The Department of Trade and Industry (DTI) will push ahead with interactive gambling regulations, but there is still some uncertainty on proposed tax legislation for the sector.
The DTI has finalised public hearings on amendments to either regulate or prohibit interactive gambling. While the department says the legislation will be reviewed and highly regulated interactive gambling legislation would be introduced, it is yet to make a decision on the Interactive Gambling Tax Bill.
The Bill, which will introduce a special tax on all interactive gambling activities, was introduced in November by minister in the presidency Trevor Manuel.
Operators with an interactive gambling site in SA would be liable for this tax, which is provided for in the National Gambling Amendment Bill. The department proposes that operators be taxed at a rate of 6% of their gross gambling revenue.
The Casino Association of SA (CASA) previously stated that, while it is government's right to impose taxes on the industry, the success of the Bill would depend on industry's reaction.
Interactive gambling was provided for with the passing of the National Gambling Amendment Bill, in May 2008, after the initial National Gambling Act did not provide for interactive gambling in SA. The Bill was drawn up as part of government's plans to tighten regulations on interactive gambling and reduce offshore control.
Tax powers
The DTI says imposing a tax is necessary and has defended the Bill, saying: “Taxation needs to be optimised to create a level playing field and to curb any proliferation of gambling.”
The Bill, however, has been criticised for giving the National Gambling Board (NGB) too much power to administrate and manage the taxes and any penalties incurred by service providers. The Bill also fails to set out any provisions for the taxes to be paid into the National Revenue Fund.
CASA says taxes generated in line with the Bill would be considerable as the online gambling trend continues to grow. While the legislation would allow government to generate revenue from the industry, it is a concern that the funds would be administered by the NGB in its own accounts, says the CASA.
The DTI says any concerns raised would be addressed, but failed to say if the tax Bill would be reviewed and if any changes would be made.
The NGB, which is tasked with monitoring all licensed operators, will issue only 10 interactive gambling licences. All licences will be provided on a national level to operators that can prove they have a physical presence locally, and all financial transactions would also have to be located within SA.
Strict verification procedures that are compliant with the Financial Intelligence Centre Act will need to be complied with. The interactive gambling providers would also, through licensing conditions and regulations, ensure there is an electronic system for the monitoring and reporting of registered players.
“Constant developments in technology have a direct impact on conventional methods of product and service offerings. To allow for flexibility in the ever-changing environment of information and communication technology, many of the provisions in this regard will be provided for in the regulations,” says the DTI.
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