BACK TO THE DRAWING BOARD

Casino Sector Supports Interactive Gambling Regulation In Principle But Suggests Further Research And Consultation

[Cape Town 22 August 2007] More research into the commercial viability and socio-economic implications of a legalised interactive gambling industry, and further consultation with national and international stakeholders, was required before parliament should accept the proposed National Gambling Amendment Bill.

Addressing the Portfolio Committee on Trade and Industry today, Casino Association of South Africa (CASA) chairperson, Jabu Mabuza, said that while industry supported in principle the legalisation and proper regulation of interactive gambling, the National Gambling Amendment Bill was inadequate in a number of serious respects, and should be referred back for further research, stakeholder consultation and redrafting.

“In our view the amendments as tabled do not do the job adequately. There are a number of issues and shortcomings which need further thought and debate, notable among which is the absence of any clear thinking with regard to taxation, which will determine the positive and negative effects, and ultimate success or failure, of the interactive industry. High levels of tax on interactive gambling compared to other jurisdictions will discourage the entry of new operators into the market, while low taxation will prejudice other gambling sectors in South Africa. Either way, the fiscus will lose.

“It is also questionable, without access to players in the United States, the world’s biggest market, whether the interactive industry in South Africa is even viable. Our own domestic interactive gambling market is insufficient”.

It was essential, he said, that everything possible should be done to ensure that any interactive gambling which is introduced is done so in such a way that the advantages of legalising this form of gambling outweigh its disadvantages.

“There has to be a level playing field. All that has been achieved, and all the benefits of the existing regulated gambling industry in South Africa, should not be put at risk. To ensure consistency and fairness, for example, interactive operators ought to pay a rate of tax no less than those paid by other sectors of the gambling industry.

“New interactive gambling operators should also be subject to no less stringent requirements with regard to empowerment, probity, financial credibility, skills development, job creation, regulation, taxation, and measures to prevent underage gambling and the promotion of responsible gambling, than those which are applied to land-based casinos”.

Regrettably, said Mabuza, there were already inconsistencies in the application of these standards among different sectors of the industry in South Africa. The lottery, for example, with 8 000 gambling outlets had not been subject to the same advertising and other regulations, and made no contribution to addressing the question of problem gambling.

Mabuza also warned against going ahead with the amendments without due regard for international considerations.

“It is essential that our interactive gambling legislation is compliant with South Africa’s commitments in terms of international treaties and conventions, such as the World Trade Organisation (GATS, General Agreement on Trade in Services). Cognisance should be taken of the possible impact of pending litigation by Brussels against those countries in the EU with a monopolist approach to interactive gambling which are seeking to exclude licensed operators from other member states.

“In our view, much more homework also needs to be done on complex issues surrounding international reciprocity in this sector of the industry”.

Mr Mabuza said that there were a number of other key issues, such as establishing guarantees to cover debts to players and the fiscus, equal access to communication platforms, duplication of inspections, personal licenses, and the role of interactive intermediaries, among others, which needed greater certainty and resolution.

“For all these reasons, we are strongly of the view that the Bill should go back to the drawing board for improvement, as well as more extensive consultation with informed national and international stakeholders. Presently, South Africa has some of the world’s most effective and well-formulated legislation governing land-based gambling. It stands to reason that legislation for interactive gambling should be as comprehensive and thorough. The current proposals do not accomplish that goal”, he said.

For further information please contact CASA chief executive, Derek Auret, on 082 557 6566.