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.
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
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