Online gambling is the Wild West of the gaming industry – completely unregulated – yet South Africans, who can increasingly access cheaper internet connections at home, are taking their chances and pocketing their illicit winnings.
But the National Gambling Board is on their trail, as well as that of the advertisers of what remains an illegal business that was estimated to be worth R320 million in 2009.
Almost R3m in ill-gotten gains from online gambling has been confiscated and paid into a trust. And that advert featuring the blond hunk surrounded by mostly semi-clad women has disappeared from television screens after the board’s intervention.
This week the review commission on the South African gambling industry and its regulation told MPs of the trade and industry committee that all forms of online gambling, including poker and all betting, should be brought into the regulatory fold and made legal.
“The big elephant in the room is internet gambling. The danger is that with the offer of the carrot, it may grow unexpectedly. But already any one of us can log on at night and place hundreds of bets,” Stephen Louw, one of the commissioners, told MPs.
The five-member commission’s recommendations include offering a limited number of initial licences, advertising rights for these licence holders, a bigger role for banks in enforcement mechanisms and national regulations to cover all forms on online gambling, whether from a computer or a cellphone with web access.
The recommendations follow Italy’s example. That country has issued 200 online gambling licences and the regulatory agency e-mails users who have entered unlicensed sites, warning them they would forfeit all consumer protection.
Louw said total bans on online gambling were difficult to enforce: the US and Australia were among the top 10 online gambling countries – after outlawing it.
Gambling board CEO Baby Tyawa said the board had worked with the Reserve Bank and banking regulatory authorities to act against illegal online gambling by targeting winnings.
The focus had been on the “big number winners”, but now the smaller fish would receive attention. However, the board was coy about giving further details.
And the possibility of regularising irregular income has been nixed by the Reserve Bank after consultations. Now banks have come on board after hearing that online gambling wins were unlawful.
“We depend entirely on the various regulators,” said Tyawa, who is in favour of regulating online gambling. She added that as the board “we must explain, we must come with the data… show we are losing finance” in the form of tax.
It was estimated that R320m was generated through online gambling in 2009 in South Africa, according to eGaming Review Magazine.
The lawful gambling industry generated R15.9bn, or R18.1bn including the national lottery in 2009. This netted taxes of R1.5bn, or R1.92bn if VAT was included, making gambling tax the second-most important source of income.
Since legalisation in 1996, according to the review report, gross gaming revenues increased in real terms between 2001 and 2009. Casinos account for 80 percent of the taxes and 90 percent of the almost 60 000 jobs the industry.
While the regulation of South Africa’s gambling industry was well regarded internationally, the review commission warned against the current piecemeal approach to online gambling. There are draft regulations on interactive gaming only, not the whole spread of online gambling.
As the online gambling sector is growing, the murky legislative and regulatory environment would need urgent attention, according to the review commission.
DA MPs Tim Harris and Jacques Smalle this week called for regulations to be finalised. “Such regulation should establish a licensing regime, allow online registration, allow servers to be located anywhere and also govern poker and betting exchanges.”
Already, the Western Cape Gambling Board and Phumelela Gaming and Leisure offer bets via cellphones or internet banking.
“The use of cellphones to bet is not any different to using the internet. However, bookmakers and totalisers are not subject to the same restrictions or protection that these interactive gambling operators are expected to comply with,” the review report said. - Weekend Argus