SA wannabe online gamblers’ long wait as regulation drags

SA wannabe online gamblers’ long wait as regulation drags
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SA’s online gambling industry has been waiting for almost 10 years for the Department of Trade, Industry and Competition (DTIC) to develop a regulatory framework for e-gambling, resulting in huge tax and revenue losses for the economy.

This is the word from Nitesh Matai, GM of SunBet, the online betting arm of casino and resort hotel chain Sun International.

Speaking at the SunBet media webinar yesterday, Matai provided a landscape of SA’s R8 billion online gambling industry (including e-sports and i-gaming), which he said was expected to grow at 11.5% on a compound annual growth rate between 2020 and 2027, driven by high Internet penetration and increasing use of mobile phones.

While online betting, including e-sports and i-gaming, is legal with a licensed operator, South Africans cannot gamble on any international or local Web site from within the country.

Matai is of the view that the lack of a regulatory framework that serves to guide SA’s online gambling industry has resulted in missed economic and employment opportunities, which could contribute significantly to the county’s economy.

“There is a hard cost to lack of regulation of the online gambling industry in SA,” he explained.

“There are between 50 and 100 illegal online gambling operators, that we are not getting the tax revenues from – that money is going out of the country and it also means all the winnings don’t circulate in our economy. There are as many online casinos as there are people willing to play locally, and the consumer is always at the mercy of these illegal operators because there are many risks associated with illegal online gambling.”

Many countries restrict or ban online gambling, but it is legal in the UK, some provinces in Canada, most countries of the European Union and several nations in the Caribbean.

Highlighting the impact of creating a regulated environment for the industry, Matai pointed out that it would not only create a legally conducive environment for punters, but regulatory compliance would also help eliminate many risks faced by online gamblers, through consumer protection and the rollout of licences to qualifying operators both locally and internationally.

“The dangers of illegal gambling sites in SA include no age and identity verification of online players who use illegal or unregulated Web sites, money-laundering, no safeguards around data protection, illegal software being used, no comebacks if something goes wrong and higher transaction costs from payment gateways. In some instances, operators may hesitate to make pay-outs to winners because they are sometimes not vetted,” he explained.

Illegal gambling establishments also negatively impact legal operators in terms of their ability to generate revenue, eating into the profits of licenced operators.

In 2017, the Department of Trade and Industry confiscated R1.25 million worth of online gambling winnings.

Online gambling was set to be made legal in SA by an amendment to the National Gambling Act. However, the Bill stalled in August 2009 when the Parliamentary Portfolio Committee on Trade and Industry decided the gambling sector in South Africa should be reviewed.

This led to the Gambling Review Commission being set up to review the entire sector: casinos, online gambling and horse racing. In the middle of 2011, the Gambling Review Commission recommended that online wagering be made legal, and more than 10 licences issued.

According to Matai, that hasn’t happened – until such time as the law is amended, online gambling is illegal if gamblers are seated in SA.

“There have been millions of rands spent by the industry and countless consulting hours in trying to get government to publish these regulations. We keep being promised a white paper and then we keep on being disappointed. Where the process is at this stage is anybody’s guess. Every once in a while, we hear rumours about government being ready make an announcement about this, but then we see nothing coming,” he stated.

Putting forward recommendations for government on drawing up the draft regulations, Matai went on to say SA is a forerunner in the online casino and online gambling space, with some of the biggest online casinos in the world having been run out of SA in the last 20 years. This means government can draw its knowledge from consulting industry heavyweights.

“SA develops what is arguably among the best online gaming platforms and software in the world, and there are also South African casinos that operate in other regulated parts of the world. There is such a wealth of knowledge sitting with the people that have been involved in online gambling for the last two decades. Government should consult with the industry on that basis.”

Secondly, the white paper that government has been talking of publishing over the years has been in existence in many countries across the globe, which SA can draw from, he asserted.

“There is a lot of opportunity to fast-track this process if our government is not at an advanced stage yet. We don’t have to re-invent the wheel because there are white papers developed by other government/s, intended to inform regulations, and we’d have to customise it for SA as we have a different set of challenges and responsible gambling aspects to look at here.”

The National Gambling Board, an agency of the DTIC, told ITWeb it was not able to respond to questions about government’s regulatory process on short notice.

A statement on the organisation’s website reads: “The National Gambling Amendment Act, 2008 which was passed by the National Assembly and assented to by the Presidency on 10 July 2008, has never come into operation.

“The Act comes into operation on a date fixed by the president by proclamation in the Gazette, and this has never taken place. Legislation comes into operation on the day of its publication in the Government Gazette. As the Amendment Act prescribes that it will only come into effect on a future date to be fixed by the president, by proclamation in the Gazette, and the president has never done so, the Amendment Act thus cannot be relied upon or referenced as being the law regarding the regulation of interactive gaming or online gambling.”