Consumer And Corporate Regulation Division

Presentation to the Portfolio Committee on Trade and Industry01 August 2014

Delegation

• Zodwa Ntuli: Deputy Director General, Consumer andCorporate Regulation

• Prof Linda de Vries: Chairperson, National GamblingBoard

• Prof Nevhutanda: Chairperson, National LotteriesBoard

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Purpose

To brief members of the Portfolio Committee about the work of Consumer and Corporate Regulation

Division (CCRD) focusing on the Regulated Industries.

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Total Recorded Alcohol Per Capita Consumption: SADC

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Source: WHO (2014)

Minister of Trade and IndustryConsumer and Corporate Regulation Division

Responsibilities:

•Reducing the socio-economic harm;•Promoting development of responsible and sustainable regulated industries;•Facilitating entry of new participants and diversity of ownership; and•Setting essential national norms and standards.

National Lotteries Board

• Established in terms of Section 2 of the Lotteries Act, 57 of 1997.

• Advises the Minister on the issuing of the licence to conduct the National Lottery;

• Administers the fund and holds it in trust; monitor and regulates lotteries incidental to exempt entertainment, private lotteries and society lotteries.

National Gambling Board• Retained as established under the National Gambling Act, 1996.• Monitors and investigates the issuing of licenses;

• Maintains the National Gambling Register and monitoring socio-

economic patterns of gambling activity in the Republic.

National Liquor Authority•A chief directorate within the dti, to which Minister has delegated powers in terms of the Liquor Act•Regulates the manufacturing and distribution of liquor, licenses, educate and conducts enforcement in terms of the Liquor Act. •The NLA establishes and maintains a register

National Liquor Regulators Forum (NLRF) • Consists of CD: NLA and heads of provincial liquor boards.• a non-statutory forum established to serve as a technical committee to the National Liquor Policy Council (NLPC)

NLPC/National Gambling Policy Council (NGPC)•Consists of Minister and MECs responsible for Gambling and/ or Liquor in the 9 provinces

NLPCIn terms of section 37

Liquor Act, 2003

NGPCIn terms of section 61

Gambling Act, 2004

Lotteries

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Lotteries Amendment ActLotteries Policy and Law provides for:

Efficient processing of applications; For appointment of full time Distributing Agencies; National Lotteries Board (NLB) to manage NLDTF; NLB to be the final arbitrator regarding internal disputes resolution

where applicant is not happy; Accountability of Distributing Agencies to both Minister and NLB

Board; Pro Active funding based on informed research; Limit active participation of conduits; Removal of Reconstruction and Development Programme Licensing of Organ Of State to conduct National Lottery 7

Future Projects

Education and Awareness for visibility of NLB as it rebrands to implement the amendments.

Implementation of full time adjudication function.

Draft regulations are in the process of being finalised and will be published for public consultation in August 2014.

Appointment of the licence operator for lottery.

Monitor turnaround times for grants.

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NLB

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Achievements

Celebrates 15 years of existence in March 2014

Distributes an average of R2 billion per annum

Has distributed R18 billion to good causes since inception

Today employs 222 employees including interns and contract

workers

In the financial year 2013/14 NLB has distributed R2,030 billion

Currently in a process of managing the process to appoint a new

lottery operator

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NLB’s dual mandate

Regulation• National Lottery: Operated by Gidani (34% of sales

to NLDTF)• Other lotteries

Distribution• National Lottery Distribution Trust Fund• (NLDTF) Process applications and make payments• Distributing Agencies adjudicate applications and

make grants in line with criteria

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Misc

Gidani NLDTF

Art & Culture RDPSport

NGOsCBOs

Charities

REGULATORMonitor activitiesthrough License NLB

Grant Funding

Operates the National Lottery

Weekly

transfer

Applications

Grant funding

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0

200

400

600

800

1000

1200

Arts and Culture & National Heritage

Charities Sports and Recreation Miscellaneous

Mill

ions

Allocated

Distributed

Grant funding per province

R 0.00

R 100.00

R 200.00

R 300.00

R 400.00

R 500.00

R 600.00

R 700.00

Mill

ions

Allocated

Distributed

CURRENT ORGANISATIONAL PROJECTS

Third National Lottery Operator (RFP)

The NLB is in advanced stages with the process of appointing the new Lottery Operator.

The Board will be presenting a full report, including a recommendation to the Minister in August 2014.

Verification Process

The NLB has in the past financial year started with the in-depth verification process of projects funded

The exercise has revealed fraudulent activities and non-compliance by beneficiaries

This exercise resulted in to the value of about R250 million being withdrawn

National Indaba 2014

In the 2nd quarter of the financial year 2014/15, NLB will host the Annual National Indaba (September 2014).

All NLB Stakeholders will be Invited including beneficiaries from all Provinces 15

LIQUOR

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Liquor Achievements

Implementing Liquor Act

Increased inspections

2010 Soccer World Cup Regulations

Liquor Policy Conference hosted in February 2012

2013 African Cup of Nations (AFCON) Liquor Regulations

Regulatory Impact Assessment on the Liquor Act conducted and reportproduced.

Amendment to the Liquor Regulations 2013

National Liquor Norms and Standards published for public consultation

African Nations Championship Regulations (CHAN 2014) Regulations

Consumer education and awareness campaigns conducted includingmedia campaigns

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Liquor Regulatory framework

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Distribution

Micro manufacturing

the dti

Retail

Liquor Act 59 of 2003

Macro Manufacturing

Prov. Govt.Prov. Acts /89

Future work

Policy Review and legislative amendments to incorporate normsand standards

Enhancing the capacity of the National Liquor Authority to bemore efficient – moving towards automation

Participation in the Inter Ministerial Committee (IMC) andimplement action plans adopted

Strengthen role and impact of National Liquor Policy Council

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NATIONAL LIQUOR AUTHORITY

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Liquor Act, 2003

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Regulates:

Manufacturing (thresholds applicable) and Distribution (no thresholds applicable) of liquor and methylated spirits

National Liquor Authority Cooperative governance in liquor regulation

Leadership was provided through cooperative governance bycoordinating and chairing the National Liquor Regulators Forum[NLRF].

Implementation of Strategy to combat alcohol abuse

Easter Campaign

Youth Month Campaign

Sobriety Week Campaign

Festive Season Campaign

Campaigns were held in all provinces and In total 10500 people werereached directly, 33 million indirectly and 33 radio interviews wereconducted

Ensure compliance of registrants to conditions of registration

3500 Inspections conducted and reports produced 22

Registrations and Licensing as at March 2013/14

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14

4999

281 400

1741

0

400

800

1200

1600

2000

2400

2800

3200

3600

4000

4400

4800

MANUFACTURERS DISTRIBUTORS MANUFACTURER/ DISTRIBUTOR

NEW APPLICATIONS RENEWALS

REGISTRATION AND LICENSING NLA 2013/14

Registration and Licensing 2013/14 per Authority

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0

5000

10000

15000

20000

25000

EC FS GP KZN LP MP NW NC WC NLA

MANUFACTURERS

DISTRIBUTORS

MANUFACTURER/ DISTRIBUTORON CONSUMPTION

OFF CONSUMPTION

ON/OFF CONSUMPTION

Application Processing

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27.33%

4.42%

62.16%

21.21%

0.25%9.39%

PROFILE OF REGISTRANTS/LICENCES

Manufacturing - 1419

Distribution - 2441

On Consumption - 34353

Off Consumption - 11722

Manufacturing & Distribution - 140

On/Off Consumption - 5192

Compliance Inspections as of 31 march 2014

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In September 2013, NLA in partnership with Limpopo Economic Development closed down fiveillegal taverns and issued R83 500 fines during a 3 day blitz inspection operation.

The following inspection took place in 2013/2014 financial year.

Gambling

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Gambling Achievements

Gambling Review Commission Report (2010)

Portfolio Committee for Trade and Industry Report on therecommendations of the Gambling Review Commission

Select Committee for Trade and International Relations Report onthe recommendations of the Gambling Review Commission

Policy and the Bill are being developed and will be tabled beforeCabinet late this year.

Norms and Standards were developed and published forcomments - comments are currently being evaluated forfinalisation.

Regulations on the Exclusions Register, advertising and re-certification are being finalised.

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TRENDS IN GAMBLING

According to the NGB research, the total value added impact of thegambling sector was R21.9 billion in 2012 representing 0.8% ofthe GDP of South Africa.

The gambling industry consists of casinos, Bingo, Limited Pay-outMachines, horse racing, sports betting, etc.

A study by PWC compared SA gambling industry to Kenya andNigeria, the study forecast the gambling outlook from 2013-2017.

Of the three countries in 2012, South Africa had the largestoverall gambling market as well as the largest land-basedcasino gambling market.

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FUTURE WORK

Norms and Standards are being finalised. Policy and Bill will be completed and tabled before Cabinet later

this financial year. Regulations for Interactive Gambling will be prepared in order to

finalise before the end of the current financial year. The implementation of the exclusions register data base will be

finalised within the financial year. the dti and the National Gambling Board will work towards

enhancing partnerships with all partners for efficiency. Education and awareness will be up scaled. Monitoring and evaluation.

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GAMBLING ACTIVITIES Authorised gambling activities are as follows:

Casino gambling.

Horseracing.

Bingo.

Limited payout machines (allows maximum bets of R5.00 and maximum winnings of R500.00).

Interactive gambling (Not yet implemented pending promulgation of the National Gambling Amendment Act, 2008).

Bookmakers (betting on horses and other sporting activities).

New Gambling activities that still require policy intervention:

Electronic Bingo Terminals (said to be evolution of traditional paper bingo game).

Greyhound racing.

Online gambling.

Activities that still require more research work

Fafi 33

REVENUE GENERATED The revenue collected in 2012/2013 amounted to:

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Total revenue R2 095 327 130. Information sourced from the NGB Annual Report 2012/2013

76%

14%

2% 8%

Taxes/Levies contributed per gambling modeCasinos Betting Bingo Limited Pay-out Machines

REVENUE GENERATED The revenue collected per province in 2012/2013 amounted to:

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Total revenue R2 095 327 130. Information sourced from the NGB Annual Report 2012/2013

40%

25%

19%

4%

5%

2% 1% 2%

3%

Taxes/Levies contribution per province

Gauteng

KZN

Western Cape

North West

Eastern Cape

Limpopo

Northern Cape

Free State

Mpumalanga

NATIONAL RESPONSIBLE GAMBLING PROGRAMME

The National Responsible Gambling Programme (NRGP) was establishedin 1999 as a voluntary initiative of the gambling industry to try and curbproblem gambling.

The NRGP is led by the South African Responsible Gambling Foundation(SARGF) which has regulators and industry professionals as Trustees.

All gambling sectors, except Lotto, contributes 0.1% of their GrossGambling Revenue towards funding the operations of the NRGP.

The NRGP offers the following: Public awareness Training Counseling treatment for problem gamblers using a toll free number

(0800 006 008) accessible by all people with gambling challengesregardless of the mode of gambling.

Research School curriculum about gambling dangers and the entire gambling

industry. In 2013 the contributions amounted to R17 366 559.00. 36

NATIONAL RESPONSIBLE GAMBLING PROGRAMME

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Problem gambling calls above indicate a total of 1761 call received in 2011/2012 financial year and in 2012/2013 financial year 1856 calls were received.

COURT CASES

Akani Egoli (Pty) Ltd vs Gauteng Gambling Board and Others The matter was a challenge to the Gauteng Gambling Board on

the roll-out of Electronic Bingo Terminals (EBTs). The court found that the EBTs are just slot machines that

should not have been rolled-out outside of casinos.

Casino Enterprises v The Gauteng Gambling Board (653/10)[2011]ZASCA 155 The court ruled that online gambling is illegal in South Africa

and that anyone offering it for play in South Africa is actingillegally.

Gambling in this case will be happening where punter orgambler is located regardless of the location for the server.

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Conclusion

Thank You

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