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IN THE NORTH WEST HIGH COURT, MAFIKENG

CASE NO: UM 45/2017

In the matter between:

HOLLYWOOD SPORTSBOOK

GAUTENG (PTY) LTD Applicant

and

NORTH WEST GAMBLING BOARD Respondent

DATE OF HEARING : 17 MAY 2018

DATE OF JUDGMENT : 05 JULY 2018

FOR THE APPLICANT : ADV. A.M ANNANDALE S.C

FOR THE RESPONDENT : ADV. M MATHAPHUNA

JUDGMENT

Reportable: YES / NO

Circulate to Judges: YES / NO

Circulate to Magistrates: YES / NO

Circulate to Regional Magistrates: YES / NO

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HENDRICKS J

Introduction

[1] The applicant, Hollywood Sportsbook Gauteng (Pty) Ltd, launched an

application in two parts, on an urgent basis, on 23rd October 2017

praying for interim interdictory relief against the North West Gambling

Board (respondent) from taking any steps against the applicant or any

other entity involved in the sale and/or distribution of top-up vouchers

in the North West Province and to lay any complaints against them

(Part A), pending a declaratory order declaring that the top-up

vouchers does not constitute betting, wagering or gambling and does

not contravene the North West Gambling Act No 2 of 2001. (Part B).

[2] The matter is opposed by the respondent firstly on the basis that the

relief sought cannot be granted seeing that the respondent is by law

authorized to regulate gambling in the North West Province. This

constitute the counter-application by the respondent also in the form of

interdictory relief. Secondly, that no case has been made out by the

applicant for the granting of a declarator. Certain points in limine were

also raised by the respondent, which relate to non-joinder and lack of

locus standi. I will deal with these points in limine later on in this

judgment. It became common cause, due to the passage of time, that

the matter was no longer urgent and was consequently enrolled in the

normal cause, as an opposed motion which was ultimately argued on

17th May 2018, when judgment was reserved.

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Background

[3] The applicant is a company which forms part of the Hollywood

Sportsbook Holdings group of companies. The outline component of

applicant’s business is conducted by a branch in Boksburg, which is

the holder of a valid bookmakers licence issued by the Gauteng

Gambling Board. It’s principle place of business is in Alberton,

Gauteng. It is common cause that the applicant is not registered as a

bookmaker and therefore does not possess a bookmaker’s licence

issued by the North West Gambling Board for the North West Province.

[4] Part of the business of the applicant involve the sale of top-up vouchers

(TUV’s) for use by registered punters on their on-line betting accounts.

The TUV constitute a betting credit or betting currency. With this TUV,

a punter can top-up his or her betting account and then place bets

using the funds available in the betting account. No bet is placed unless

and until the punter loads the TUV and selects to use the credit to place

a bet. No betting activity occurs at the outlets that sell the TUV’s. The

outlets, some formal (i.e. Boxer Stores, Blue Label, Choppies, Kazang,

Edgars) and others informal, only sell the TUV’s. It was submitted on

behalf of the applicant that these TUV’s are acute or similar to the

selling of airtime vouchers for cellular phone networks.

[5] The respondent contented that the sale of these TUV’s is illegal, as it

constitute betting or gambling (or wagering). Action was taken against

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certain outlets that sell these TUV’s. This necessitated the launching

of this application.

[6] The process of how TUV’s can be purchased and used need to be

thoroughly explained. To purchase a TUV from an outlet in either

sector, a person simply pays an amount of money equivalent to the

face value of the TUV they want from a till point or informal trader. The

TUV’s provided to and sold in the informal sector are sealed, but once

opened by a customer they reveal a unique personal identity number

("PIN"). TUV’s sold in the formal sector are in the nature of a till slip

that have a PIN printed on the face of them.

[7] The TUV has no record of a stake or wager, odds or any mention of an

event or contingency on which a bet is placed. It also has no ticket

number or betting transaction code. The TUV does not constitute the

placing of a bet, it represents the acquisition of betting currency to be

used later. A person wishing to utilise the TUV first has to access the

applicant's online betting system via, for example, a cellular phone or

the internet. It is necessary to have an account with Hollywood

(applicant) in order to utilise the online gambling platform.

[8] Only once a punter has accessed his/her account on the online

platform can he/she enter the TUV PIN. The punter's betting account

with the applicant will then be credited with the value of the TUV. The

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TUV thus constitutes betting credit that needs to be activated by

loading it onto the applicant's system. Once the credit is loaded, the

punter is able to use it to place a specific stake or bet on a specific

contingency.

[9] Once a valid bet is placed, the punter receives a unique betting ticket

or transaction code which records:-

• the event or contingency on which the bet has been placed;

• the stake;

• the odds.

The placing and acceptance of a bet only occurs when a person actually

places a specific stake on a specified contingency and receives a betting

ticket with a transaction code.

[10] It was submitted on behalf of the applicant that from the process

described above, the outlets selling the TUV’s play no role in the later

placing of the bet on the applicant's online gambling platform. There is

no certainty that the punter will use the TUV to top-up his or her account

with the applicant. Many different events could intervene after the

purchase of the TUV. The punter who purchased the TUV might give

it as a gift to someone else or, conceivably, lose the TUV. Similarly,

once the punter's account is credited with the voucher value, the punter

could place a bet immediately or leave the loaded credit to be used on

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a different occasion. The mere acquisition of the voucher does not

constitute a bet as the TUV merely reflects the monetary credit which

may be loaded onto an existing Hollywood account. As alluded to

earlier, there is no ticket number or transaction code to validate a bet,

no provision for a stake, odds, payout or mention of an event or

contingency which would constitute a bet.

[11] The purchase of TUV’s are not the only mechanism available to top up

a Hollywood account. There are, in addition, three different options

whereby a person can deposit funds into the Hollywood account. Credit

cards and PAYFAST both offer quick and easy methods whilst the third

is a simple electronic funds transfer ("EFT") into the applicant's bank

account at one of the four major South African banks - Standard Bank,

FNB, Nedbank and ABSA. Utilising any one of the methods mentioned

above results in a corresponding increase in the balance of the

customers personal Hollywood account. As correctly submitted by Ms.

Annandale SC, a simple transfer of funds in the manner contemplated

can never be said to be the placing of a bet or wager and by necessary

implication the respective bank cannot be said to be operating as an

agent or intermediary for the purposes of gambling or betting. Yet that

process is no difference in substance or effect to the purchase of a

TUV. I will revert to this later on in this judgment. At first I need to deal

with the applicable legislation.

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[12] The North West Gambling Act 2 of 2001 define that ‘bet’ or ‘betting’

means to stake any money or thing of value or to stake on behalf of

any person, or expressly or impliedly, to undertake, promise or agree

to stake on behalf of any person, any money or thing of value on any

event or contingency other than the contingency involved in a gambling

game.

‘gamble’ means the wagering of a stake of money or anything of value

on the unknown result of a future event at the risk of losing all or a

portion thereof for the sake of a return, irrespective of whether any

measure of skill is involved or not and encompasses all forms of

gambling but, excludes the operation of an amusement machine and,

the word gambling shall have a corresponding meaning.

‘gambling game’ means any game, whether or not the result thereof

is determined by chance, played with or by means of playing cards,

dice, gambling machines, gambling devices, or any mechanical,

electro-mechanical or electronic device, component, machine, any

computer hardware, or software, which upon payment of money,

property, cheques, a token, electronic credit, credit, debit or electronic

chip or similar object or upon payment, whether directly or indirectly by

a player of any consideration whatsoever, whether by reason of the

skill of the player or operator or the element of chance or both, may

entitle or deliver to the person playing the game money, merchandise,

property, cheques, credit, electronic credit, debts, tokens, tickets or

anything of value other than an opportunity to play a further game,

whether the pay off is made automatically or in any other manner

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whatsoever and including, without derogating from the generality of the

aforegoing, roulettes, bingo, keno, twenty-one, blackjack, poker,

chemin de fer, punto banco and bacarrat, excluding any amusement

game insofar as it is regulated or provided for in terms of this

legislation.

‘sporting event’ means any ball-game, race (including a race

involving vehicles or animals) or other athletic or sporting contest,

competition or game, including a beauty contest, usually attended by

the public.

[13] It was furthermore contended by Ms. Annandale SC on behalf of the

applicant, that the placing and acceptance of the bet only occurs when

the punter actually places a specific stake on a specified contingency.

The sale of the TUV’s does not constitute gambling or on-line betting

services on various sporting activities, as it has no record of a stake or

wager, odds, pay-outs or any mention of an event or contingency which

would constitute a bet in terms of the North West Gambling Act. From

the voucher it cannot be determined on which event a bet is placed or

any detail of the event or what the odds are or what the extent of the

wager/bet is or what the details of the transaction/sporting activity is.

The TUV’s simply does not represents a bet, nor is the sale thereof a

placing of a stake on any contingency.

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[14] Mr. Mathaphuna on behalf of the respondent, submitted that the sale

of these TUV’s is a sine quo non for the placing of a bet. I agree. That

the sale of the TUV enable a punter to load credit onto his/her account

is indeed correct. This however begs the question whether it does

equate to the placing of a bet. To argue that it does, would be in my

view to stretch it too far. The process of how a bet is placed is explained

hereinabove.

[15] This brings me to the issue of the place where the bet is placed. As

alluded to earlier, and I think that it is common cause, the bet is not

placed at the outlet where the TUV is sold. With regard to the licenced

premises, Section 66 A (1) of the North West Gambling Act provides:-

"(1) A person shall not –

(a) conduct or permit the playing of any gambling

game or conduct or permit any gambling in or

on any premises under his or her control or in

his or her charge; or

(b) be directly or indirectly involved in the

operation of any gambling business;

without an appropriate licence..."

Because the sale of vouchers is not gambling as explained, the selling

outlets conduct cannot amount to a contravention of section 66A (1).

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[16] Section 1 of the North West Act stipulates that

“’gambling business’ means any business of which

gambling forms part ".

Gambling as defined in the North West Act does not form any part of

the business of the outlets selling TUV’s who do not either place or

accept bets when they sell the TUV’s.

[17] Section 70 of the NW Act provides that:

"(1) No person shall gamble or make a bet at any place

other than on licensed premises.

(2) A gambling debt may only be settled at –

(a) licenced premises;

(b) a place authorised by the Board, or

(c) a place where a debt is ordinarily paid in such

circumstances where the debt is paid pursuant

to a court order or the terms of settlement of

legal proceedings instituted for its recovery."

As stated earlier, any gambling or betting which may occur after the

sale of the TUV’s, occurs on Hollywood's online platform in Gauteng.

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[18] In Casino Enterprises (Pty) Ltd vs Gauteng Gambling Board and

Others 2011 (6) SA 614 (SCA) the following is stated:

“[33] Having determined that gambling takes place when a player

places a stake upon an uncertain chance it becomes

necessary to decide whether and, if so, at what point in the

course of the operations described in para 20 that fulfilment

is achieved. In my view the key facts are those contained in

paras 2.19(a), 2.20 and 2.21 of the summary.

[34] According to these facts the stake is irrevocably placed on

the outcome of the player’s chosen gambling game (and the

gamble is under way) at the moment that he or she activates

the ‘Spin’ button (or its equivalent). The fact that any or all of

the actions described by Prof Hazelhurst may occur in

Swaziland after or as a consequence of that activation is, it

seems to me, irrelevant to the central issue as none of those

actions changes the reality that the player at his or her

computer has in South Africa committed himself or herself to

staking money on the chance. That takes place where the

player is (in South Africa) and not in Swaziland.

[35] Such an interpretation satisfies the aims of the statute: the

prospective player is ‘seduced’ in South Africa, he or she

takes and activates the crucial decision to gamble here, he

or she is impoverished here; the internet casino intrudes

upon the field of licensed operators here and it does so

without payment of dues to the State. The legislature is

concerned with substance, not form, and if gambling takes

place in South Africa it is of no consequence what means

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are employed to facilitate it and whether those means are

employed outside the country.”

Therefore, bets placed on-line are placed where the bet is accepted by

the bookmaker. In this instance it will be in Boksburg, Gauteng where

the bet is accepted at the branch of the applicant.

[19] Section 72 of the North West Act provides that:

"(1) No person shall –

(a) act as agent for the holder of licence for the purpose of gambling

on a sporting event, whether or not for gain; or

(b) whether or not for gain, act as an intermediary between the holder

of any licence and any other person for the purpose of gambling

on a sporting event. "

(emphasis added).

The question arises whether the outlets or vendors act as agents or,

intermediaries for the applicant. In my view, the vendors of TUVs

cannot be acting as an agent or intermediary for the purpose of

gambling or betting. It seems to me, as correctly pointed out by Ms.

Annandale SC, that the purpose of section 72 is to ensure privacy of

dealings between the punter and the holder of a bookmaker's licence

so as to protect both the punter and the industry by ensuring that the

entity with whom the bet is placed is duly registered and accordingly

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properly regulated. As stated earlier, the manner in which funds are

loaded onto the punters Hollywood account may differ. If it is done for

example by means of a EFT, it cannot be said that the bank act as

agent or intermediary of Hollywood (the applicant).

[20] Ms. Annandale SC submitted that the three key and operative words

in section 72 are:

• agent;

• intermediary;

• gambling.

Of these terms, only gambling is defined in the North West Act as "the

wagering of a stake of money or anything of value on the unknown

result of a future event at the risk of losing all or a portion thereof for

the sake of a return.”

[21] The terms agent and intermediary must accordingly be given their

ordinary meaning. An agent is one that acts or has the power or

authority to act for or represent another. An intermediary is, inter alia,

an intermediate person or thing or one that acts as an agent between

persons or things. A bet is a bilateral contract between the punter and

the bookmaker. Section 72 is contravened where an entity acts as

agent or intermediary for the bookmaker for the purpose of placing a

bet. This means that the agent or intermediary must intervene in the

betting contract between the punter and the bookmaker.

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[22] On the plain wording, and considering the manner in which TUV’s

work, outlets selling TUV’s do not act as an agent or intermediary of

Hollywood (the applicant) for the purpose of gambling on a sporting

event. TUV vendors therefore do not represent Hollywood (the

applicant) in the conclusion of a betting agreement or the placing of a

bet. They do not intervene between the punter and the bookmaker in

the sequence of events that constitute the placing and acceptance of

a bet.

[23] It follows therefore that section 72 does not apply to the sale of TUV’s

by any store in the distribution network and the applicant's conduct

does not contravene section 72. The sale of TUV’s also does not run

contrary to the propose of the section as the bets are placed directly

with Hollywood (the branch in Boksburg for example), which is subject

to regulation and control.

[24] As far as I am concerned, the respondent failed to convince that the

selling of TUV’s, either formal or informal constitute illegal gambling in

the North West Province. The vendors/outlets selling these TUV’s does

not act as agents or intermediaries for the applicant. No betting take

place at the place where the TUV’s are sold. It was contended that

because of the actions and threats of action by the respondent against

these outlets, a declarator is sought in order to protect these outlets

and the vested interest of the applicant in the sale of the TUV’s.

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[25] Mr. Mathaphuna on behalf of the respondent, raised as a point in limine

the non-joinder of the outlets that sells these TUV’s and other parties

that may have an interest in this matter. So too, was it contended that

the applicant lacks the requisite locus standi in order to bring this

application. Reliance was placed on the provisions of Section 21 (1)

(c) of the Superior Court’s Act 3 of 2010 in that the applicant is required

to show that it has an interest in an existing, future or contingent right

which is the subject of the inquiry in the main proceedings and that it

is suitable to grant the declarator.

[26] Because the declarator has a potential to affect the rights and related

obligations, all interested parties should have been joined in the

proceedings, so it was contended. Boxer, Edgars Connect and

Choppies retailers are alleged to have been disrupted and are now

refusing to sell TUV’s. The contention is that these outlets should have

been joined as interested parties. These outlets decline to sell TUV’s

and does therefore no longer have any interest in these proceedings.

It was therefore not necessary to join them in these proceedings. The

Gauteng Gambling Board likewise have no interest to intervene or

interfere in the realm of the North West Gambling Board in the North

West Province. Their non-joinder are not material to these

proceedings. It is difficult to imagine the interest the Gauteng Gambling

Board would have in the selling of TUV’s in the North West Province

over which the North West Gambling Board exercise authority.

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[27] The contention was furthermore that the applicant has no direct

interest in any right impugned in the North West. It has no trading

licence as bookmaker in the North West Province and merely has an

indirect financial interest because it depends on vendors to sell TUV’s

and to make money for it, whilst the applicant is itself removed from

the point of sale. In my view, the applicant does have a vested interest

in the sale of the TUV’s. It also has a right that is adversely affected by

the conduct and threat of further action by the respondent. That right

need to be protected. I do not agree with the submission on behalf of

the respondent that “the declaratory order is not desirable as it has not

been shown to be removed from the betting on the Applicant’s Gauteng

platform from the North West by persons in the North West;” and

furthermore “the TUV’s are a sine quo non of the betting and thus are

constructively, potentially and possibly actually unlawful in the North

West where the Applicant has no licence.”

[28] As far as the betting on the applicant’s Gauteng platform from the North

West by persons in the North West are concerned, it matters not that

the TUV’s are sold in the North West. What is of importance is where

the actual bets take place. The bets takes place in Gauteng and it

stands to reason therefore that the applicant requires a bookmakers

licence in Gauteng. If the applicant want to open a branch in the North

West Province where bets can be placed, it will need to apply for a

bookmaker’s licence in terms of the provisions of Section 57. I am

unconvinced that because the TUV’s are a sine quo non for betting it

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is “thus constructively, potentially and possibly actually unlawful in the

North West.”

[29] As far as costs are concerned, the applicant prays that costs be

awarded on a punitive scale because of the manner in which the

respondent, as an organ of State, conducted its case. I do not agree.

However, that this case, because of the statutory issues involved and

its importance to both parties, warranted the employment of senior

counsel (or even two counsel where applicable), is beyond question.

[30] Part A of this application which relates to interim interdictory relief as

well as the counter-application were overtaken by the events. The main

application in the form of a declarator (Part B) is now before this Court

for adjudication. There is no need to pronounce on either Part A or on

the counter-application. This Court will therefore only pronounce on

Part B of the application (the declarator).

Order

[31] Consequently the following order is made:

(i) It is declared that the sale of top-up vouchers for Hollywood

online betting accounts does not constitute betting, wagering or

gambling and does not contravene the North West Gambling Act

2 of 2001.

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(ii) The respondent is ordered to pay the costs of this application, on

a party-and-party basis.

(iii) Such costs to include the costs consequent upon the

employment of senior counsel and two counsel (junior and

senior), where applicable.

R D HENDRICKS

JUDGE OF THE HIGH COURT,

NORTH WEST DIVISION, MAHIKENG