The purpose of this memorandum is to provide the inputs of the Mpumalanga Gambling Board on the National Gambling Amendment Bill, 2007, which was published in the Government Gazette No. 29489 for public comment.
We wish to reiterate our previous comments and concerns, in as far as same had not been taken into account. With reference to the Report on the regulation of interactive gambling, which to a great extent informed the Policy, as well as the draft Bill, we wish to place the following on record:
a shortcoming in the report is that no reasons or motivations for proposals are
set out by the Committee. Furthermore, it does not appear that the impact of
the World Trade Organisation judgment on
must be noted that of the ten jurisdictions examined, only two, namely the
· The report does not give any solutions to the problems of underage gambling and player protection. As far as player identification is concerned, the report does not indicate the steps that the interactive gambling operators must take to verify the identity, age and place of residence of the persons registering to gamble on their websites.
· The Committee does not set out the reasons for its proposal that no prior limit must be placed on the number of licences issued initially. In view of the fact that the Minister limited the number of land based casinos in Provinces, as well as the number of LPMs that can be rolled out by Provinces and that the National Act provides for socio-economic impact studies to be conducted at certain stages of the roll out of LPMs, it is not understood why interactive gambling should be treated differently.
As far as draft one of the National Framework for the regulation of interactive gambling is concerned (we have not seen the approved Policy Framework), same is broadly based on the above mentioned Report, and save for the comments, as set out above, the following general concerns must be highlighted:
· The issue regarding bandwidth and the constraints arising form the telecommunication structure remain a concern. Even though the Electronic Communications Act, 2005 (Act No. 36 of 2005) may make provision for the promotion of convergence in broadcasting, broadcasting signals and telecommunication sectors, same has not taken place yet.
· Even though the draft Policy Framework states that the “regulatory approach” is to be that “provincial authorities in which gaming servers may elect to locate, would be mandated, through national legislation, to control, licence and police interactive gambling, whilst the national authority would retain general oversight and administration of this sector”, it states with regard to “regulatory structure” that the national authority will, inter alia, “receive, consider and approve applications for licences to operate within the interactive gambling”, whilst provincial authorities will perform all of the other regulatory functions, for example ensuring and enforcing compliance and collecting fees and taxes. Furthermore, with reference to “conditions of licence”, it is stated that the provincial licensing authority must set the conditions of licence. This is contradictory and untenable – only the entity licensing a person or entity has the regulatory jurisdiction over such person or entity to enforce and ensure compliance, etc.
· As far as the cost of regulation and monitoring is concerned, the draft Policy Framework surmises that in view of the fact that the regulation of gambling in our country is an area of concurrent national and provincial competence and that there are existing national and provincial regulatory structures, the cost of regulating and monitoring interactive gambling would not necessarily vastly increase the required budgets of existing structures.
As far as the 2006 draft of the Bill, that was circulated to Provinces for comments/inputs, is concerned, we wish to highlight the following concerns:
Bill is not in line with government’s broad policy framework for the regulation
of all forms of gambling, in that it does not take into account the provisions
in the Constitution regarding the concurrent jurisdiction between the National
Gambling Board (“NGB”) and Provincial Licensing Authorities (“PLAs”) to
regulate gambling in
· Instead of establishing uniform norms and standards as far as interactive gambling is concerned and exercise general oversight, as is the purpose of the National Act, the Bill reserves certain functions and duties relating to the regulation of interactive gambling to the NGB exclusively, and contains provisions that PLAs must somehow fulfil other duties and functions, with regard thereto.
3. Comments on the National Gambling Amendment Bill, 2007
3.1 Insertion of section 1A
We are of the view that it is not necessary to insert this section, as this is a logical and accepted process of interpretation of laws, when there are no precedents in the South African common law or legislation.
3.2 Amendment of section 4
“Participates” should read “participate”.
3.3 Insertion of section 5A
“(c)” should be removed – this is not another paragraph.
3.4 Insertion of section 6B
In view of our comments above and those to follow, the resolution of disputes should be referred to the relevant PLA that should licence the interactive provider and exercise regulatory control over it, and not the NGB.
3.5 Insertion of section 18A
We are not sure what is meant by subsection (1); it is unclear why the NGB may register a web site at which interactive game is conducted. If the intention is for the NGB to approve the registration of such a web site, then our comment in 3.4 above is relevant, as the approval of the web site will form part of the licensing process.
3.6 Substitution of section 32
The provisions relating to the jurisdiction of the NGB is contrary to the draft Policy Framework, that states that the “regulatory approach” is to be that “provincial authorities in which gaming servers may elect to locate, would be mandated, through national legislation, to control, licence and police interactive gambling, whilst the national authority would retain general oversight and administration of this sector”.
the Bill is not in line with government’s broad policy framework for the
regulation of all forms of gambling, in that it does not take into account the
provisions in the Constitution regarding the concurrent jurisdiction between the
NGB and PLAs to regulate gambling in
More specifically, in the current National Gambling Act, 2004 (Act No. 7 of 2004) (“the National Act”), the NGB has no powers to issue national licences and the PLAs in whose jurisdiction the applicants reside or conduct business, has the power to issue national licences and exercise regulatory control over such licensees.
Lastly, in terms of Item 9 of Schedule 1 of the Financial Intelligence Centre Act (“FICA”), an accountable institution is “a person who carries on a business in respect of which a gambling licence is required to be issued by a provincial licensing authority”. Therefore, if the NGB is going to issue interactive gambling licences, the interactive provider will not be an accountable institution in terms of FICA.
3.7 Substitution of section 33
The comments, as set out in paragraph 3.6 above, are also applicable to this proposed amendment.
Furthermore, the typographical error in the word “acco0rdance” in section 33(h) must be corrected.
3.8 Section 34
Should the proposed amendments be effected and the NGB proceed to issue interactive licences, then no provision has been made in section 34 with regard to the entity that will exercise oversight functions over the NGB. The NGB cannot exercise oversight functions over its own operations, functions and responsibilities.
3.9 Amendment of section 35
The comments, as set out in paragraph 3.6 above, is also applicable to this proposed amendment, in as far as the “the board” is included in subsection (1).
3.10 Amendment of section 37
With reference to paragraph (b) of subsection (1A), see the comments made in paragraph 3.6 above. Furthermore, it is not understood why there is an option for PLAs to issue personal licences.
It is also not understood why the proposed subsection (3) is included in this section, which deals with the “authority of national licence”, as subsection (3) deals with operational matters relating to interactive providers.
With reference to subsections (4) and (5) – firstly, in all provincial legislation it is the competence of the PLA to impose licence conditions; secondly, it is not understood why interactive gambling licences are singled out, as licence condition are imposed on all national licences; thirdly, in terms of the draft Policy Framework the following minimum licence conditions must be imposed:
· Identification of licensee
· Nature of activity such licensee is entitled to engage in
· The type of licence awarded
· The duration of such licence
· Nature and specifications of operator internal control systems
· Compliance directions
· Audit requirements and approval of auditors
· Financial accounting
· Maintaining of records and reporting requirements
· Monitoring of activities
· Technical compliance and game testing
· Any other condition that may reasonable be attached in order to give effect to the regulatory objective and/or for the effective regulation of this sector.
3.11 Insertion of section 37A
We refer to our previous comments, namely that no reasons have ever been provided why no prior limit must be placed on the number of licences issued initially. In view of the fact that the Minister limited the number of land based casinos in Provinces, as well as the number of LPMs that can be rolled out by Provinces and that the National Act provides for socio-economic impact studies to be conducted at certain stages of the roll out of LPMs, it is not understood why interactive gambling should be treated differently.
However, even if the number of licences are limited, in terms of the World Trade Organisation Appellate Body Report on the United States – Measures affecting the cross-border supply of Gambling and Betting Services WT/DS285/AB/R, once South Africa allows internet gambling, it will be compelled to allow an unlimited number of overseas internet sites to target and advertise to South Africans.
3.12 Amendment of sections 38 and 39
We wish to reiterate our comments, as set out above. However, if it is acceptable that the NGB reserves the function of licensing the interactive providers, then the Constitution needs to be amended to reflect this exception, and the NGB must undertake the full regulatory responsibility with regard to interactive gambling. It cannot be expected that a provincial regulator who has not licensed a person, must exercise some or other regulatory control over that person.
Furthermore, similar to provincial legislation, all the substantive provisions relating to applications must form part of the draft Bill and cannot merely be prescribed by means of Regulations to the Act.
3.13 Amendment of sections 40 and 43
The comments, as set out in paragraph 3.6 above, is also applicable to this proposed amendment, in as far as the “the board” is included.
3.14 Amendment of section 48
Firstly, the comments, as set out in paragraph 3.6 above, are also applicable to this proposed amendment. Secondly, it is not understood under which circumstances a temporary licence will need to be issued to an interactive provider. Under normal circumstances, temporary licences are issued mostly to casinos, pending the completion of all undertakings in their bid commitments relating to the construction of facilities.
In addition, with reference to the proposed subsection (6), the comments relating to licence conditions, set out in paragraph 3.10 above, are reiterated.
3.15 Amendment of section 53, 54, 56, 57, 58, 59 and 60
The comments, as set out in paragraph 3.6 above, is also applicable to this proposed amendment, in as far as the “the board” is included.
3.16 Amendment of section 65
With reference to the proposed amendments to subsection (1)(a) and the provisions of subsection (2) of section 65, the problems of the NGB also becoming a regulator (by licensing interactive gambling) becomes clear. No amendments to subsection (b), (dealing with the NGB advising Council on matters of national policy and norms and standards) were proposed to include interactive gambling. Probably, because the regulator cannot advise on national policy and norms and standards on a matter that it regulates and one wonders, who will advise Council on national policy on interactive gambling. This, once again, supports our comments, as set out herein.
3.17 General observations relating to the draft Bill
Save for our comments, as set out above, we have the following general observations regarding the absence of crucial sections in the draft Bill, if the NGB is going to be the regulator in respect of interactive gambling, namely:
· Application for licences (qualifications, attributes, etc.)
· Procedures (time limits, prescribed forms, etc.)
· Information to be furnished
· Public hearings
· Consideration of applications
· Consultation of other institutions
· Decisions and notification (with reasons)
· Issuing of licences
· Application and licence fees, as well as allocation of such fees
· Penalties for late payment of fees
· Appeals (grounds, procedures, appeal authority, powers of appeal authority, effect)
· Conditions of licence, limitations, restrictions or qualifications
· Content of licences (duration, transferability, review, renewal, amendment, suspension, cancellation)
· Prescriptions relating to gambling devices and systems to be used
· Financial or controlling interests in business of licensee
· Books to be kept, information to be furnished by licensee, etc.
· Register of licences (duty to prepare and maintain, publication, etc.)
· Inspections (inspectors, power to enter and inspect, obtain answers and information, protection, etc.)
· Disciplinary proceedings
· Offences and applicable sanctions
· Competency to impose sanctions against licensees for contraventions of Act.
However, the most glaring shortcoming in this regard is the fact that absolutely no provision has been made for the payment of gambling taxes and levies by any interactive provider. Although the provision for taxes and levies are made in a money bill that has to comply with the procedures and directives of the relevant sections in the Constitution, it is still a requirement that substantive provisions in this regard be included in the draft Bill, preferable under a chapter called “taxation and financial arrangements” with sections dealing with the following:
· Imposition of taxes and levies on interactive gambling
· Tax payable upon conviction.
In conclusion, we wish to clarify that we agree with Government’s policy that interactive gambling be brought into the regulatory frame and that national licences be issued to interactive providers. We are, however, not in agreement that the National Gambling Board should be the entity to licence and regulate interactive gambling, in view of their current purpose and role in the gambling industry, as stated in our comments above.
Furthermore, it is our submission that the cost of regulating and monitoring the interactive gambling industry will vastly increase the budget of the National Gambling Board, that is not currently geared for the licensing and regulation of any sector in the gambling industry. Whereas, if the licensing and regulatory control of the interactive gambling sector is dealt with as all other national licences is currently being dealt with, then we are in agreement that it will not necessarily have a vast impact on the budgets of the provincial licensing authorities, that are already geared, as far as personnel and infrastructure, are concerned to deal with these functions and responsibilities.
We are of the opinion. in view of the lack of detail for the findings and recommendations in the Report on Interactive Gambling, the inconsistencies in the draft Policy Framework, which is also not in line with the economic objectives of Government and the shortcomings in this draft National Gambling Amendment Bill, 2007, that sufficient stock has not been taken as to the readiness for the regulation of interactive gambling in the country. We, therefore, propose that the draft Bill be held back until all the above concerns are properly addressed.
We will appreciate it if we could be afforded an opportunity to address the Trade and Industry Portfolio Committee during the public hearings on the National Gambling Amendment Bill, 2007, with regard to our comments, as set out herein.