Media Statement

For release: 21 February 2016

CASINO INDUSTRY CALLS FOR BALANCED APPROACH

As the country looks to Minister Pravin Gordhan’s budget speech on 24 February 2016 to provide clarity in an uncertain economy, the casino industry is crossing its collective fingers that it won’t be forced to face further regulatory pressures.  With consumers tightening their belts, the local casino industry  is  grappling  with  many  of  the  same  challenges  as  the  rest  of  the  economy,  as  well  as some  unique  to  its  sector  including  prospective  increases  in  gambling  taxes,  grey  areas surrounding  the  proliferation  of  Electronic  Bingo  Terminals  (EBTs),  a  proposed  increase  in  the number of casino licences, and the thriving illegal online gambling industry.

With  all  indications  pointing  to  a  likely  increase  in  both  corporate  and  personal  tax,  casino operators are hopeful that they will not have to brace themselves for a simultaneous increase in gambling taxes.  While a gaming tax increase is already in the pipeline for Gauteng-based casinos, the knock-on effect would be massive if implemented nationwide.  According to the recent Survey of Casino Entertainment in South Africa 2015 issued by CASA – the Casino Association of South Africa – 37% of the value generated by its members is already paid over to local, provincial and national  government  in  the  form  of  levies  and  taxes.   CASA,  which  represents  36  of  the  38 licensed  casinos  in  South  Africa,  has  voiced  its  concerns  that  further  taxation  could  negatively impact employment in the sector, cut into budgets earmarked for CSI projects and, ultimately, put further pressure on consumers.

Another concern for licensed casinos is the rollout of EBTs in the absence of a national regulatory framework.   When  gambling  was  legalised  in  South  Africa  in  1995,  strict  requirements  were introduced  to  govern  the  types  of  games  that  could  be  offered  under  each  type  of  gambling licence, with bingo licences being subject to less stringent requirements than those pertaining to casino  licences,  which  grant  the  right  to  offer  slot  machines.   The  issue  now  is  that  EBTs  as subsequently  introduced  and  offered  by  bingo  licensees  are  not  at  all  that  dissimilar  to  slot machines  in  key  characteristics  such  as  the  appearance,  presentation  and  manner  of  play,  yet bingo licence holders are not required to satisfy the particular stringent requirements stipulated for purposes of holding a casino licence which entitles casinos to legally operate slot machines.

Obtaining a casino licence in South Africa is no mean feat, with a total of only 40 such licences available, and bidders have to meet strict requirements in terms of capital investment, B-BBEE,
security of tenure of the premises on which the casino is to be built, a graded hotel, a conference and  convention  facility,  other  leisure  and  entertainment  facilities  and  corporate  social
investment.   The  applicable  requirements  for  obtaining  bingo  licences  are  fewer  and  less substantial than those that apply to casino licences and there is currently no limit on how many
bingo licences can be granted or the number of EBTs that can be rolled out.

While the Gambling Review Commission recommended that EBTs not be introduced at all, CASA stands  in  support  of  the  National  Gambling  Board’s  stance  that,  should  the  rollout  of  EBTs  be unavoidable, then they must at least be regulated within a national regulatory framework.  CASA is also  hopeful  that  the  2012  recommendations  of  Parliament’s  Subcommittee  on  Gambling  be adopted that would not permit EBTs to look, feel or sound like slot machines.

Another issue up for debate is the proposed increase in the number of casino licences available in South Africa.  This would increase the number to 41, with the additional licence to be granted in
the  North  West  Province,  which  already  has  four.  Opposed  to  the  move,  Advocate  Themba Ngobese, Chief Executive Officer of CASA explains, “Due to the fact that casinos used to be legal
in the then Bophuthatswana, the number of casinos in the North West Province has not been in proportion to the scale of economics in the region.”

He  continues,  “It  is  of  the  utmost  importance  to  stress  that  certainty  on  the  number  of  casino licences  is  crucial  for  the  stability  of  the  industry,  as  well  as  investor  confidence.”    Ngobese  is concerned that granting an additional licence in the North West would create a worrying precedent that  could  lead  to  even  more  licences  being  granted,  changing  the  fundamental  regulatory framework for the licensing of casinos from that which currently exists.

The  casino  industry  is  also  calling  for  the  enforcement  of  the  law  regarding  online  gambling. Currently,  it  is  illegal  to  operate,  or  even  participate,  in  online  gambling  activities  and  offenders face up to ten years imprisonment, fines up to R10 million, or both.  Some online gamblers don’t even  realise  that  what  they’re  doing  is  against  the  law  as  unscrupulous  websites,  often  based offshore, openly claim to be legal here.

It makes financial sense that Government should share the industry’s mounting concern.  If just 5% of  all  gambling  revenue  were  redirected  to  illegal  online  gambling  during  the  previous  financial year, it would represent approximately R125 million in lost gambling tax revenue alone.

And while CASA is neither for nor against legalising online gambling in South Africa, it is aggrieved that Government is allowing illegal online gambling to thrive unchecked.  CASA believes there are two options – either Government maintains the status quo with respect to online gambling being illegal but then takes stern action against illegal it or it must be legalised and subject to an effective and credible legislative and regulatory dispensation.  This would ensure consumers are protected and operators contribute positively to the economy, as the traditional licensed casinos do. In  the  2014/2015  financial  year  CASA  members,  making  up  95%  of  licensed  casinos  in  South Africa, contributed R5.7 billion towards tax revenue, supported 64 000 direct jobs and contributed R134 million to social upliftment projects.

In  the  face  of  such  varied  challenges,  the  casino  industry  can  but  call  for  a  more  tempered approach from Minister Gordhan later this week and a more reasonable regulatory environment in the years to come.

Ends

Notes to Editors
The Casino Association of South Africa was established in 2003 and represents the interests of 95% of the 38 legal land-based casinos operating in the country.  CASA’s emphasis is on playing a constructive  and  positive  role  in  the  evolution  of  good  public  policy  and  good  governance  in respect of the casino industry. CASA conducts and publishes an annual survey of the industry and all  members  subscribe  to  an  agreed  code  of  conduct.   For  further  information  visit  CASA  at www.casasa.org.za

For media enquires please contact:
Lebo Seoheng
Kaelo Engage
lebo@kaeloengage.com
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