South Africa – could see huge boost from online gambling

At the moment, only 40 casinos are legally licensed in South Africa and these continue to be the physical, bricks and mortar kind. Any other gambling operations are considered illegal, but these laws are still being flouted by the black market and its gaining massively.

The South African National Gambling Board has confirmed that illicit gambling is gaining momentum within the country and claims that it is having hugely damaging consequences for the industry. Not only is it helping to increase the numbers of problem gamblers currently active within the country, it is also eroding away and the revenue streams of legitimate operators.

As a result, of its secretive and illegal nature, it’s hard to know exactly how many illegal operations might operating at any one time. However, it is believed to be a huge problem and its believed that it has risen exponentially over the last few months.

According to research conducted by PwC, gambling is a multibillion-rand industry and brought in close to R30-billion in gross earnings in 2018. This money does come from sports betting, horse racing and bingo, but the largest contributor is the country’s 40 licensed casinos.

Although the Casino Association of South Africa (Casa) has refused to support or repel online gambling advancements, it has raised concerns over the current licensing conditions that are enforced on casino operators. It stated that it felt it was being punished for compliance, with the cost being a substantial tax burden and excessively strict terms and conditions.

However, there is more to come, as a 1% “gambling levy” was announced in the country’s recent budget. The government claims that this is being added to combat problem gamblers and further amendments to the Gambling Act are also being proposed.

But Casa CEO Themba Ngobese says it’s not just about the company’s bottom line, but the knock-on effect on tax revenue, employment opportunities and the cash distribution to surrounding communities. NGB statistics show that about 4,000 jobs have already been lost to the unlawful industry.

Ngobese says policymakers need to decide whether they want to maintain the status quo, and take decisive action against illegal operators, or legalise it and subject it to an effective and credible legislative dispensation. Regulatory uncertainty is detrimental to the industry.

“This will also ensure that consumers are protected and that online operators contribute positively to the economy, as the current land-based licensed casinos do.”

The Department of Trade and Industry (DTI) thinks that more rules and less gambling will be enough to tackle the problem and in 2018 it issued a notice introducing the National Gambling Amendment Bill to parliament. It proposes confiscating illegal winnings from gamblers, fining the internet service providers that knowingly host illegal sites, and forcing banks to monitor and block payments to and from online operators.

The proposals did not pass regulatory muster of the National Council of Provinces. So it is back to the drawing board. It was announced in Mid-July that the bill will be re-tabled and the process started afresh, according to Mandla Rayi, chairperson of the Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour Select Committee.

However, Casa stated that it was alarmed by these developments and believed that it raised multiple red flags for the industry. One such change was the proposition that the NGB would be replaced by a National Gambling Regulator (NGR).

Meanwhile, the overarching question is whether the country should decriminalise currently illegal gambling. In the past, lobbyists and politicians have tried to change the law and to see that online gambling is illegal but it has failed on each occasion. However, it may have recently gained authority, as the Gambling Review Commission now supports such a change. It stated that legitimacy would allow the government to monitor and regulate the industry effectively. The statement from the GRC has been met with a firm rebuttal from not only politicians but the NGB as well.

The South African government are currently seeking new ways to generate revenue and legalising online gambling could be the key to this. And there is money to be made. According to the Global Online Gambling and Betting Market Report 2019, the size of the global online gambling and betting market will maintain its average annual growth rate of 13.71%.

It has grown from $2.5-billion in 2014 to $3.6-billion in 2019. Market analysts believe the market will further expand over the next few years and will probably be worth $5.6-billion by 2023.

Source: gaming – awards

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