Black
Economic Empowerment); and
§
Contribute to infrastructure development in rural
communities.
Section 11 of this Act made
interactive gambling unlawful in
3.
PROCESS
Following the Committee
decision on the 12 August 2009, members of the public and relevant implementing
agencies were invited to express their views on gambling legislation in general
either through written submissions or in the public hearings in November 2009,
January and February 2010. A full list of participants is provided in Annexure
B of this report. Finally, Members of the Committee visited the GrandWest
Casino in
4. KEY ISUES RAISED IN THE SUBMISSIONS
Key issues have been
grouped in terms of socio-economic impact, of legalised gambling, the impact of
misleading advertising, regulation of cross-border gambling, the current regulatory
environment and interactive gambling. A summary of the individual submissions
are provided in Annexure C.
4.1. The socio-economic impact of legalised gambling
Generally,
submissions by the gambling industry reported that gambling activities have largely
had a positive impact on the economy through income generation, employment
opportunities, and its contribution to tax revenue, infrastructure development
and corporate social investment. The main economic contributor has been the
casino industry. In addition, industries such as the limited pay-out machines
industry refer to the significant opportunities provided for black economic empowerment
and small business development.
Industry players and the administrator
of the National Responsible Gambling Programme (NRGP), the South African Responsible Gambling Foundation (SARGF), were of the
opinion that problem gambling was a phenomenon that affected a small percentage
of gamblers and it was inferred that the public generally accepted it as a
recreational activity. The SARGF also stated that the industry made financial
contributions to the NRGP, which is used to promote public awareness of problem
gambling and for the treatment programmes for problem gamblers.
On the other hand,
concerned institutions and citizens alluded to the negative impacts of gambling
on society and in particular families. One of the written submissions referred
to a recent study conducted by the National Gambling Board (NGB) entitled “The
Socio-Economic Impact of Legalised Gambling in
4.2. Impact of misleading advertising
The industry players
indicated that there was generally compliance to advertising requirements
within the regulated industries. The Casino Association of South Africa pointed
out that the industry players may be subjected to administrative
penalties, or even the suspension or revocation of the licence if they failed
to adhere to these requirements. However, according to land-based industry
players the bulk of misleading advertisements were on
radio, television, the Internet and when in print media were published by
unlicensed or unregulated interactive gambling operators.
Another
view expressed in the submissions was that while the industry may be adhering
to the requirements, the principle behind advertising was to develop an
emotional bond between the consumer and the product. Therefore, despite efforts
to include warnings related to the dangers of advertising, it could still
entrench a culture of gambling, particularly among the youth, rather than one
that promotes decent work and productivity. Furthermore, advertising tends to
be misleading by creating the impression that one may be the next winner, which
can be most damaging to individuals who least can afford the financial loss.
4.3. Regulation of cross-border gambling
Standard
Bank sent a written submission with concerns about the implementation of the
new Act in terms of their role in facilitating electronic transactions. They
explained that according to Section 2.16 of the Exchange Control Regulations[1],
cross border gambling activities are prohibited including the participation in
foreign lotteries and betting organisations. The Bank has been advised to hand
over all proceeds received from foreign gambling but can only verify the source
of the funding based on the client’s declaration.
In
addition, the bank submitted that it was not in a position to differentiate
between a service provider that transacts at a land-based site and an online
casino simultaneously. Thus, compliance with all the provisions of the
Lotteries and National Gambling Acts and the Exchange Control Regulations was difficult.
4.4. Current regulatory
environment
Primarily, each industry
player commented on how the current legislation impacted on their area and/or
how more lenient legislation on other industries undermined their market share.
They identified seven key challenges in the current legislative environment.
§
Firstly, there was an onerous compliance costs on
national industry players, due to differing compliance standards between
provincial gambling boards and between national and provincial gambling boards.
In addition, there was a need to comply with additional legislation such as
liquor and business legislation. This was particularly challenging in the LPM
industry where there were numerous challenges in terms of the zoning of sites
in former black areas, types of eligible sites, restricted advertising, the
limit on the number of LPMs allowed per site and the LPM stake and prize limits
that have not been adjusted since their establishment.
§
Secondly, the limited capacity of municipalities
and provincial gambling boards to process the relevant licence applications in
a timely manner. This becomes challenging when a site owner requires a number
of permanent licences simultaneously to run his/her establishment legally.
§
Thirdly, not all forms of gambling receive similar
levels of regulation and these differences in legislative requirements lead to
lost opportunities and unfair competition. An example includes operating the
totalisator compared to operating as a bookmaker.
§
Fourthly, manufacturers of gambling machines raised
concerns about being over legislated in terms of the Financial Intelligence
Centre Act and the certification and distribution of gambling machines and
devices.
§
Fifthly, the use of electronic bingo machines is
currently being disputed, as the view is that the machines do not truly offer
the game of bingo. In CASA’s opinion, the emergence of electronic
bingo machines means that bingo halls would be operating as casinos without the
required contributions that casinos must make, as the bingo halls are not
stringently regulated.
§
Sixthly, the capacity of
the central electronic monitoring system to monitor LPMs countrywide, as the
number of LPMs is rising.
§
The seventh issue was raised by a community leader
who pointed to a possible compromise of the integrity and independence of the
National Responsible Gambling Programme. It was stated that there were four
representatives from the gambling sector sitting on the South African
Responsible Gambling Trust and furthermore the NRGP programme is funded by
proceeds from the industry.
4.5. Interactive gambling
There was general consensus
in the submissions for various reasons which they stated that interactive
gambling was a challenge. However, there was disagreement in whether or not it
should be legalised given the ease of access and the borderless nature of
interactive gambling sites. One of the key challenges was that regardless of
the government’s stance on interactive gambling, foreign online gambling sites
would continue to offer services within
Industry players were
concerned of the impact on land-based facilities; the rate of taxation compared
to land-based facilities; the competitiveness of legal interactive gambling
sites given the restrictive and cumbersome regulations being proposed and the
access of sites to youth through various electronic equipment. Civil society
including churches and community leaders expressed a strong view that interactive
gambling would have a negative impact on society and should not be legalised. If
it was legalised it should be subjected to strong controls
5.
KEY ISSUES
HIGHLIGHTED BY DTI AND RESPONSIBLE AGENCIES
5.1.
Department of Trade and Industry (DTI)
The submission focused on the evolution of gambling legislation within
The introduction of the 1996 and 2004 Acts introduced significant
changes with respect to regulations and enforcement, fair, transparent and
equitable licence allocation and economic empowerment. At present, the gambling
industry is faced with a number challenges with respect to technological
advancements and global interaction of economies. This brought about the need
to introduce interactive gambling with the National Gambling Amendment Act of
2008. This highlighted a number of challenges with respect to the limited
approach in regulating this form of gambling which currently excludes Person to
Person and the lack of control measures to ensure the protection of society and
integrity of the economy. Interactive gambling saw the emergence of
international syndicates which operates outside the border of
5.2.
National Gambling Board (NGB)
The submission focused on the legislative impediments faced by the NGB
in executing their legislative mandate. Gambling, being a concurrent
legislative competency, resulted in lack of uniformity in regulating gambling
activities and procedures. A unilateral amendment of legislation by provincial
governments resulted in legislation conflicting with National Gambling
legislation.
New challenges are facing the gambling industry with the advancement in
technology resulting in the need for the formulation of a new Bingo policy and
review of regulation procedures. The submission highlighted inconsistencies
between casino and bingo licensing as both are competing in the same market.
Concerns were highlighted with respect to Limited Payout Machines (LPM), as
inconsistencies exist between municipal by-laws and gambling legislation and
between provincial Business Act requirements and Gambling Laws with regard to
licensing of machines. The NGB informed
the Committee that the horseracing activities are broadly defined within the
2004 Act and would require detailed amendments as well as the development of
policy on regulation of racing and betting activities, including sporting
activities.
The economic impact of the Fafhee form of gambling is not known but
various socio-economic studies would suggest that the Fafhee games contributed
towards the increase in irresponsible gambling. Currently, the Fafhee form of
gambling is unregulated.
With respect to interactive gambling, the NGB realised the urgency to
develop and determine a clear policy position. This would allow for the
revisiting of key issues such as the proposed tax rate of 6 per cent, the
imposition of maximum credit limit in a player account, player registration,
the concept of E-wallet, and the issue of advertising. The need for the
establishment of clear regulatory environment with respect to interactive
gambling is urgent.
5.3.
National Regulator for Compulsory Specifications
(NRCS)
The NRCS mandate is to promote the right and obligations of government
to protect the safety of the public and the environment. The National Gambling
Act mandates the NRCS to analyse the test reports of gambling equipment and
issue a letter of certification (LOC) in accordance with the relevant
compulsory specification. NRCS therefore protects gamblers by ensuring that the
service providers strictly comply with compulsory specifications. Currently,
there is no provision in the law that governs compulsory specification on performance.
5.4.
Financial
Intelligence Centre (FIC)
The FIC is a statutory body
established to identify the proceeds of crime and to combat money laundering
and terror financing. In relation to gambling, the Financial Intelligence
Centre’s (FIC) responsibilities include monitoring compliance with obligations
relating to combating money laundering and terror financing and providing
guidance to the National Gambling Board, as the supervisory body for gambling,
in terms of their performance of their functions relating to the combating of
money laundering and terror financing.
The FIC reported concerns
regarding the implementation of the interactive gambling legislation, as well
as possible measures to mitigate these risks. These included possible abuse of
interactive gambling facilities and vulnerabilities of interactive gambling to
money laundering abuse. The Centre emphasised the fact that interactive
gambling does not provide strong supervision, as it works from the basis that
one cannot adequately verify the identity of one’s customer. Some of the key
vulnerabilities are:
§
The ability to verify customer identification and
monitor that the registered account is not being used by another person;
§
Limited access to customer records and transactions
where the online casino is hosted offshore;
§
The jurisdiction of interactive gaming service
providers is unclear, where these are hosted outside South Africa, which
negatively impacts on compliance with the FIC Act and other South African
legislation; and
§
The ability to supervise and enforce an effective
licensing regime, where illegal or rogue online casinos are prohibited from
entering and operating within the borders of
6.
RECOMMENDATIONS
RECEIVED FROM ALL THE SUBMISSIONS
Most of the submissions
received came from industry players and therefore the recommendations focused
on streamlining the implementation of gambling activities by easing the
administrative burden. The key recommendations made by the industry players,
civil society, community leaders, the DTI and responsible agencies, as well as
FIC because of money laundering, are listed below. A full list of the
recommendations is available in Annexure D.
6.1. General:
One of the key general recommendations focused on the protection of
vulnerable groups, including the poor and the need for these to be explicitly included
in socio-economic analyses. Furthermore, the promotion of gambling should be
curbed and a culture of productivity should be promoted, especially since the
advent of interactive gambling and increased Internet access could exacerbate
problem gambling activity. Finally, there was a call for strictly enforced penalties,
which should include jail terms.
6.2. Casino industry:
The
main recommendation from the casino industry was that regulations for casinos
should return to focusing on substantive operational risks identified by
regulatory authorities.
6.2.
Limited Payout Machines
Industry:
The
recommendations made in respect of the LPM industry focused on increasing the
LPM stake and prize limits to account for inflation over the last 13 years;
standardisation of legal requirements for operation and licensing, particularly
in areas where zoning is unavailable; temporary LPM licences for taverners awaiting
approval for a permanent liquor licence; exclusion from requirements in terms
of the National Register of Excluded Persons and participation in the selection
of the monitoring system being used.
6.4. Interactive gambling:
The
following recommendations related to interactive gambling:
6.4.1.
The National Gambling and
Lotteries Acts should be amended to include a clause similar to the one in the
Films and Publications Board Act section 24(B) (3), which stipulates that “any
person that facilitates transactions, knowing that such transaction will
facilitate access to, or the distribution or possession of, child pornography,
shall be guilty of an offence.”
6.4.2.
The insertion of a
provision in the National Gambling Act to deem interactive gambling to take
place “where the player is located” in cases where an interactive gambling
operator is not licensed in
6.4.3.
Sun International feels
that the interactive gambling debate should be reopened in order to identify
relevant policy objectives.
6.4.4.
Justice Alliance South
6.4.5.
The enforcement of the law
in terms of interactive gambling is assessed in relation to government’s
capacity.
6.4.6.
The legal difficulties in
prosecuting illegal interactive gambling operators for misleading advertisement
could be addressed by inserting the clause “where the player is located” into
the relevant section.
6.4.7.
Probity checks should
be applied strictly to ensure that criminals do not acquire a controlling
interest in online casinos.
6.4.8.
Rogue or unlicensed online
casinos must be prevented from making (or continuing to make) their services
available in South Africa.
6.4.9.
Money flow to rogue or
unlicensed on-line casinos must be prevented.
6.4.10.
Licensed operators must
subject their operations to the jurisdiction of all South African laws and establish
a presence in South Africa, including a locally based gateway to provide
services to South African based gamblers.
6.4.11.
Compliance by online
casinos with legal obligations, such as customer identification, must be
supervised and this monitoring process must include the ability to examine compliance
through the inspection of their systems and records.
6.4.12.
Supervisors must be
able to take action against licensed online casinos where they fail to comply
with their legal obligations
6.4.13.
Transaction related
information must be held in South Africa where it can be accessed by South
African law enforcement agencies.
6.4.14.
Sufficient capacity to supervise compliance and prevent unlicensed or rogue
operators from offering interactive gambling facilities must be ensured.
6.5. Electronic Bingo Machines:
The
main recommendation was that the National Gambling Act should be amended to
include the Gauteng Gambling Board’s definition of Bingo to include the use of
electronic bingo machines, as this appears to be contradictory within the
current national legislation.
6.6. Manufacturers of gambling equipment:
The
recommendations relevant to gambling equipment manufacturers related to the
easing the regulatory burden of approving, certifying and distributing gambling
equipment and devices, particularly in relation to concurrent requirements; amending
the National Gambling Act to reflect the changes in the application for
certifying gambling equipment and aligning regulations for compulsory specifications
to the NRCS Act;
6.7. Advertisements:
The
following recommendations were made in terms of advertising: alignment of the
national gambling legislation with the Code of Advertising Practice and the
Consumer Protection Act; to transfer the censoring function of gambling
advertisement to existing authorities, such as the Advertising Standards
Authority of South Africa; tighter regulation and monitoring of advertisements,
particularly for interactive gambling and the use of advertisements to raise public
awareness of the dangers of gambling.
6.9. Minors:
The
recommendations relevant to minors related to strict enforcement where underage
gamblers are admitted, including a helpline to report illegal practices; the
location of gambling sites to venues applying similar age restrictions; and the
use of signage to display restrictions clearly.
7. SITE VISIT TO GRANDWEST CASINO
A few Members of the
Committee visited the GrandWest Casino on 23 February 2010. The full report on
the site visit is available in Annexure E. The Members were taken on a general
tour of the complex, which included restaurants, fast food outlets and shops,
the casino, the loyalty club members’ area, conference facilities and
entertainment areas.
The regional manager, Mr
John Fraser, explained that the grounds offered about 2 000 employment
opportunities, of which approximately 1 000 were directly linked to the
casino’s facilities. Most of the establishment’s employees had permanent
contracts and employed on a schedule basis to allow labour flexibility. In
addition, the casino had provided extensive training and promotion
opportunities to individuals from surrounding areas.
The Members were shown the electronic
and camera surveillance room, where activities on the casino floor, in general
and other designated areas were monitored for compliance with the relevant
legislation and to ensure the safety of clients. The casino is operated on an
electronic basis, with punters having to use issued electronic cards to gamble.
This assists the casino in ensuring that money deposited there were used for
gambling transactions and to monitor for potential money laundering activities.
The surveillance team
designated one staff member per shift to manually monitor for the presence of problem
gamblers and nationally banned individuals within the surveillance room on the
basis of the National Gambling Board’s problem gambling and the Casino
Association of South Africa’s databases. A second mechanism to prevent problem
gambling is that punters need to provide an identity document when claiming
their winnings, which is checked against the problem gambling database. Registered
problem gamblers would then forfeit their winnings.
The financial manager, Mr
Wayne de Wet, also explained that the use of loyalty cards assisted in
identifying possible suspicious activities and problem gamblers, and did not
necessarily encourage gambling. The regional manager assured the Members that
Sun International only extended credit to punters on rare occasions and this was
aimed at high rollers, and these funds were generally repaid shortly
thereafter.
The regional manager then
outlined Sun International’s corporate social investments within the region,
which included the extension of bursaries and funding the Shawco Community
Health Project.
The following observations
emerged from the visit:
§
The GrandWest Casino appeared to be highly
regulated and well monitored with a high compliance rate.
§
There may be a gap in identifying, registering and
monitoring problem gamblers, especially for those falling into more vulnerable
groups including pensioners. As these individuals may not be regular gamblers
but may lose a significant proportion of their income in a few sittings at
casinos.
§
The monitoring of the use of day cards for the
possibility of money laundering activities should be reviewed on a daily basis.
§
There may be a need for the Committee to visit
smaller gambling establishments to assess the controls that are being
implemented to monitor problem gamblers and money laundering.
8. PRELIMINARY OBSERVATIONS
During the final phase of
the oversight process the Portfolio Committee of Trade and Industry were
informed by DTI of a commission they had established at the end of last year to
study the issues around gambling. In view of this, the Committee took a
decision to report on its preliminary observations with a few recommendations.
The Committee have been told to expect the final report of the Commission at
the end of May 2010. The Committee will then study this report and once again
exercise its oversight and deliberate and take a final report to the House in
the second half of this year.
8.1.
The illegal use of interactive gambling sites, even
if regulated in South Africa, will be hard to curb and monitor due to
continuous technology development. On the one hand, regulation would provide a
legally protected space for South African adults to engage in recreational
online gambling activities. This space could allow government to identify
problem gamblers. However, regulating the activity will not necessarily inhibit
the use of ‘illegal’ foreign sites that could still be accessed by the very
individuals that the legislation seeks to protect, such as minors and problem
gamblers.
8.2.
The disparity between the rules for the National Lottery
in comparison to other land-based gambling activities in terms of the promotion
of National Lottery sales compared to restricted operations for other land-based
gambling activities.
8.3.
National and provincial gambling legislation should
be reviewed for alignment and recommendations made to the relevant parties for
consideration.
8.4.
The requirements for the LPM industry should be
reconsidered given varying restrictions across provinces
9. RECOMMENDATIONS
9.1.
Parliament should develop procedures to address the
processing and oversight of subordinate legislation.
9.2.
A comprehensive study should be conducted on the, as
yet, not proven economic benefits intended by the legislation and also the costs
to society and government and the fiscus.
9.3.
At this stage, gambling should be more rigorously
regulated and its proliferation halted.
9.4.
Interactive gambling advertisements and
sponsorships in South Africa should be prohibited, in the absence of any
regulations.
9.5.
Operators should have an obligation and
accountability/liability towards persons becoming gambling addicts and their
deprived and affected families. Stronger
measures need to be put in place to prevent compulsory and addictive gamblers
from running up debt for themselves and their affected families at licensed
gambling facilities.
9.6.
The FIC need to set up stronger measures, in
co-operations with South African banks, to prevent cross-border flow of funds
due to interactive gambling activities, specifically also from credit card
transactions.
9.7.
Ways to curb advertising that presents gambling as
a way to get rich and stronger warnings against the risks associated with
gambling should be considered.
10. ACKNOWLEDGEMENTS
The Committee
acknowledges the contributions made by industry players, civil society,
community leaders and DTI and responsible agencies and FIC for their inputs
into the gambling review process, thus far.
The Committee also wishes to thank its Committee support staff in
particular the Committee Secretary, Content Advisor and Researcher for their
conscientious commitment to their work.
The Chairperson thanks all Members of the Committee for their active
participation during deliberations and their constructive recommendations to
the House.
References
Distressed Cities Increasingly Bank on Casino
Gambling, National Civic Review,
Summer 1993, p. 303.
Sallaz, J.J. (2001) Gambling with
Development: Casino Capitalism in South Africa and on Indian Lands in
California. Working Paper No. 17. University of
California Berkeley. Available:
http://www.iir.berkeley.edu/culture/conference/sallaz.pdf
[Accessed: 22 September 2008].
Wiehahn Commission (1994) Interim Report on Lotteries and Gambling in
the Republic of South Africa. Report submitted to the Lotteries and
Gambling Board.
Wiehahn Commission (1995) Main Report on Gambling in the Republic of
South Africa. Report submitted to the Lotteries and Gambling Board.
ANNEXURE
A: RECOMMENDATIONS EMERGING FROM THE INTERIM WIEHAHN REPORT
The Wiehahn Interim Report
of the Lotteries and Gambling Board recommended that:
§
Government stated in
policy that, in principle, only licensed forms of lotteries and gambling in the
Republic of South Africa are allowed;
§
Lotteries and
gambling activities shall be subject to the control, regulation and supervision
provided for by statutes and other provisions which will be promulgated by
legislatures;
§
Funds that accrue
from lotteries and gambling in the Republic of South Africa shall be utilised,
inter alia, for taxes, levies, licensing, administration cost and an
appreciable percentage for the Reconstruction and Development Programme and
other recognised and approved projects for the upliftment and development (in its widest context) of
the disadvantaged and disabled in the South African Society;
§
The lotteries and
gambling industries be compelled to uphold the highest standards of moral
conduct and professionalism and to develop a code of conduct which will embrace
the principles of honesty, integrity and fairness; and
§
Section 5 of the
General Law Sixth Amendment Act, 1993 (Act 204 of 1993), be implemented without
delay and all illegal casinos be closed without delay.
ANNEXURE B: LIST OF PARTICIPANTS
The following institutions
and individuals made written and/or oral submissions to the Committee:
1.
Family Policy Institute
2.
Justice Alliance for South Africa
3.
Limited Payout Machine Association SA
4.
Casino Association of SA
5.
Bingo Association of SA
6.
Phumelela Gaming & Leisure Ltd
7.
Aristocrat Technologies Africa (Pty) Ltd
8.
A G Consulting CC
9.
The Standard Bank of South Africa Limited
10.
Thuo Gaming SA (Pty) Ltd
11.
Department of Trade and Industry
12.
Financial Intelligence Centre
13.
National Regulator for Compulsory Specification
(NRCS)
14.
National Gambling Board
15.
Advertising Standards Authority of SA
16.
Sun International
17.
Ms T Soko, Advocacy Group at King of Kings Baptist
Church
18.
Ms S Day, Concern Citizen
19.
Rev R Cawood, Fish Hoek Methodist Church
20.
Ms J Mason, Concern Citizen
21.
Ms S Naidoo, Concern Citizen
22.
Ms C Whyte, Concern Citizen
ANNEXURE C: SUMMARY OF WRITTEN SUBMISSIONS
RNGL |
Institution |
Description |
Concerns/Recommendations |
1 |
Thuo Slots |
A route operator that supply, install and operate Limited Payout
Machines (LPMs) at premises that have a pre-existing primary business, such
as restaurants, sports bars and betting rooms. These are licensed by the
provincial gambling boards as secondary businesses. It operates in the
Western Cape and KwaZulu-Natal. |
Socio-economic impact of
legalised gambling: Thuo Slots provided
broad benefits of the LPM industry including job creation and SMME and BBBEE
opportunities. Impact of misleading
advertising: Advertising is limited to the display of the
route operator’s corporate logo at the site. Current regulatory
environment: Thuo Slots felt that the LPM industry is
subjected to very strict statutory limitations such as (i) the stake and
prize limits of R5 and R500 respectively is outdated as it has not been
adjusted since 1996, (ii) the types of eligible venues, the permitted number
of LPMs per site, the restricted advertising and the restriction on jackpots
and linked games. In addition, the implementation of the national central
electronic monitoring system (CEMS) is cumbersome as the CEMS is unable to
effectively handle the increasing volumes of data generated by the LPMs,
which affects the operation of the LPM industry. Interactive gambling: The current illegal operation of on-line gambling is undermining the
effective regulation of the gambling industry and the amended Act should be
implemented and full enforced as soon as possible. Recommendations: Section 27 of the National Gambling Act should be amended to permit
route operators to have a choice in the monitoring system being used and that
this amendment be implemented before the termination of the current CEMS
contract in 2012. The LPM stake and prize limits be adjusted to R10 and
R1 000 respectively. |
2 |
Standard Bank |
Standard Bank acts as an acquirer of merchants that use the bank’s
infrastructure s its primary source for card transactions and as an issuer of
cards to its current and potential customers. Merchants could include an
interactive gaming company/entity or a separate entity that provides this
service on behalf of other entities. |
Regulation of
cross-border gambling: Section 2.16 of the
Exchange Control Regulations[2]
prohibits cross border gambling activities including the participation in
foreign lotteries and betting organisations. The Bank has been advised to
hand over all proceeds received from foreign gambling but can only verify the
source of the funding based on the client’s declaration of the source. In terms of its acquiring role, the bank is not in a position to
differentiate between a service provider that transacts at a fixed site or
casino and an online casino simultaneously. Thus, compliance with all the
provisions of the Lotteries and National Gambling Acts and the Exchange
Control Regulations become difficult. Current regulatory
environment: The current legislation does not define
banks’ obligations in relation to the processing or facilitating of
transactions. Interactive gambling: Concern in terms of facilitating illegal interactive gaming by
processing transactions arising from cardholders’ participation in interactive
gaming. In addition, the Bank would like to verify that the obligation for
valid licensing is the responsibility of the service provider and not the
bank. Recommendation: The National Gambling and Lotteries Acts be amended to include a
clause similar to the one in the Films and Publications Board Act section
24(B) (3), which stipulates that “any person that facilitates transactions,
knowing that such transaction will facilitate access to, or the distribution
or possession of, child pornography, shall be guilty of an offence.” |
3 |
The Bingo Association of SA (BASA) |
BASA represents licensed bingo operators operating in South Africa.
There are licensed centres in Gauteng, Mpumalanga and KwaZulu-Natal. The
North West Gambling Board is currently adjudicating over bingo licence
applications. Bingo is a low stakes form of gambling that is played within a
social setup. |
Socio-economic impact of
legalised gambling: The eight Bingo
operations in Gauteng employ over 500 people mostly from previously
disadvantaged communities. There have been minimal calls (0.11% of all calls)
to the National Responsible Gambling programme (NRGP) helpline regarding
Bingo in comparison to other forms of gambling since 2000. Thus, BASA
believes that Bingo does not have a negative impact on society. Current regulatory
environment: There is some confusion around whether the
current definition of bingo allows for the use of electronic bingo machines
and the inclusion of high technology for the purposes of operating bingo. Interactive gambling: BASA felt that illegal interactive gambling may negatively impact
land-based gambling and that regulating this may be the only solution. Recommendations: The National Gambling Act be amended to include the Gauteng Gambling
Board’s definition of Bingo to include the use of electronic bingo machines,
as this appears to be contradictory within the current national legislation. |
4 |
AG Consulting |
AG Consulting has been involved in drafting legislation and
regulations and provides services in terms of gaming law and compliance. |
AG Consulting’s presentation highlights issues per gambling form with
an emphasis on interactive gambling. Socio-economic impact of
legalised gambling: The casino industry has made large investments in infrastructure and
job creation and generates fiscal revenue. The NRGP has led to a decline in
the number of problem gamblers. In terms of the LPM industry, there is a significant contribution to
small business contribution. Current regulatory
environment: In terms of the LPM industry, there are
enormous operational constraints due to zonings and a limit on the number of
LPMs. In addition, the licensing process has been suspended in certain
provinces and disparity between provincial approaches. In terms of Bingo, the development of the industry has been fragmented
and highly contentious. Currently, there is a legal dispute about the use of
electronic bingo machines. Interactive gambling: The provision of illegal interactive gambling by neighbouring states
including the open and extensive advertising is unresolved. The presentation
provides the advantages and disadvantages of various issues when considering
policy in terms of interactive gambling. These issues include the
difficulties of policing borderless activities, the increase in problem
gambling, money-laundering and under-age play. These policy considerations
lean toward the regulation of interactive gambling. Recommendations: In terms of the LPM industry, there should be standardisation of
certain basic procedures pertaining to advertising, criteria for licensing
sites, public hearings and site location requirements. The insertion of a provision in the National Gambling Act to deem
interactive gambling to take place “where the player is located” in cases
where an interactive gambling operator is not licensed in South Africa. |
5 |
Phumelela Gaming & Leisure Ltd |
Phumelela operates as a horse racing and totalisator[3]
in the Eastern Cape, Gauteng, Limpopo, Mpumalanga, Northern Cape and North
West. It has five racecourses and allied training centres in four provinces
and over 230 betting shops and operates two call centres in the Eastern Cape
and Gauteng and a betting website. It commingles its horse racing and sports
betting totalisator pool with Gold Circle, which operates in KwaZulu-Natal
and the Western Cape. In addition, Phumelela has shares in Phumelela Gold
International Limited and operates internationally in terms of simulcast
products and coverage of races, as well as an online totalisator operation. |
Socio-economic impact of
legalised gambling: Totalisator betting
operations generates tens of thousands of direct and indirect jobs. Directly,
Phumelela has 2 000 employees and 50.23% black ownership. It has contributed
R160 million to the fiscus in national and provincial taxes in the year
ending 31 July 2009 excluding various licence fees. It is also involved in
NRGP initiatives. Impact of misleading
advertising: Phumelela complies with the advertising
requirements. Regulation of
cross-border gambling: Unsure whether
regulation is effective as foreign online operators continue to offer
services in South Africa. Current regulatory
environment: The environment is not efficient due to the
nine provincial gambling boards and the national gambling board’s different
standards and the lack of cooperation between these. As Phumelela operates
across a number of provinces, its cost of doing business and compliance is
increased and some provinces have not updated their legislation yet. There is
also a need for processes and decisions to consider commercial aspects. Different gambling forms are not subjected to similar requirements,
thus certain forms are more heavily regulated than others leading to lost
opportunities and unfair competition. The totalisator is losing about R200
million due to open bets being offered by bookmakers that ‘unlawfully’
compete with the totalisator and use its intellectual property. This also
means that fewer funds are being contributed to horseracing. Interactive gambling: Phumelela believes that delaying the regulation of this industry may
mean that South African operators are losing opportunities and that the
websites may be unattractive as the proposed regulation is too onerous
compared to other jurisdictions. |
6 |
Aristocrat Technologies Africa (Pty) Ltd |
Aristocrat is a manufacturer, supplier or maintenance provider of
electronic gaming machines[4]
and online casino monitoring systems[5]
to licensed casinos and LPM gambling operations in the sub-Saharan and other
regions of Africa. |
Current regulatory environment: Current challenges faced by Aristocrat’s business operations are: a)
The listing of compliance to the Financial Intelligence Centre Act (FICA) as
a condition for a national manufacturer’s license is unnecessary, as the FICA
does not apply to the operations of a manufacturer. b)
The onerous responsibilities of applying to all nine provincial gambling
boards for approval of gambling equipment even though the equipment has been
tested and certified based on national standards for gambling equipment as
published by the South African Bureau of Standards. c)
The double work of having to register gambling equipment and devices on the
National Gambling Machine and Devices Register and then having to apply to
the provincial gambling boards for distribution approvals for the movement of
the same gambling machines and devices. Recommendations:
(a)The
removal of the certification of gambling equipment and devices or, if
certification is required then there must be more than one certification
agency, accredited to ISO/IEC 17020[6],
in the industry and who are competent in the evaluation of gambling
equipment. b)
The reinterpretation of the concurrent national and provincial regulations of
gambling to consider approval of gambling equipment to be a matter of
national approval as opposed to 9 separate approvals by each provincial
gambling board for the same equipment. c) The updating of clauses 19 to 23, with regard to the National
Gambling Machine and Devices Register, to allow for one stream of activity
with regard to the approval of distribution of gambling machines and devices
and the registration thereof as opposed to 2 separate processes currently
governing the two requirements. |
7 |
Family Policy Institute (FPI) |
FPI is a non-profit research and educational organization dedicated to
articulating and advancing a family-centred philosophy of public life. |
Socio-economic impact of
legalised gambling: FPI presents nine
social costs related to gambling. These include crime, business and
employment costs (such as lost productivity), bankruptcy, suicide, illness
associated with depression and stress among others, social service costs,
direct government regulatory costs, family costs (such as abuse, child
neglect or divorce) and abused money acquired through false pretences. FPI notes
that gambling removes money from the economy and that the net social effect
of gambling is negative. Impact of misleading
advertising: FPI refers to the role of advertising in
creating an emotional bond between the consumer and the product. Therefore
advertising will tend to favour gambling rather than make consumers aware of
the possible dangers. In principle advertising provides an incentive to play
and an idea that you will in all likelihood be the next winner, which is
misleading. This usually preys on those that can least afford the financial
loss enticing them into potentially even further impoverishment. The FPI also
describes the potential harm of advertising on youth in normalising this
activity. |
8 |
South African Responsible Gambling Foundation (SARGF) |
The SARGF is responsible for the NRGP since 1999. The SARGF delivers
programmes of public awareness, training, treatment and a curriculum for
schools relating to the dangers of gambling and how to avoid them. It also
undertakes research and keeps abreast of the best international research
conducted. It covers casinos, the National Lottery, scratchcards, racing and
other sportsbetting, LPMs, remote gambling and illegal gambling. |
Socio-economic impact of
legalised gambling: The SARGF receives an income
of R15.6 million from the gambling industry. According to their study,
participation rates in gambling have decreased significantly and there has
not been an increase in problem gambling between 2005 and 2008. Interactive gambling: Even though SARGF believes that problem gambling is currently at a
minimum, interactive gambling is considered a key challenge, whether legal or
not, as control access to these types of sites will be problematic. |
9 |
Sun International |
Sun International is a leisure group offering superior gaming, hotel and
entertainment experiences. It operates and manages 22 casinos in South
Africa. It is also a member of the Casino
Association of South Africa (see RNGL 18 for a description and other issues). |
Interactive gambling: Several policy considerations were raised that should be taken into
account when finalising the regulations and taxation for interactive
gambling: ·
Rate of taxation to
prevent ‘arbitrage’ from local operators of land-based play to online play
and to ensure international competitiveness. ·
Definition of employment
and investment objectives in terms of interactive gambling, as this can be
operated at a low base, excluding the call centre function. ·
Current access of online
gambling available of electronic equipment by youth. ·
Restrictive and
cumbersome regulations in order to protect the public may deter users and
operators from participating in South African licensed operations. ·
The operation of illegal
online casinos with impunity. Recommendations: Sun International feels that the interactive gambling debate should
be reopened in order to identify relevant policy objectives. |
10 |
Justice Alliance of South Africa (JASA) |
JASA is a coalition of churches and individuals committed to upholding
Judeo-Christian values in the South African society. JASA has attached a
study/submission by the Royal College of Psychiatrists, which is a statutory
body responsible for the supervision of the training and accreditation of
psychiatrists in Britain. In addition, it provides guidelines and advice
regarding the treatment, care and prevention of mental and behavioural
disorders. |
Current regulatory
environment: The NRGP is supervised by the South African
Responsible Gambling Trust, which has at least four representatives from the
gambling industry. This is a conflict of interest and undermines the NRGP’s
integrity and independence. In addition, the schools programme may be
introducing children to gambling at a young and impressionable age. Interactive gambling: JASA is concerned about the ability to prevent children from
accessing gambling sites. They believe that this is a moral issue and
gambling has been seen to destroy lives. Interactive gambling is especially
dangerous as it can be accessed 24 hours, 7 days a week. JASA believes that the notion of ‘responsible gambling’ is
disingenuous and tougher regulations should be in place regarding interactive
gambling. Recommendations: JASA is strongly opposed to legalising interactive gambling. |
11 |
Zonke Monitoring Systems |
Zonke is the current National CEMS operator that monitors the LPM
industry as guided by Section 27 of the National Gambling Act and its
regulations. |
Current regulatory
environment: Conflicts between national and provincial
gambling and other legislation exist. The roll-out phase has been slowed due
to factors such as: ·
The lack of zoning in
former black areas, as Section 56(a)(ii) prohibits licensing in
inappropriately zoned areas. ·
The Business Act (No. 71
of 1991) provides for a similar licensing process as the National Gambling
Act for premises where three or more coin operated machines are operated
leading to duplication. In addition, the lack of capacity in certain
municipalities has also limited/delayed the issuing of these business
licences. ·
Liquor licences: Certain
provinces require businesses operating LPMs to possess permanent liquor
licences. The issuing of liquor licences is often problematic due to capacity
issues and inefficiencies. Recommendations: Zonke recommends the following: ·
Zoning: The issuing of
LPM site licences should consider the local authorities comments where zoning
is unavailable and taverns operating for more than 10 years should be
eligible. This would entail an amendment to Section 56 as proposed. ·
The Businesses Act:
Amending the Business Act to exclude gambling electronic equipment, however
this would need to be done at a provincial level as the Act has been assigned
to each province. This could be facilitated through the MinMEC or the
National Gambling Policy Council mechanism. ·
Liquor licences: Affected
taverners should be granted a LPM licence if they can prove that they are
awaiting approval for a permanent licence, on condition that the LPM licence
will lapse if the liquor licence approval is unsuccessful. |
12 |
Advertising Standards Authority of South Africa (ASASA) |
ASASA is an independent self-regulatory body established by the
advertising and marketing communications industry. It regulates the industry
through the Code if Advertising Practice, which contain standards that must
be adhered to by advertisers, agencies, marketers and broadcasters when
communicating with the public about their offers. |
Recommendations: ASASA recommends the following changes to the gambling regulations: ·
Sub-section 4(a) of Section 7 be deleted from the
Regulations as same is regulated by Clause 4.2 of Section II of the Code as
well as Section 41 of the Consumer Protection Act. ·
Sub-section 17(5) might be unconstitutional in
that there are mechanisms in place for the public to opt-out regarding
unsolicited messages. This issue might
as well be dealt with by the Direct Marketing Association of South Africa. ·
The phrase “on its own accord” be deleted from
sub-section 7(6). It is our view that
such powers afford the Board to censor marketing material. It is our view as well, as indicated
earlier on, that such mandate be removed from the Board and be vested with
the ASASA and/or the Tribunal (to be established in terms of the Consumer
Protection Act). This argument also
goes to sub-section 7(7) and 7(8). In terms of the National Gambling Act, ASASA
recommends that sub-sections 15(1)(a)(i) and 15(1)(a)(ii) be deleted from
this Act, as they are provided for in Section 41 of the Consumer Protection
Act as well as the Code of Advertising Practice. |
13 |
Fish Hoek / Kings Baptist Church |
|
Socio-economic impact of
legalised gambling: According to a study on
the social impact of gambling in South Africa, most people who gamble earn
less than R2 500 per month[7].
While a study by the National Gambling Board showed that there are 12 people
affected by each problem gambler[8].
Other spheres that are affected by gambling include mental health, financial,
community and work. Recommendations: Kings Baptist Church recommends that gamblers are educated and are
made aware of the possible dangers of gambling by: ·
Displaying the odds of
winning on slot machines and LPMs, as well as a tally of how much money the
gambler has spent on a particular machine. ·
The helpline number
should be displayed on prominent signs in gambling areas. ·
Possibly a restriction in
terms of the minimum distance between an ATM and a gambling location/machine. Other recommendations were that: ·
Very strict enforcement
should be applied to sites that are found to admit underage gamblers such as
penalties and the loss of licences. ·
A minimum size and the
prominent positioning of signs indicating under 18s are not allowed,
especially on interactive gambling websites. ·
The close monitoring of
online advertising, particularly via e-mail websites, in terms of underage
gambling. Tight regulation of television adverts that portray gambling as a
glamorous activity. Levies or taxes from the industry could be used to fund
alternative advertisement of the possible dangers of gambling. ·
A national campaign with
a helpline could be run where people could report under-aged gambling, unfair
practices, particularly of smaller gambling establishments and unlicensed
establishments. |
14 |
SARGF |
See RNGL 8 |
See RNGL 8 |
No RNGL 15 |
|||
16 |
Limited Payout Machine Association South Africa (LPMASA) |
The LPMASA represents all South African licensed route operators. |
Socio-economic impact of
legalised gambling: The LPM industry has
directly invested more than R405 million in the six operational provinces[9]
over the last eight years. Gross gaming revenue has been more than R475 million
and the annual operating revenue is R315 – 400 million. Current regulatory
environment: LPMs are facing challenges such as obtaining
licences for sites due to the cumbersome approval process set by provincial
regulators and site-owner’ failure to adhere to licensing requirements. Recommendations: The LPMASA has made the following recommendations: ·
Not to implement Sections
14(10) to (12) in respect of the LPM industry, as it is difficult to comply
with the strict national exclusion register requirements/guidelines due to
excessive regular trade requirements and limited resources. ·
Revise the stake and
prize limits. ·
Explicitly define the LPM
industry to provide for this to be accommodated in the current Land Use
Management Act and various town planning schemes. |
17 |
Carol Whyte |
A concerned citizen |
Socio-economic impact of legalised gambling: Mrs Whyte indicated that a narrow picture of the socio-economic
impact of gambling is usually provided. She refers to the answers provided by
respondents in a NGB commissioned study, where 71.3% of households stated
they would be using money spent on gambling to purchase household necessities
and 27.3% would be saving these funds[10].
Therefore, the recreational activity of gambling
will not increase South Africa’s productive capacity, and is therefore a
diversion from human capital development and sustainable economic
development. South Africa’s global rankings in terms of welfare and casino
statistics were disproportionate in 2000 and its propensity to gamble was
higher than in other countries where welfare was higher. In
addition, inadequate attention is given to the social consequences of
the damaging effects of excessive gambling on work ethics and family
responsibility. There is also a massive underestimation of the
inherent dangers and social impact of gambling on youth relative to problems
such as substance-abuse, HIV/AIDS and poor scholastic performance at all
levels of the education system. Furthermore, the poor are
spending more of their disposable income on gambling activities, including
the lottery, according to NRGP reports on Gambling
and Problem Gambling in South Africa. Impact of misleading
advertising: Mrs Whyte’s concern is that advertising
further entrenches the culture of gambling instead of decent work and
productivity over the long term, particularly among the youth who are already
engaging in gambling activities. Other: The independence of the SARGF is questioned and its authority in
commenting on the state of gambling and problem gambling in South Africa, as
results can be manipulated depending on who is commissioning the study. Recommendations: Mrs Whyte recommends that: ·
All advertising be
limited to raising public awareness of the dangers of gambling. ·
The Committee consider
the Wiehahn Report on Gambling that forms the basis of the National Gambling
legislation. ·
The impact on vulnerable
groups is included in socio-economic analyses. ·
The poor are protected. ·
Interventions are
implemented to promote a culture of productivity rather than one of gambling. ·
Promotion of gambling is
done way with in a phased manner. ·
The enforcement of the
law in terms of interactive gambling is assessed in relation to government’s
capacity. ·
Research by institutions
commissioned by industry or gambling authorities is cautiously evaluated. ·
Ensure that regulations
curb gambling rather than promote it considering the explosive effect that
increased internet access will have. |
18 |
Casino Association of South Africa (CASA) |
CASA is a voluntary association. Its members hold 35 of the 37
operational casino licences in South Africa. It represents and advances the
interests of the casino industry and presents the facts about casino
entertainment to the public, media, regulators and policy-makers through
education and advocacy. |
The first letter was dated February 2009 and outlines the role of the
casino industry in terms of BBBEE. CASA argued that its industry was one of
the few that had a meaningful framework in place in terms of the promotion of
black economic empowerment and this has been included in the conditions of
the licences awarded. These constitute binding and legally enforceable
contracts between the relevant gambling boards and casino operators. Its
contribution to BBBEE has included the creation of 100 000 direct and indirect
job opportunities and filling these with more than 80% previously
disadvantaged individuals and contributing to corporate social investment
initiatives including the creation of broad-based community trusts.
Nationally, the industry scored a level 6 Empowerdex rating, with 46% of the
economic interest and 46% of all voting rights being held by black
individuals. |
19 |
CASA |
See above |
Socio-economic impact of
legalised gambling: CASA has indicated the
contribution that the casino industry has made in terms of direct job
opportunities (33 278), related tourism and leisure infrastructure investment
(more than R19.6 billion) and government revenue (R4.43 billion). It has also
played a key role in BBBEE objectives and provided 90% of the gambling
industry’s contribution to the NRGP. Impact of misleading
advertising: CASA felt that misleading advertisement does
not occur within the licensed gambling sector and that the legislation deals
extensively with these standards. This is also matched by provisions in the
applicable provincial legislation. Failure to adhere to these may result in
administrative penalties, or the suspension or revocation of the licence. All
advertisements in the casino industry must include reference to the NRGP, and
the helpline number and be at least 10% of the size of the advertisement.
There is also a Code of Conduct in this regard. In CASA’s opinion, the bulk of misleading advertisement on television,
the Internet and in print is published by unlicensed or unregulated
interactive gambling operators. Current regulatory
environment: CASA feels that the legislation has moved
from a risk-based focus to a micro-management of the industry and thus
leading to over-regulation that is becoming ineffective. The legislation does restrict licensed gambling activities and
therefore does not over-stimulate the latent demand for gambling. No restrictions were placed on bingo operations and the advent of
electronic bingo machines does compromise bingo halls as these machines do
not truly offer the game of bingo. In CASA’s opinion,
this emergence means that bingo halls would be operating as casinos without
the required contributions that casinos must make. Other: CASA considers the National Lottery a form of gambling, which though
regulated faces very few restrictions when compared to other gambling forms.
This lack of stringent regulations is attractive to the poor and contributes
to their further impoverishment. Recommendations: CASA feels that: ·
The legal difficulties in
prosecuting illegal interactive gambling operators for misleading
advertisement could be addressed by inserting the clause “where the player is
located” into the relevant section. ·
Regulation for casinos
should return to focusing on substantive operational risks identified by
regulatory authorities. |
20 |
Shamla Naidoo |
Manager of the Student Orientation and Advocacy at the University of
Cape Town |
Ms Naidoo indicated that information on the control monitoring systems
available, a breakdown of profit margins and submissions, as well as the percentage
of disposable income that was gambled, research on who the target market is,
the socioeconomic impact on the gambling community and society, the addictive
nature of gambling and its counterproductive impact on a developing economy
was required to comment strategically and intelligently on gambling policy,
legislation and research. She outlines a number of normative aspects that should be considered
when assessing policy and legislation, such as the country’s history and
objectives, the need for economic, emotional/psychological and family
recovery, as well as the need to use appropriate benchmarks to regulate the
gambling industry. She also states that the easy access to interactive gambling will increase the pace of economic or
financial destruction. She concludes that many individuals and families have been ravaged by
this industry and government must implement controlled and socially
responsive legislation to prevent this destruction. |
21 |
Sandy Day |
A concerned citizen |
Socio-economic impact of legalised gambling: Gambling is an activity that devastates individuals,
their families and social circles; causing financial ruin and personal and
family breakdowns. Interactive gambling:
Interactive gambling sites should be prohibited in South Africa, as
there are already casinos and gambling machines available and such sites will
only make it easier for people to lose more money. At the very least, there
should be restrictions imposed on them, such as certified copies of photo ID
(i.e. a passport or identity book) must be submitted to the site organizers
before a client is allowed to play to restrict the gambling activities of
underage people and make it more difficult for others to participate in
internet gambling. Recommendations: ·
Slot Machines should not be placed near venues
that are frequented by children and families; but rather where similar age
restrictions to gambling are applied. ·
Penalties should be strictly enforced and
since money is readily available in gambling establishments, jail terms
should apply to illegal activities, instead of fines. ·
All gambling sites, whether interactive or
not, must have clear and prominent signage displaying the age limits and
restrictions that apply in terms of the gambling legislation, including the
responsibilities of the gambling site owners and the players. ·
Staff should be aware of the legislation
regulating their industry. |
APPENDIX D: RECOMMENDATIONS RECEIVED FROM ALL THE SUBMISSIONS
Most of the submissions
received came from the industry players and therefore, their recommendations
focused on streamlining the implementation of gambling activities by easing the
administrative burden. The following recommendations were made by the industry
players, civil society, community leaders and DTI and responsible agencies and
FIC because of money laundering.
1. General:
1.1.
The Committee should
consider the Wiehahn Report on Gambling that forms the basis of the National
Gambling legislation.
1.2.
The impact on vulnerable
groups should be included in socio-economic analyses.
1.3.
The poor should be
protected by the legislation.
1.4.
Interventions are
implemented to promote a culture of productivity rather than one of gambling.
1.5.
Promotion of gambling is
done away with in a phased manner.
1.6.
Research by institutions
commissioned by industry or gambling authorities is cautiously evaluated.
1.7.
Ensure that regulations
curb gambling rather than promote it considering the explosive effect that
increased internet access will have.
1.8.
Penalties should be
strictly enforced and since money is readily available in gambling
establishments, jail terms should apply to illegal activities, instead of
fines.
1.9.
Staff employed by gambling
institutions should be aware of the legislation regulating their industry.
2. Casino
industry:
2.1.
Regulations for casinos
should return to focusing on substantive operational risks identified by
regulatory authorities.
3.
Limited Payout
Machines Industry:
3.1.
Section 27 of the National
Gambling Act should be amended to permit route operators to have a choice in
the monitoring system being used and that this amendment should be implemented
before the termination of the current CEMS contract in 2012.
3.2.
The LPM stake and prize
limits of R5 and R500 respectively should be adjusted to R10 and R1 000
respectively.
3.3.
In terms of the LPM
industry, there should be standardisation of certain basic procedures
pertaining to advertising, criteria for licensing sites, public hearings and
site location requirements.
3.4.
The issuing of LPM site
licences should consider the local authorities’ comments where zoning is
unavailable and taverns operating for more than 10 years should be eligible.
This would entail an amendment to Section 56 as proposed.
3.5.
Explicitly define the LPM
industry to provide for this to be accommodated in the current Land Use
Management Act and various town planning schemes.
3.6.
Amending the Business Act
to exclude gambling electronic equipment, however this would need to be done at
a provincial level as the Act has been assigned to each province. This could be
facilitated through the MinMEC or the National Gambling Policy Council
mechanism.
3.7.
Affected taverners should
be granted a LPM licence if they can prove that they are awaiting approval for
a permanent liquor licence, on condition that the LPM licence will lapse if the
liquor licence approval is unsuccessful.
3.8.
Not to implement Sections
14(10) to (12) in respect of the LPM industry, as it is difficult to comply
with the strict requirements/guidelines for the National Register of Excluded
Persons due to their excessive regular trade requirements and limited
resources.
4. Interactive gambling:
4.1.
The National Gambling and
Lotteries Acts should be amended to include a clause similar to the one in the
Films and Publications Board Act section 24(B) (3), which stipulates that “any
person that facilitates transactions, knowing that such transaction will
facilitate access to, or the distribution or possession of, child pornography,
shall be guilty of an offence.”
4.2.
The insertion of a
provision in the National Gambling Act to deem interactive gambling to take place
“where the player is located” in cases where an interactive gambling operator
is not licensed in South Africa.
4.3.
Sun International feels
that the interactive gambling debate should be reopened in order to identify
relevant policy objectives.
4.4.
Justice Alliance South
Africa is strongly opposed to legalising interactive gambling.
4.5.
The enforcement of the law
in terms of interactive gambling is assessed in relation to government’s
capacity.
4.6.
The legal difficulties in
prosecuting illegal interactive gambling operators for misleading advertisement
could be addressed by inserting the clause “where the player is located” into
the relevant section.
4.7.
Probity checks should
be applied strictly to ensure that criminals do not acquire a controlling
interest in online casinos.
4.8.
Rogue or unlicensed
online casinos must be prevented from making (or continuing to make) their
services available in South Africa.
4.9.
Money flow to rogue or
unlicensed on-line casinos must be prevented.
4.10.
Licensed operators
must subject their operations to the jurisdiction of all South African laws and
establish a presence in South Africa, including a locally based gateway to
provide services to South African based gamblers.
4.11.
Compliance by online
casinos with legal obligations, such as customer identification, must be
supervised and this monitoring process must include the ability to examine
compliance through the inspection of their systems and records.
4.12.
Supervisors must be
able to take action against licensed online casinos where they fail to comply
with their legal obligations
4.13.
Transaction related
information must be held in South Africa where it can be accessed by South
African law enforcement agencies.
4.14.
Sufficient capacity to supervise compliance and prevent unlicensed or rogue
operators from offering interactive gambling facilities must be ensured.
5. Electronic
Bingo Machines:
5.1.
The National Gambling Act
should be amended to include the Gauteng Gambling Board’s definition of Bingo
to include the use of electronic bingo machines, as this appears to be
contradictory within the current national legislation.
6. Manufacturers
of gambling equipment:
6.1.
The removal of the
certification of gambling equipment and devices or, if certification is
required then there must be more than one certification agency, accredited to
ISO/IEC 17020, in the industry that are competent in the evaluation of gambling
equipment.
6.2.
The reinterpretation of the
concurrent national and provincial regulations of gambling to consider approval
of gambling equipment to be a matter of national approval as opposed to 9
separate approvals by each provincial gambling board for the same equipment.
6.3.
The updating of clauses 19
to 23, with regard to the National Gambling Machine and Devices Register, to
allow for one stream of activity with regard to the approval of distribution of
gambling machines and devices and the registration thereof as opposed to 2
separate processes currently governing the two requirements.
6.4.
The relevant sections of
the National Gambling Act should be amended to address the changes in terms of
the process for applying for certification of gambling equipment.
6.5.
The NGB should develop
regulations that are aligned to the NRCS Act, so that compulsory specifications
for gaming devices and related apparatus only cover safety matters and do not include
performance matters.
7. Advertisements:
7.1.
Sub-section 4(a) of Section
7 be deleted from the Regulations as same is regulated by Clause 4.2 of Section
II of the Code of Advertising Practice as well as Section 41 of the Consumer
Protection Act.
7.2.
Sub-section 17(5) might be
unconstitutional in that there are mechanisms in place for the public to
opt-out regarding unsolicited messages.
This issue might as well be dealt with by the Direct Marketing
Association of South Africa.
7.3.
The phrase “on its own
accord” should be deleted from sub-section 7(6). It is Advertising Standards Authority of
South Africa’s (ASASA) view that such powers afford the Board to censor
marketing material. It is their view as
well that such mandate be removed from the National Gambling Board and be
vested with the ASASA and/or the Tribunal (to be established in terms of the
Consumer Protection Act). This argument
also goes to sub-section 7(7) and 7(8).
7.4.
In terms of the National
Gambling Act, ASASA recommends that sub-sections 15(1)(a)(i) and 15(1)(a)(ii)
be deleted from this Act, as they are provided for in Section 41 of the
Consumer Protection Act as well as the Code of Advertising Practice.
7.5.
The close monitoring of
online advertising, particularly via e-mail websites, in terms of underage
gambling. Tighter regulation of television adverts that portray gambling as a
glamorous activity is necessary. Levies or taxes from the industry could be
used to fund alternative advertisement of the possible dangers of gambling.
7.6.
All advertising be limited
to raising public awareness of the dangers of gambling.
7.7.
Gamblers are educated and
are made aware of the possible dangers of gambling by:
o
Displaying the odds of
winning on slot machines and LPMs, as well as a tally of how much money the
gambler has spent on a particular machine.
o
The helpline number should
be displayed on prominent signs in gambling areas.
o
Possibly a restriction in
terms of the minimum distance between an ATM and a gambling location/machine.
8. Minors:
8.1.
Very strict enforcement
should be applied to sites that are found to admit underage gamblers such as
penalties and the loss of licences.
8.2.
A national campaign with a
helpline could be run where people could report under-aged gambling, unfair
practices, particularly of smaller gambling establishments and unlicensed
establishments.
8.3.
Slot Machines should not be
placed near venues that are frequented by children and families; but rather
where similar age restrictions to gambling are applied.
8.4.
A minimum size and the
prominent positioning of signs indicating under 18s are not allowed, especially
on interactive gambling websites.
8.5.
All gambling sites, whether
interactive or not, must have clear and prominent signage displaying the age
limits and restrictions that apply in terms of the gambling legislation,
including the responsibilities of the gambling site owners and the players.
ANNEXURE E: SITE VISIT TO GRANDWEST CASINO
1. Introduction
Two Members of the
Committee, Mr B Radebe and Mr A van der Westhuizen, accompanied by Mr John
Fraser, the regional commercial manager of Sun International, Mr Wayne de Wet,
the financial manager of GrandWest and Mr Themba Marasha, the Chief Operations
Officer from the National Gambling Board, visited the GrandWest Casino on 23
February 2010.
The Members were taken on a
general tour of the complex, which included restaurants, fast food outlets and
shops, the casino, the loyalty club members’ area, conference facilities and
entertainment areas. Sun International informed the Committee that it leases
the additional areas to franchises. These establishments are operated by their
relevant franchisees.
2. Findings
The regional manager
explained that the grounds offered about 2 000 employment opportunities,
of which approximately 1 000 were directly linked to the casino’s
facilities. He indicated that the casino had provided extensive training and
promotion opportunities to individuals from surrounding areas, most of whom
only had a matric certificate. Furthermore, most of the establishment’s
employees had permanent contracts but were on duty on a schedule basis, to
allow for the casino being open 24/7 and for seasonal demands.
The Members were shown the
electronic and camera surveillance room, where activities on the casino floor,
in general and other designated areas were monitored for compliance with the
relevant legislation and to ensure the safety of clients. The casino is
operated on an electronic basis, with punters having to use issued electronic
cards to gamble. This assists the casino in ensuring that money deposited there
were used for gambling transactions and to monitor for potential money
laundering activities.
The surveillance team
designated one staff member per shift to manually monitor for the presence of
problem gamblers and nationally banned individuals within the surveillance room
on the basis of the National Gambling Board’s problem gambling and the Casino
Association of South Africa’s databases. A second mechanism to prevent problem
gambling, where these individuals have not been detected visually or
electronically, is that punters need to provide an identity document when
claiming their winnings, which is checked against the problem gambling
database. If they are found to be registered problem gamblers they would then
forfeit their winnings, as agreed upon registration. The regional manager
emphasised that employees were trained to identify possible problem gamblers.
The financial manager also
explained that the use of loyalty cards assisted in identifying possible
suspicious activities and problem gamblers, and did not necessarily encourage
gambling. The regional manager assured the Members that Sun International only
extended credit to punters on rare occasions and this was aimed at high
rollers, and these funds were generally repaid shortly thereafter.
The regional manager then
outlined Sun International’s corporate social investments within the region.
This included the GrandWest CSI Bursary Fund, which was open for any field of
study and was available directly from the tertiary education institutions, and
the Shawco Community Health Project, which provides quality clinical services
in under-resourced and impoverished communities within the Cape Metropolitan
area.
3. Conclusion
In general, the GrandWest
Casino appeared to be highly regulated and well monitored with a high
compliance rate. This may be attributed to longstanding, well working
relationships with the provincial and national gambling boards. In addition, as
casinos are relatively large establishments and licences are limited coupled with
high investment costs, there is an in-built incentive to cooperate and comply
with the gambling boards.
However, there may be a gap
in identifying, registering and monitoring problem gamblers, especially for
those falling into more vulnerable groups including pensioners. As these
individuals may not be regular gamblers but may lose a significant proportion
of their income in a few sittings at casinos. In addition, the monitoring of
the use of day cards for the possibility of money laundering activities should
be reviewed on a daily basis.
Furthermore, there may be a
need for the Committee to visit smaller establishments, such as limited payout
machines and totalisators, to assess the controls that are being implemented to
monitor problem gamblers and money laundering.
Report to be considered.
[1] These regulations are issued in terms of the Currencies and Exchanges Act (No. 9 of 1933).
[2] These regulations are issued in terms of the Currencies and Exchanges Act (No. 9 of 1933).
[3] A totalisator (also “tote board”) is an automated system that registers bets and divides the total amount bet among those who won (http://www.thefreedictionary.com/Totalisator).
[4] Electronic gaming machines include hoppers, bill
validators, monitors, coin comparitors, sophisticated circuitry and EPROMs.
[5] The online casino monitoring systems are driven
by software developed by Aristocrat Technologies Australia (Pty) Ltd. and some
of its subcontractors.
[6] This refers to the General Criteria
for the Operation of Various Types of Bodies Performing Inspection.
[7] S. Rule and C. Sibanyani (2000) The
Social Impact of Gambling in
[8] NGB (2002) The Promotion of
Responsible Gambling in
[9] The operational provinces are the
[10] The
National Gambling Board’s (NGB) (2003) Economic
Impact of Legalised Gambling in