GOVERNMENT THE BIGGEST 'SHAREHOLDER' IN SA's CASINO SECTOR

75% Of South Africans Approve Of A Regulated Gambling Industry

[Durban, 16 April 2004] The gambling industry in South Africa was subject to a higher degree of state intervention than any other business sector in the economy, and given government's effective 35% share of value-added in the casino sector, it was the industry's largest de facto shareholder.

Addressing politicians and regulators from more than 15 international and domestic jurisdictions at the biennial conference of the National Gambling Board in Durban this afternoon, Casino Association of South Africa (CASA) chief executive, Derek Auret, said that government, by virtue of its high level of participation in the industry, and its prescribed definition of the industry's operating parameters, was effectively in a partnership with the private sector in this multi-billion rand business.

"This imposes on both parties the need to manage and advance a relationship whereby we and the regulating community work constructively and transparently to deal with issues of mutual concern and interest.

"And while it is hardly our expectation that government should act only as a shareholder and not a regulator, it is also true that we have a common interest in the success of a gambling industry that fulfils all the economic and social obligations that are the subject of the policy framework which has been established."

Neither party could afford the adversarial relationship between regulators and industry which existed in some countries.

There needed to be a mechanism, or process, he said, whereby the regulating community and industry worked together to ameliorate dramatic changes in the external environment. In a period of global economic uncertainty, with interest rates, inflation and a volatile exchange rate poised to negatively affect their business, casino managers should not find their hands tied by insufficiently flexible state control which would only obstruct their ability to respond pro-actively to macro-economic influences.

"I am pleased to say that an incipient procedure to move towards such a process of constructive engagement has been established with the recent passage of the National Gambling Bill, and will hopefully continue into the future on all matters that are of concern to industry and regulators alike. We should continually talk to each other in a constructive fashion in an attempt to refine, enhance and promote the sound regulatory regime that is fast maturing in South Africa. We should constantly remind ourselves, as Winston Churchill said in a different but analogous situation, that 'jaw, jaw, is better that war, war'.

"This is essential for the long-term sustainability of the casino industry in this country, since sustainable profitability depends on fair partnership terms, open co-operation and upon mutual sensitivity and understanding. We naturally recognise that the regulator has the final word - that is as it should be and it is not in dispute."

But it was not all one-way traffic and as an industry, casino operators were also faced with certain obligations if they were to manage public perceptions and be seen to be a responsible partner.

"We must continue to strive to:

• Consolidate and expand industry contributions to public benefits;
• Address problem gambling and, where and when it may occur, exploitation of the poor; and
• Ensure that government understands the industry and its commitment to these issues.

It was recognised internationally, he said, that in terms of policy and regulation, South Africa had one of the world's most sophisticated gambling dispensations. Impartiality and incorruptibility characterised the administration and governance of the country's new gambling environment.

And South Africa's legislation had been successful in virtually eliminating the country's previously rampant illegal industry, in raising substantial revenues for the public sector, and in generating significant new investment in both gambling and non-gambling infrastructure and facilities. Additionally, its gambling regime satisfied the highest global standards in terms of industry probity and customer protection.

"No matter how enlightened our lawmakers, our industry must always be alive to the threat of greater state control and intervention. It is for this reason that we must continue to show our ability and readiness to confront and resolve the few ethical and legal problems that arise from time to time in the casino industry. South Africa's internationally-acknowledged handling of the problem gambling issue illustrates the value of this approach."

Mr Auret said that one of the more important trends emerging in the international leisure industry over the past decade was the growing acceptance of regulated casino gambling, and its high potential to contribute positively to socio-economic development through new investment, employment creation, and the provision of new non-gambling tourism infrastructure. In fact, research last year conducted by the National Gambling Board showed that 75% of South Africans approve of the country's regulated gambling industry.

"As an industry, we need to repay this public confidence by demonstrating beyond doubt that we are responsible corporate citizens, and that we are reliable and trusted partners in the formulation and implementation of good public policy.

"We need to be seen to be serving the public interest. This means we must place an over-riding emphasis on our accountability to society, including our shareholders, fulfilling to the letter the social and legal obligations that were and are implicit in the licenses we hold."

Part of this, he said, was the recognition within industry that it had an important contribution to make to the evolution to good policy, engaging government constructively and regularly to that end.

"There needs to be a greater level of consensus and discussion about what is needed to ensure the sustainable health of the industry, which is in the interest of all its stakeholders, not least of which government. CASA is actively seized with these matters, and is ready to engage in efforts to address problems where they occur in order to make the South African gambling environment an international example of note", he said.