South African gambling hearings commence

The public consultation phase of the South African government’s Department of Trade and Industry study on the recently presented Gambling Review Commission’s report kicked off this week in Cape Town, with industry representatives from both land and online interests in attendance.

The Commission was appointed in 2009 by the trade and industry minister to investigate the appropriateness of gambling policy and regulations, and the proliferation of gambling opportunities both on lnd and over the internet.

This week’s hearing focused mainly on horse racing, bingo and online betting, according to reports in the newspaper Business Day. Horse racing industry parties bemoaned the decline in stakes and race meetings over the past thirteen years, a plight not uncommon in international horse racing.

“In aggregate, as the cost of ownership is greater than the total stakes available, owners make a net contribution to the sport of horse racing in SA,” the Racing Association said in a written submission.

“With stakes remaining flat and costs increasing, the burden on thoroughbred racehorse owners becomes more onerous each year. Owners currently fund the sport by over R570 million.

“Owners are under more financial strain now than they have ever been in the past. If the current system continues, owners will be forced out of the sport.”

The Association proposed that because bookies make good profits from betting on the horses, they should make a contribution to subsidise the industry. The bookmaking representatives were quick to oppose this idea, insisting the industry was funded by betting patrons.

The proposed withholding tax of 15 percent on all gambling winnings of R25 000 or above was also a “major threat” to the industry, the Racing Association said.

The Association feels that it is being “penalised” under current tax law by its losses being ring-fenced. One of the turf club companies proposed a government grant to assist the industry.

Business Day reports that a major issue for bookies was the Commission’s recommendation that person-to-person betting exchanges be brought into the regulatory framework. Neither of these parties would be licensed and determined as fit and proper beforehand — as is the case with bookmakers — placing punters at risk, they claimed.

“Person-to-person exchanges by their very nature can be expected to bring about a proliferation of unlicensed persons endeavouring to make their living by acting as bookmakers,” the associations for KwaZulu-Natal, Gauteng and the Western Cape said in their submission.

Addressing the question of legalising and regulating online gambling, Betfair welcomed the recommendation that online gambling be regulated rather than prohibited and called for uniform legislation throughout the country to safeguard players.

The Bingo Association criticised the Commission’s recommendation for electronic bingo operations to be banned, claiming this was just giving in to the demands of the casino industry.

The Commission’s report suggests that the bingo industry requires more regulation because bingo halls have been allowed to “proliferate” across the country, a claim that the Association said was an exaggeration, and urged the government to reject.

Further hearings are planned before the report goes to Parliament.