The number of South Africans gambling online is set to grow as cellphones become a more popular way of surfing the Internet, but the activity is still illegal in SA, despite a grey area in the law.
Government is currently reviewing gambling legislation, and this could make provision for interactive gambling, but this process is only expected to be concluded later this year. At the moment, the official position is that online gambling is illegal.
Estimates indicated that there are about 500 000 online gamblers in SA. Peter Collins, executive director of the National Responsible Gambling Programme in SA, says the industry is thought to be worth at least R800 million a year. He says the sector will grow as cellphones start supporting gambling applications.
This also opens up the possibility that under-age consumers could gamble online, which he says would be “doubly illegal”. Collins adds that, although gambling is illegal, it is not policed. “It is not something that anyone is going to waste police time on.”
Arthur Goldstuck, MD of World Wide Worx, says while cellphone use to gamble is “a long way off, it is a coming possibility”. He anticipates five million more people will come online in the next five years, and two million of these will use the Internet through cellphones.
Currently, according to research by World Wide Worx, there are five million Internet users in SA. Goldstuck says new users will initially be inexperienced, and not the target market of online casinos. However, “the following five years is when it gets scary”.
Making sure
Goldstuck adds that if the law changes to allow online gambling, checks and balances will have to be put into place to police the sector and make sure that people taking part in interactive gambling do so legally.
Putting measures in place to make sure the law is adhered to, is one of the issues facing the Department of Trade and Industry. Nomfundo Maseti, chief director of policy and legislation at the department, has previously said there are several aspects that need to be taken into account.
Among these is how to limit online gambling to adults, and concerns that gambling could be associated with criminal acts, like money laundering.
In addition, the Financial Intelligence Centre Act, which requires individuals to disclose their personal details, like their ID number and proof of residential address, would also be applicable to players taking part in interactive gambling.
Maseti adds that players would have to create an account limited to a credit card or cheque account, and present a bank stamp to confirm the validity of the respective account. No cash transactions would be allowed and players could have up to R20 000 in their accounts.
If government decides in favour of online gambling, the National Gambling Board will only issue 10 licences. Gambling operators will be required to prove they have a physical presence in SA and their financial transactions will have to be located within South African borders.
About 7% of all gambling revenue globally is spent on the Internet, he says. In SA, according to the National Gambling Board, the overall gaming industry is worth about R16 billion in revenue. South Africans bet about R212 billion in legal gambling each year.
Not clear
Companies offering online gambling in SA, such as Piggs Peak and Silver Sands, which are registered outside of the country, argue that online gambling is legal, because it does not take place in SA.
Alicia Gibson, member of AG Consulting and a lawyer specialising in gambling law, explains there are no legislative provisions governing the legal question of where gambling takes place.
At the moment, the law is open to interpretation. Online gambling companies assert that, in terms of the law, the actual act of gambling takes place in the country where they and the server is located, and not in SA, where the gambler is seated.
As a result, this view would mean it would not necessarily be illegal for overseas online gambling companies to advertise in South African media, such as Silver Sands, which advertises extensively on South African television.
Gibson explains the relevant gambling transactions are not unlawful in terms of the National Gambling Act, 2004. "The bottom line is the legal question of where the gambling takes place," says Gibson.
At the moment, a case that could change this is making its way through the court system. Casino Enterprises, in Swaziland, took the Gauteng Gambling Board to court in 2006, after the board put a stop to it advertising its online gambling service in the province.
The gaming house, which owns Piggs Peak Internet Bingo, Piggs Peak Internet Casino and Volcanic Gold Online Casino, argues that the online gambling takes place legally in Swaziland and did not contravene the Gauteng Gambling Act.
Undecided
However, the matter is still undecided as it is on appeal. A Supreme Court judgment in March 2008, dealing with technicalities around the case, stated: “The dispute seems rather to be whether players who engage in the activity can be said to be gambling within the province. This is not a matter for the opinion of experts, but is rather a matter for a court to decide by construing the meaning of that term in legislation.”
It is not known when the matter will finally be resolved. Gibson explains the case hinges on the location of the person engaged in the gambling, and if the court eventually finds in favour of the Gauteng Gambling Board, the advertising of interactive gambling licensed in other jurisdictions will be unlawful in SA, no matter where the casino is based.
Gibson says, however, that the legal conundrum could be entirely circumvented by national legislation, which deems interactive gambling to take place where the player is situated in cases where the provider of the interactive gambling is not licensed in terms of the National Gambling Act. "But, for now, it's still very much hanging in the air."
Goldstuck points out that the US has deemed that the location where the person is playing from is where the gambling takes place. Online gambling is illegal in the US. He adds that pornography, for example, is deemed to be accessed from where the person is located.
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