South Africa Prepares To Legalize Mobile and Online Gambling

11 December 2006

Newspaper

BUSINESS DAY

CAPE TOWN — Online and cellphone gaming will become legal for the first time in SA if a draft amendment bill adopted by the cabinet last week is finally passed into law.

The South African gambling industry has been frustrated by the length of time it has taken government to come up with regulations to legalise internet gaming.

Foreign operators, particularly British operators, have been waiting for internet gaming to be legalised so that they can enter the domestic market, while provincial governments have been losing out on an additional source of tax revenue.

The draft bill proposes a licensing system for both the players and the online gaming websites.

The manner in which gaming proceeds would be taxed still had to be determined, trade and industry deputy director-general Astrid Ludin said yesterday.

She said a key challenge in drafting the proposed legislation was to find a way to effectively regulate anything on the internet and how to prevent money-laundering.

Additional resources would be required for the proposed regulations to be enforced by the National Gambling Board.

The department also had to look at the economic effect of interactive gambling and attempt to restrict access to a select audience, which would exclude young people.

A proposed way of limiting the scope of online gambling would be to make it illegal for advertisers to advertise on gambling sites, Ludin said.

Interactive gambling was outlawed by the National Gambling Act of 2004 because government considered that more time was needed to conduct research into this form of gaming, which has assumed massive proportions worldwide.

The act gave Trade and Industry Minister Mandisi Mpahlwa two years to draw up regulations to govern internet gambling, which will be regulated in terms of the proposed Gambling Amendment Bill.

The long-awaited regulations stem from a report compiled by a National Gambling Board committee and the recommendations of a national gambling policy committee consisting of Mpahlwa and the provincial MECs responsible for gambling.

Research was conducted on how other jurisdictions such as Britain, the US and Australia regulated online gambling.

Unlike the US, which decided to outlaw internet gambling to prevent money-laundering and funding terrorism, the South African government has decided to allow interactive gambling within a regulated framework. This is consistent with its general approach to gambling.

Gambling is a concurrent competence between national and provincial governments in terms of the constitution, so provinces were closely involved in framing the regulations.

The US law prevents credit-card companies from collecting payments for online bets, which effectively closed down a multibillion-dollar-a-year industry.

Estimates by foreign market-research companies suggest that the global gambling industry — worth more than $8,2bn a year in 2004 — would triple to $25bn a year by 2010.

Online poker in particular is a major source of online gaming revenue.

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