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Gambling report not out

Farzana Rasool
By Farzana Rasool, ITWeb IT in Government Editor.
Johannesburg, 31 Aug 2010

The Gambling Review Commission has not yet completed its report that would make recommendations to review the country's gambling laws and could even recommend that online gambling be legalised.

This is despite the fact that the report was expected to be complete by the end of August.

A recent High Court ruling has declared that online interactive gambling is illegal in SA. The review commission is “looking at the industry holistically, including casinos, online gambling and horse racing, so as to do a comprehensive review”, according to Nomfundo Maseti, chief director of policy and legislation at the Department of Trade and Industry.

She says that although she cannot pre-empt what the commission will report, it could recommend that online gambling in SA be made legal, which would require a change in legislation. Current legislation does not make provision for online gambling.

However, the commission's report has not yet been completed. “It's safe to say that it will be ready in about two weeks,” adds Maseti.

She says any recommendations made will have to be assessed by the department to determine if they are feasible.

Operations halted

As part of the ruling that banned online gambling, the Northern Gauteng High Court dismissed the application of Piggs Peak Casino, which operates and is licensed in terms of Swaziland laws. Piggs Peak's application sought for the court to declare that it lawfully advertises in SA as a licensed entity.

“Piggs Peak Casino relies on a Web site with a computer server that is located in Swaziland. The order is in response to a suit filed by Piggs Peak seeking to declare their advertisements and operations in SA as lawful,” says the National Gambling Board (NGB).

The casino has appealed the decision, but - in the meantime - has stopped operations, despite previous statements saying that business would continue as usual until the appeal has been heard and the outcome determined.

In a new statement to customers, operations director Lew Saul Koor says the casino is in the process of applying for leave to appeal the judgment that declared online interactive gambling illegal.

Koor adds that the business thought it could continue to operate in the interim, but has since been advised that it should stop operating for South African players until the matter has been resolved.

“We have taken a decision to stop operating... until application for leave to appeal has been heard and decided upon, which we feel should take no longer than a week or two.”

Forbidden interaction

The ruling, handed down in Johannesburg by Judge Neil Tuchten, ends years of debate about whether online gambling is legal, as the act of gambling is now deemed to take place at the punter's computer, and not where the server is located.

As a result, it is an offence for Internet service providers (ISPs) to facilitate online gambling, and for the media to run advertisements promoting interactive gaming. In addition, banks cannot aid people in gambling online.

Online gambling in SA is illegal, because the National Gambling Act of 2004 does not make provision for it.

Arguments around the question of where the gambling takes place, if a gambling Web site is hosted outside of the country's borders, have been winding their way through the legal system for some time.

Legal betting

Tuchten ruled that gambling is determined to take place at a “real world” location, and people gambling online are doing so illegally, because they are not gaming at a physical licensed casino or betting outlet.

However, Alicia Gibson, member of AG Consulting and a lawyer specialising in gambling law, says a differentiation must be made between interactive online gambling and online betting.

She explains that with interactive gambling the actual game takes place online and this has been declared illegal. Bets, however, are made on real-time games that take place in physical, licensed places outside the cyber world and are legal.

The NGB also identifies the need to clearly articulate whether or not the explicit prohibition of interactive gambling in the ruling has any effect on current licensed online betting activities.

“This ruling does not impact on licensed online betting activities regulated in SA. South African licensed online betting sites and any other South African bookmaker Web sites remain legal to operate and do not fall into this category.

“A clear distinction between interactive gambling and online betting within the context of racing and betting should be drawn. The latter involves the communication of a bet via the Internet with the licensed bookmaker/totalisator operator in SA. Betting via the Internet is merely a communication medium used between the bookmaker or totalisator operator and the customer.”

Protecting citizens

About 7% of global gambling revenue is spent on the Internet. However, the NGB says illegal interactive gambling activities pose a tremendous threat to the citizens of SA that far exceed its monetary losses to the country.

It explains that ease of availability and anonymity have negative repercussions. “Unlicensed interactive gambling activities significantly undermine national policy, legislation and threaten licensed gambling operations by creating an unregulated and untaxed competition.”

It adds that unregulated gambling lacks consumer protection to ensure that individuals who choose to gamble are actually paid for their winnings.

“The NGB is hopeful that with this landmark ruling, SA will be off limits to unlicensed gambling purveyors and that the intention of the legislature to outlaw interactive gambling shall be observed.

“Severe and harsh penalties will be meted out on perpetrators of illegal gambling activities who may be fined up to R10 million and or 10 years imprisonment. It shall also be a requirement that unlicensed operators use readily available technology to block their domains from being accessed in SA.”

Reviewing legislation

Government is currently reviewing gambling legislation, which could make provision for interactive gambling, says Gibson.

Online - or interactive - gambling was set to be legislated by the National Gambling Amendment Bill. However, the Bill's promulgation was delayed last August when the Parliamentary Portfolio Committee on Trade and Industry requested that current legislation be reviewed.

As a result, the department set up a commission to review the entire industry. If government decides in favour of online gambling, the NGB 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.

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