Millions of rands are being lost to offshore gaming sites because current online gaming regulations severely restrict the issuing of licences to operators, says Thomas Pays, MD of online auction company Smokoo.
Local online gaming industry players are awaiting the release of the Gambling Review Commission's final report, to be submitted to trade and industry minister Rob Davies, later this month.
The review commission was appointed by the minister last year to scrutinise developments in the gambling industry during the past 10 years, as well as to find ways of best regulating the sector.
Speaking from an industry point of view, Pays says that besides restricting the issuing of licences, current regulations also limit outlets to land-based casinos while overlooking the online versions.
According to Pays, latest trends show that rather than visiting a land-based environment, gamers prefer to play online, as it is more convenient. “We are in an environment where interest in and access to online activities are increasing and where people are less happy to venture out at night,” he says.
Morality concerns
Pays adds that government needs to focus more on the will of the electorate, rather than attempting to play the role of moral watchdog.
“SA is lagging behind first world countries because of its attitude to online gambling. These are the wealthier nations who, previously blinded by puritanical morality issues, now adopt a more sanely practical view and see online gaming as a source of badly needed tax revenues, particularly welcome in the light of the recent economic recession,” Pays argues.
He adds that the time is ripe for an expanded and legally regulated online gambling industry in SA, as other gambling businesses have not destroyed the moral fabric of the country. “The national lottery and horseracing did not destroy our society, and neither will online poker or casino games.”
Providing there is close regulation and oversight by experts who are familiar with the online world and its gambling component, and not merely by randomly appointed civil servants, a legalised online gambling industry would not only be desirable but vital to SA, according to Pays.
Underground activity
The current restrictive laws, he adds, have seen the thriving of an illegal parallel market, which has resulted in the country losing millions. “History has shown us repeatedly that to ban an activity is to drive it underground and to inspire exceptional ingenuity among those who seek to bypass such bans.”
Pays is of the view that prohibiting online gambling is not a solution as was the case in the US following the passing of the Unlawful Internet Gambling Enforcement Act (UIGEA) in June this year. Since the inception of the UIGEA, says Pays, Americans are still able to gamble online, and the offshore casinos continue to process deposits from players within the US.
He adds that apart from getting tax revenue from a more relaxed online gambling arena, SA will also benefit in regards to foreign currency generation.
“Besides the tax benefits that accrue from SA citizens playing online, a well-regulated online gambling industry has the capacity to attract both overseas players and foreign currency,” he notes. It will also draw established international operators to the country, and offer some of the benefits now being enjoyed by offshore gaming havens such as Belize, the Netherlands Antilles, or even Mauritius, Pays says.
Awaiting action
Lucky Lukhwareni, head of legal services at the Gauteng Gambling Board (GGB), the provincial gambling watchdog, says the Act meant to regulate online gambling, the National Gambling Amendment Act no 10 2008, is not yet effective in the country. According to him, the Department of Trade and Industry is busy drafting the regulations to the Act.
“Online gambling is currently prohibited in SA and the GGB will pursue any person or organisation which contravenes the gambling legislation in the province,” adds Lukhwareni.
However, he admits there is a thriving illegal online gaming industry in the country. “We are aware that there are organisations which are operating illegal online gambling in SA. Most of these operators are dealing from beyond our borders.”
He adds that the GGB is entangled in a court battle with one such offshore online operator. “We were in court on 26 July this year with an online gambling operator from a Swaziland-based company. Though the company is not based here, the operators were advertising their online gambling business in SA, which is illegal. We are awaiting a court verdict on this matter,” says Lukhwareni.
Legalising the online gaming sector, he notes, will benefit the country in a lot of ways. “For example, the country will generate revenue from the taxes that would be collected from the industry as well as employment creation.”
Share
