THE NATIONAL GAMBLING AMENDMENT BILL, 2007

Briefing to the Portfolio Committee on Trade and Industry

8 August 2007

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IG in SA

• Estimated 3.5 million people have access to the Internet and only a small percentage of these will access gambling sites (niche market)

• Cost of telecommunications high• Reports indicate that a number of South Africans visit foreign IG

websites daily• Global IG industry has grown from US$2.2bn in 2000 to about

US$9.2bn and is expected to reach US$18bn by 2008 (Interactive Gambling Report, 2005), there are implications for South Africa

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Objectives

• Protection of players• Revenue to the fiscus • Retain spend on IG within the country

• Policy rationale:

-Cost of prohibition high

-Share in the global IG industry revenue

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Introduction

• The National Gambling Act, 2004 (“the NGA”) requires the Minister to introduce into Parliament, within two years of the effective date, legislation for the regulation of interactive gambling (IG)

• A research committee was established by the National Gambling Board (NGB) to investigate the implications of the regulation of IG within the Republic

• The research report was finalised in October 2005, and tabled before the National Gambling Policy Council (NGPC), which recommended an enabling legislation

• Draft Bill was approved by Cabinet in December 2006 and published for comment on 18 December 2006

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Intro cont.

• Approximately 20 written submissions were received• Issues raised by stakeholders included:

– Licensing, location of server, money laundering, player protection, problem gambling etc

– Most of these issues were incorporated in the revised Bill• Bill submitted to State Law advisors by end of June 2007 and

certified on 13 July 2007

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Intro cont.

• Bodies and stakeholders consulted included:– The National Gambling Board– Provincial Licensing Authorities– National Treasury– South African Reserve Bank– South African Revenue Services– Casino Association of South Africa– Industry role players– National Responsible Gambling Programme– Problem Gamblers Anonymous

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Background

• The key impact areas identified by the report included: – Protection of vulnerable persons;– Addiction to gambling;– Exposure to money laundering and organised crime; – Competition within local gambling industry;– Cost of regulation and monitoring

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Approach

• To introduce IG by way of an amendment to the NGA as opposed to a separate piece of legislation

• Policy on IG recommended that IG should form part of the broad policy for the regulation of all forms of gambling and be subjected to the general administrative and oversight role of the Board, rather than creating a separate regulatory authority for IG

• Existing regulatory regime i.t.o the NGA largely applies to all forms of gambling including IG

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Scheme of the Bill

• Definitions of new terms• Provision of IG games• Player protection• Advertising• Licensing • Compliance and enforcement• Problem gambling• Money laundering• Empowerment• Taxation

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Provision of IG games

• Establishes a legal basis for the provision, regulation and control of IG within the Republic

• Provides for authorised forms of electronic communication for purposes of IG

• Provides for authorised IG games, systems and methods

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Player protection

Registration of players Establishment of player account for payment

of monies Prohibit South Africans from engaging in IG activities provided by

providers not registered in the Republic Method of payment of wagers and prizes to players and

remittance to foreign players and external companies Strict probity of providers Provider not allowed to extend credit to a player Dispute resolution The license condition of provider must be displayed on website

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Existing provisions w.r.t advertising in NGA apply to IG, e.g. advertisement to carry notice of dangers of addictive and compulsive gambling

Only licensed IG providers are permitted to

advertise IG

The Minister to prescribe the content which may be

reflected on the IG website

Advertising

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Licensing

• IG licences to be issued as national licences due to the borderless nature of IG

• IG licences include:

- operator licences; and

- employee licences (key employees, management

staff and Directors/shareholders);• Licencing/testing and certification of:

– IG software– IG equipment– Manufacturers, suppliers, and maintenance providers of IG

equipment

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Compliance and enforcement

• NGB is responsible to: - ensure compliance with the NGA and conditions of license;- supervise and enforce compliance by licensees with

FICA etc. - conduct inspections w.r.t IG websites and premises where IG equipment and software is located

• NGB may revoke or suspend IG licences for non-compliance • The server to be located in South Africa• NGB may delegate some of its enforcement and compliance powers to

the Provincial Licensing Authorities (PLAs)

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Problem Gambling

• Electronic system for the monitoring and reporting of registered players

• Players must set limits on accounts• Providers to audit playing patterns and behaviour• Self-diagnosis system• Notice on website of IG provider w.r.t:

- voluntary player exclusion

- treatment of addictive gambling (National

Responsible Gambling Programme)

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Money laundering

• Registration of players and verification of player identity • Players from selected countries that comply with FATF or

designate organization• Establishment of player account and verification of nominated

accounts• Regulating the method of payment to the provider, e.g. credit card

method of payment• Obligation on IG provider to report suspicious and illegal activities • Provision for control systems to be prescribed

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Empowerment

• Conditions for awarding of IG licences subject to commitment to:

- socio-economic upliftment

- BBBEE requirements

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Conclusion

• Regulation of IG will:

- provide certainty and thereby enhance; - provide revenue to the fiscus;- ensure accountability by IG industry;- eliminate illegal IG operations;- protection of players; and- provide for effective and transparent licensing.

THANK YOU