TIME TO REFLECT?

South Africa "Infinitely Better Off" With A Regulated Industry: Mabuza

[Johannesburg, 3 July 2003] The introduction of limited payout machines (LPMs) into the South African market has unsurprisingly stimulated widespread comment and opinion about the socio-economic impacts of gambling, and as much as this debate is healthy and appropriate, there is a need for added perspective, especially as regards the country's existing casino industry.

The chairperson of the Casino Association of South Africa (CASA), Mr Jabu Mabuza, said today that this debate centred primarily around the desirability, or otherwise, of a regulated and controlled gambling industry, as opposed to an unregulated, illegal industry.

"One must recognise that South Africa's new casino industry, a product of government policy after 1996, did not evolve against a background which was virginal in respect of casino-type gambling. On the contrary, the main reason for government's introduction of the new gambling dispensation was the existence of a flourishing illegal casino industry in every town and city in the country.

"It was estimated that as recently 1995, there were up to 150 000 illegal slot machines in South Africa, paying no tax, employing very few people, and providing a platform for associated criminal behaviour such as prostitution and drug dealing. Moreover, this vast illegal industry was one almost entirely controlled by whites, offered players no protection against fraud, was readily accessible to minors, and ignored problems associated with compulsive gambling".

Today, said Mr Mabuza, this had been replaced by a rigorously and effectively regulated legal industry which contributed very substantially to the public purse, and which had funded public infrastructure to a considerable amount, including critically needed new tourism plant, such as convention centres and over 6 000 hotel beds, among other investments.

"In just six years, our new casino industry - which has fewer than 20 000 slot machines - has been responsible for some R12-billion in new investment, which means a multiplied contribution to South Africa's GDP of more than R20-billion in terms of accepted economic multipliers. In this time, we have created over 50 000 direct and indirect new jobs, many for first time workers, and last year alone, we accounted for nearly R750-million in provincial gambling taxes and VAT, which, taken together with company tax, yielded over R1.6-billion to government in revenue.

"Moreover, our sector has substantially advanced government's transformation agenda in respect of the tourism and leisure industry. More than 40% of the equity in the casino industry is held by previously disadvantaged shareholders, and our fulfilment of obligations in terms of black economic empowerment through recruiting, procurement, outsourcing and other measures are audited regularly by the authorities.

"As a consequence of the strict regulatory environment in South Africa, our casinos are subject to tightly enforced controls in terms of player protection, the exclusion of minors, probity standards, and other compliance measures, including our substantial funding of the internationally-acknowledged National Responsible Gambling Programme (NRGP), a comprehensive public/private sector initiative of government regulators and industry to address the issue of problem gambling.

"It seems to me obvious, then, that the situation obtaining in South Africa today, with respect to casino-type gambling, is one which is infinitely better than that which existed prior to 1996".

Mr Mabuza said that recently published research into the socio-economic impacts of gambling, much of it relating to the national lottery, needed to be put into perspective, especially claims that gambling had fundamentally altered consumer spending patterns in recent years.

In 2002, he said, the casino sector was responsible for R6-billion in terms of gross gaming revenue (GGR). But prior to the introduction after 1996 of regulated casinos, the gambling industry in South Africa was already earning an estimated R4-billion in GGR, primarily through illegal casinos, scratch cards and other lotteries, horse racing and sports betting.

"And while it is undoubtedly true that, because some people today prefer to spend some of their money at casinos, there has been a degree of displacement, impacting particularly on other forms of entertainment and leisure spending, it is worth noting that consumer spending at casinos is dwarfed by that on other relatively new industries, such as the
R18-billion cellphone industry, to mention but one. South Africans are also spending much more in recent years on personal security, health and education.

"As one can see, casino gambling is but one of the industries which have influenced consumer behaviour in recent years, and it is by no means the most significant".

However, said Mr Mabuza, any honest and fair appraisal of the overall impact of casinos on society must recognise, as CASA did, that a small minority of regular gamblers were prone to irresponsible behaviour which led to compulsive or problem gambling. Research by the National Centre for the Study of Gambling at UCT suggested that 0.38% of the adult population, and 0.5% of regular gamblers, were deemed to be addicted. That also meant that for the overwhelming majority of people, casino gambling had become simply another leisure recreational spending option, one in which they exercised appropriate levels of responsibility and self control.

Much had been said and written recently about the results of research published by the National Gambling Board. But few people had highlighted perhaps the most significant outcome of that study which was the statistic that 75% of South Africans approved of a regulated gambling industry.

"And among alarmist reports that three quarters of the population were gambling regularly, it was lost that most of this gambling is taking place on the national lottery. In fact, according to the NGB study, only 20% of South Africans ever gamble at a casino, and then, they spend less than R200 per visit.

"Except on the lottery, the propensity to gamble is low among poorer people (those who earn less than R2 500 per month) as it is low among the very rich. Gambling in casinos in this country, which have economic barriers to entry, as research demonstrates is solidly a middle income activity".

Mr Mabuza said that the introduction of a new form of gambling, being the LPM industry, had undoubtedly raised the level of debate about public policy in respect of gambling, and he thought this was a positive development.

"Our views on the wisdom of introducing LPMs are well known: we believe that the gambling industry needs to settle, and a better understanding of its impact achieved, before new forms of gambling are sanctioned. That said, this development has afforded policy makers and industry stakeholders the opportunity to debate issues, and we welcome the chance to play our part in that process", he said.