South Africa – how is gambling licensed?

Gambling in South Africa has always been a controversial subject, with reformers wanting to open up the market in order to generate more revenue, and traditionalists keen to maintain the heavy restrictions that are currently in place.

As a result, South Africa is one of a number of countries that has banned online gambling in the vast majority of its forms, leaving native players to find more innovative ways of accessing the wealth of online casinos that still allow them to register.

The Legal Landscape

Despite a traditionally negative attitude towards gambling, the government took the bold step of repealing a blanket ban on all gambling activities in 1994, and introduced a comprehensive licensing system in the 1996 National Gambling Act. The Act allowed the National Gambling Board (NGB) to start regulating the industry, and also gave powers to South Africa’s nine local provinces to start licensing both physical casinos and online sportsbooks. Further liberalization took place with the 2004 National Gambling Act, although online casinos remained illegal.

Whilst the new laws opened up a range of sports betting and other opportunities for physical casinos, the same could not be said for online providers – the only form of online gambling activity legal in South Africa is sports betting, and any online sportsbooks must be licensed by one of the provinces. An amendment announced in 2008 to completely legalize online gambling was passed but never enacted, leaving casino lovers in a tricky position.

The situation became even less clear in 2010, after the courts ruled that it was illegal for online casinos that are based outside of South Africa’s borders to offer services to the country’s citizens. As it stands, it is currently illegal for anyone with a South African IP address to gamble online, with the exception of the licensed operators that are regulated, controlled and taxed by the NGB and local provinces.

Any casino, individual or bank that facilitates online gambling faces a stiff penalty of up to 10 million Rand, 10 years in prison or both, but with the vast majority of providers sitting outside the nation’s borders, these penalties are extremely rare. Anyone who is caught making a profit is forced to transfer the cash to a treasury trust account, which currently holds more than 3.5 million Rand.

In 2004, the National Gambling Act was replaced in its entirety by a new National Gambling Act, No. 7 of 2004 (2004 Act). The primary objective behind the remodeling of the national legislation was twofold:
• To define with greater precision and therefore to co-ordinate activities relating to the concurrent exercise of legislative competence.
• To provide for the licensing and regulation of interactive gambling by the National Gambling Board.

In 2009, a set of proposed regulations for interactive gambling was published. These proposed the licensing of no more than ten interactive providers in the country, as well as a range of significant harm minimization requirements. When the proposed regulations were considered by the relevant Portfolio Committee of the National Parliament, legislators expressed grave reservations regarding the appropriateness of licensing and regulating interactive gambling, despite the provisions of the 2004 Act to this effect, and recommended a comprehensive review of the legislative and regulatory framework in force in the country in respect of gambling in general.

In accordance with these recommendations, the proposed interactive gambling regulations were halted, and a five-person Gambling Review Commission was established to conduct the review. The review focused on both formal and informal (licensed and illegal) forms of gambling throughout the country, across all industry sectors, as well as the effectiveness of provincial licensing authorities and the National Gambling Board and the legislative scheme for gambling.

The Gambling Review Commission produced its final report during the third quarter of 2011, which among other things, recommended the licensing and regulation of interactive gambling on a national level in South Africa. Having considered the report of the Commission, the Portfolio Committee of the national Parliament endorsed this recommendation in principle. However, a number of constitutionally-mandated processes had to be followed in relation to proposed amendments to the 2004 Act. A final decision was expected in 2013, however the process lost impetus.

During 2015 and 2016, in an effort to move the process along in a manner consistent with the Gambling Review Commission’s recommendations, the official opposition’s Shadow Minister of Trade and Industry tabled a private member’s bill (PM Bill), designed to establish a the regulatory framework for remote gambling. Around the same time, the Department of Trade and Industry (DTI) tabled its national gambling policy document (GPD). This was diametrically opposed to the Commission’s report and the PM Bill, as it seeks to reinforce the current prohibition on remote gambling and more widely deals with the industry in a number of controversial ways. The PM Bill was rejected by Parliament. Cabinet approved the DTI’s GPD. An amendment bill to the 2004 Act, which seeks to give effect to the DTI’s GPD, has recently closed for public comment.

Online gambling

Online gambling is referred to in the 2004 Act as “interactive gaming”. Interactive gaming is essentially the engaging in or making available of an “interactive game”. An “interactive game” is defined under the 2004 Act as:

“a gambling game played or available to be played through the mechanism of an electronic agent accessed over the internet other than a game that can be accessed for play only in licensed premises, and only if the licensee of such premises is authorized to make such a game available for play.”

All games of chance or skill or mixed chance and skill played on payment of any consideration and that may result in potential or actual pay-out (prize) are classed as gambling games.

Popular Markets

Whilst online gambling is certainly illegal, that hasn’t stopped a number of savvy online casinos from opening up their services to South African customers, with the likes of 888 and Mr Green all welcoming players with open arms. The number of gamblers in the country is also rising, and there are dozens of popular markets for enthusiasts to choose from.

In terms of legal gambling, the national lottery is by far the most popular game with the local population – the latest available research showed that more than 80% of the population buys a ticket each week.

Sports betting is also incredibly popular, with horse racing, rugby and football all attracting hundreds of thousands of gamblers each year. Golf is also building up a sizeable following throughout the country, with the likes of Louis Oosthuizen, Charl Schwartzel and Ernie Els all flying the South African flag and boosting the number of fans. Other popular local betting markets include the quintessentially Afrikaan sport of Jukskei, although this has yet to make its way to more mainstream sites.

The Future of Gambling in South Africa

As the world’s nations search for more ways to generate money, South Africa’s strong anti-online gambling laws are looking likely to change. The government recently raised taxes on land-based casinos, and ministers are starting to consider the potential for additional revenue if online gambling was legalized and regulated in the same controlled way.

Source: uk.pratcicallaw , gambling.com

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