South African-regulated online gambling still a way off

Following yesterday’s news that the South African Gambling Review Commission has recommended that online wagering be made legal in the country, the local publication ITWeb ran an assessment of the situation Thursday.
After years of investigations and parliamentary and public debate, the government has yet to move decisively on the issue, with the ministry for trade and industry commenting that internet gambling remains illegal until the appropriate legislation is agreed upon and promulgated.
The Commission has recommended legalisation and the issue or more than 10 licenses to operators, but even assuming that its suggestions are followed by political and legislative action, it could be up to two years before any implementation is completed, say gambling law experts.
Physical gambling was legalised in SA in 1996 and has since soared into a multibillion-rand industry, reports ITWeb. Revenue earned by brick-and-mortar outlets doubled between 2001 and 2009.
In the year to March 2010, the latest available figures, punters waged Rands 215.8 billion (around GBP 19.63 billion), which earned the state R1.6 billion in taxes.
These numbers do not include money wagered online, which is currently illegal after a High Court judgement in Gauteng last year which is currently under appeal by Casino Enterprises in neighbouring Swaziland.
Online gambling has the potential to add R110 million to the fiscus every year, as international figures show that Internet-based gaming accounts for about 7 percent of the bricks-and-mortar industry. As much as R15 billion could be bet in the virtual realm annually, ITWeb estimates.
The Gambling Review Commission, in its report released yesterday, acknowledges that there is already demand for online gambling, including online poker, online casino games and online betting and wagering. “The exact extent of the demand has not been accurately established,” it notes.
Eighteen months after the latest Commission was established, the process does not appear to be any further forward, and further delays are likely as another round of consultations and public hearings are held before the issue can again be presented to parliament.
Trade and industry minister Rob Davies said yesterday, “It’s not tomorrow or the next day, it is going to take a period of time, but it’s essential to do this.”
Four years ago it looked as if online gambling would be legalised, opening the door for South Africa to become a licensing jurisdiction and creating both income and jobs.
The legislation was approved in 2007 but no licenses issued and when regulations were framed and submitted two years later the Parliamentary Trade and Industry Portfolio Committee had objections, stalling the process although familiarisation and fact finding missions to jurisdictions like Antigua continued.
The Gambling Review Commission’s report notes that government’s approach to online gambling is at present fragmentary, saying that there are certain categories of operator who can offer internet gambling under current law, including totes, and that some unlicensed operators advertise, creating an impression that the pastime is presently legal. This inconsistent approach requires urgent attention in the Commission’s opinion.
Other findings by the Commission include:
* Internet gambling is by its very nature hard to regulate and control, and South Africans have access to offshore operators
* In a world driven by technology, online gambling is unlikely to disappear
* Jurisdictions like the US and Australia are reviewing their prohibitionary stances on internet gambling
* Prohibition does little to extinguish demand, creating instead opportunities for unsavoury operators to thrive
* As recommended in the 2007 review, more than ten licenses should be issued, thus catering for legal tote and bookies already operating
* The level of taxation will be influential in persuading operators to license in South Africa
* Strict enforcement against unlicensed operators, and in particular their access to advertising opportunities, will be important
Challenges unique to South Africa should an internet gambling regulatory jurisdiction eventually emerge will include national laws on affirmative action, the national government’s commitment to job creation and Black Empowerment requirements.

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