National Gambling Amendment Bill [B31b-2007]: briefing

ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE
10 October 2007
NATIONAL GAMBLING AMENDMENT BILL [B31B-2007]: BRIEFING

Chairperson: Ms N Ntwanambi (ANC, Western Cape)

Documents handed out
National Gambling Amendment Bill [B31B-2007] as amended by the Portfolio Committee
National Gambling Amendment Bill [B 31-2007] as introduced into Parliament
National Gambling Amendment Bill presentation
Explanatory document for presentation on Interactive Gambling

Audio recording of meeting

SUMMARY
The Department of Trade and Industry explained that the National Gambling Amendment Bill aimed at regulating interactive gambling. Interactive gambling refers to all forms of remote gambling taking place via the internet or other related forms of telecommunication. Internet gambling was a reality in South Africa, and this sector of the industry was not yet regulated. Players would be protected from dishonest and unfair practices. Money that was being spent outside of the country would remain in South Africa. Players would be registered, thus denying access to minors while enable the monitoring of problem gamblers. Attention would be given to implementing Black Economic Empowerment and socio-economic upliftment principles. Operators would have to comply with the provisions of the Finance Intelligence Centre Act. Advertising of service providers would be limited. The Department said that interactive gambling did not affect poor communities as they did not have access to internet facilities.

The main issue raised by members was how gambling affected poor communities. Some felt that gambling added to the moral breakdown in society. They also felt that some people could easily gamble away their earnings.

MINUTES
Department of Trade and Industry (DTI) briefing on National Gambling Amendment Bill
Mr Brian Muthwa (DTI Director: Legislative Drafting) said that the Bill was to provide for the regulation of interactive gambling so as to protect society against the over-stimulation of the demand for gambling. It provided for the regulation and verification of players as well as for the protection of minors and other vulnerable persons from the negative effects of gambling. It would ensure compliance with the Financial Intelligence Centre Act (FICA) and other relevant legislation. It also aimed to prevent gambling from being associated with crime, money laundering or financing of terrorist and related activities.

Their approach to regulating interactive gambling was to introduce it by way of an amendment to the National Gambling Act as opposed to a separate piece of legislation. DTI believed that interactive gambling should form part of the broad policy for the regulation of all forms gambling and be subjected to the general administrative and oversight role of the National Gambling Board rather that creating a separate regulatory authority for interactive gambling.

The existing regulatory regime in terms of the National Gambling Act largely applied to all forms of gambling including interactive gambling.

He said that the National Gambling Act of 2004 required the Minister to introduce into Parliament within two years of the effective date, legislation for the regulation of interactive gambling. A research committee was established by the National Gambling Board (NGB) to investigate the implications of the regulation of interactive gambling within the Republic. The research report was finalised in October 2005 and tabled before the National Gambling Policy Council (NGPC) which recommended enabling legislation. The draft Bill was approved by Cabinet in December 2006 and published for public comment on 18 December 2006.

Approximately 20 public submissions had been received. Issues around licensing, location of server, money laundering, player protection and problem gambling were raised. Most of these issues were incorporated into the final draft of the Bill. The Bill was then submitted to the State Law Advisors by the end of June 2007 and introduced to the National Assembly on 26 July 2007.

The initial presentation to the Portfolio Committee on Trade and Industry took place on 8 August 2007. Public hearings were then held in August 2007. The Bill was amended in light of inputs from the Portfolio Committee on Trade and Industry and stakeholder comments. The Bill was adopted by the Portfolio Committee of Trade and industry on the 5 September 2007 and by the National Assembly on 11 September 2007.

The National Gambling Board, Provincial Licensing Authority, National Treasury, South Africa Reserve Bank, South Africa Revenue Service, industry role players (such as the Casino Association of South Africa), the National Responsible Gambling Programme and Problem Gamblers Anonymous were the stakeholders consulted before the Bill was introduced.

The stakeholders that made comments at the public hearings included industry role players (Casino Association of SA, Betfair), Provincial Licensing Authorities (Gauteng, Western Cape, Mpumalanga), National Departments (National Treasury, Financial Intelligence Centre). As well as churches (Jewish Board of Deputies, Justice Alliance of SA), COSATU, National Responsible Gambling Programme and South African Advisory Council on Responsible Gambling.

The key issues raised in the public hearings included the adequacy of the consultation process, money laundering and taxation. In addition to that, issues around person to person betting exchanges, advertising, licensing powers of the NGB, curbing of gambling in this country and problem gambling were also brought up.

Mr Brian Muthwa then went through the scheme of the Bill. This included the provision of interactive gambling games, player protection, advertising, licensing, compliance and enforcement, problem gambling, money laundering and taxation.

With regards to the provision for interactive gambling games, the Bill established a legal basis for the provision, regulation and control of interactive gambling within the Republic. In terms of player protection, it proposed for the registration of players. The establishment of player accounts for the payment of monies. It prohibited South Africans from engaging in interactive gambling activities provided by providers not registered in the Republic. The Bill dealt with the method of payment of wagers and prizes to players and remittance to foreign players and external companies. Hence there would be strict control of interactive providers. Interactive gambling providers were not allowed to extend credit to a player. With regards to advertising, the Bill proposed the prohibition of all interactive gambling advertising and promotion within the Republic.

Interactive gambling licences were to be issued as national licences which included the operator licence and employee licences. There was also the licensing, testing and certification of interactive gambling software and equipment.  

The NGB was responsible for ensuring compliance with the Act, licence conditions and FICA as well as to conduct inspections in respect of interactive gambling websites and premises where interactive gambling equipment and software was located. The NGB may revoke or suspend interactive gambling licences for non-compliance. The server was to be located in South Africa. NGB may delegate some of its enforcement and compliance power to the Provincial Licensing Authorities.

In terms of problem gambling, the Bill proposed that there be an electronic system for monitoring and reporting of registered players. Players must also set limits on their accounts. Providers were to audit playing patterns and behaviour. Also suggested was a self-diagnosis system. There should also be a notice on the website of the interactive gambling provider in respect of voluntary player exclusion and treatment of addictive gambling (National Responsible Gambling Programme)

To avoid money laundering, the registration of players and verification of player identity was proposed. Winnings were to be transferred to nominated accounts held with authorised financial institutions only. Funds were not to be converted into any other form of value.

External companies must have a physical presence in South Africa so records of transactions were located here. Interactive gambling providers were obligated to report suspicious and illegal activities.

In terms of taxation, the Bill included a provision that allowed for taxation which would be catered for in a separate money Bill by the Minister of Finance. Tax was to be considered for use in curbing the extent of gambling.

In conclusion the regulation of interactive gambling would ensure accountability and transparency as well as the protection of players.

Discussion
Mr N Hendricks (ANC) said that gambling was a massive social problem.  He said that it was very easy for people to gamble away their savings

Mr Sibiya (ANC) asked what monitoring role the National Gambling Board would have. With reference to the National Responsible Gambling Programme that dealt with addiction, what measures were in place to prevent addiction?

Mr Gumede (ANC) asked what percentage of winnings would be taxed. He also asked how the DTI consulted with the public, especially those in the rural communities.

A member commented that this amendment bill was aimed at people in privileged areas.  

The Chairperson pointed out computer-literate women sitting at home who had access to online computers, gambled at home.  He noted that the majority of women in casinos were women.

Ms Themba (ANC) asked what the outcome was of the public hearings held in August 2007.

Mr Muthwa answered that interactive gambling was only accessible to people who had internet access as well as credit cards. This fact excluded many people and he did not feel that it would affect the poorer communities. Due to time constraints, the other questions were not answered.

The meeting was then adjourned.