Review of National Gambling Act, delibarations on draft Report on the Annual Report DTI

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Trade and Industry

16 November 2009
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

In a continuation of the public hearings on the Review of the National Gambling legislation, the Committee heard submissions from other stakeholders in the gambling industry.

The Bingo Association of South Africa noted that only three of the provinces had licensed Bingo operators. In addition to contributing towards the national fiscus and job-creation, the Bingo sector also allowed for secure and socially interactive environments for its players. Problem gambling in this sector had also been found to be minimal. The sector had its own market and therefore had no effect on other forms of gambling. The National Gambling Act allowed for Bingo to be played electronically, though the different provinces were unsure as to this definition. This uncertainty had hindered the rollout of its Electronic Bingo Terminals (EBTs). To address this, BASA suggested that the Gauteng Gambling Board's amendment, which had clarified the definition when it incorporated it into its own provincial legislation, should be used as a model for the National Gambling Act. It further suggested that online gambling operations be regulated by National and Provincial legislation, and that cross-border gambling be regulated by South African authorities. Free and fair competition across the gambling industry would benefit the industry as a whole. Members raised questions around how many people played Bingo and how many the sector employed. The Chairperson asked whether EBTs would amount to Limited Payout Machines. He also asked for clarity around its suggestion around the Gauteng Gambling Board's amendment to the legislation.

The Casino Association of South Africa said that the gambling industry had contributed to construction development, job-creation, regeneration, tourism and corporate social investment. Government and its employees were of also of the largest receivers of its turnover. Statistics were given in each of these areas.
Members asked whether the employment it had provided was of a permanent nature, what the reasons were for punters having to register their banking details before gambling at casinos, what the foreign equity in casinos was, what problems the sector had with current legislation and what the sector's HIV/AIDS policy was in relation to its employees. Members asked for examples of the sector being over-regulated. They also enquired how many of the patrons were poor people, what were the gender statistics, and how many of the casino’s patrons were poor or unemployed people. They also questioned whether it was correct that the casinos bussed in people, and whether it was concerned about online gambling affecting its profit margins negatively.

The Justice Alliance of South Africa, an organisation of church and independent people, noted its opposition to online gambling as it would possibly attract children to gambling. It considered that Gambling was a moral issue as it had destroyed many people's lives. It also raised its concern around the independence, and therefore integrity, of the National Responsible Gambling Trust, as it had representatives of the industry as Trustees. The Trust's schools programme was also of concern as it could lure young and impressionable children to gambling. The submission quoted from research done by the British Royal College of Psychiatrists. A Member asked whether the Alliance had conducted any research into the acceptance levels of gambling in South Africa, but it said that it had not had sufficient funding to do so. The Chairperson noted that the Committee welcomed all views as it could only reach an informed decision and develop robust legislation on the basis of information it received from varying interested parties.

Meeting report

Review of the National Gambling legislation: Continuation of public hearings
Bingo Association of South Africa (BASA) submission
Mr P Shabalala, Operations Director, Bingo Association of South Africa, said that the Bingo Association of South Africa (BASA) was the representative body for licensed bingo operators in South Africa. Although bingo was first legislated in South Africa in 1995, there were only eight licensed bingo Centres operating in Gauteng. Mpumalanga and KwaZulu-Natal had recently issued licences, though license applications in other provinces had not as yet been approved. In addition to legislation and a regulatory framework existing in all nine provinces, the benefits of bingo should warrant an immediate rollout in the remaining six provinces. Typical bingo centres were safe, secure and socially interactive environments. As opposed to other forms of gambling, bingo was seen as a low stakes form of entertainment. In addition, each site contributed up to R10 million in taxes annually. The sector also provided spin-off opportunities for local businesses. BASA was an active supporter of and contributor to the National Responsible Gambling Programme (NRGP), whose report confirmed that instances of problem gambling in this sector was minimal, being about 0.1%. The bingo sector had its own specific market in the gambling arena and, as such, had no effect on any of the other sectors within the industry.

Bingo operators were keen to embrace advances in technology, as other sectors had done. Electronic Bingo Terminals (EBTs) had been tested and approved by both the Gauteng and KwaZulu-Natal Gambling Boards. They had also been SABS-tested and certified as bingo devices. The National Gambling Act defined that bingo be played wholly electronically. Provincial Gambling Boards were, however, unsure as to this definition. The Gauteng Gambling Board had amended its Provincial Act in line with the National Act, but had fine-tuned the definition in order to remove any uncertainty in this regard.

BASA was concerned about the proliferation of interactive online gambling and its adverse effect on land-based forms of gambling. It was also raised concerns around unregulated operators increasing problem gambling. Lack of infrastructure, job creation and community benefits compared with those provided by land-based operators.

As means of addressing these issues, BASA suggested that the Gauteng Gambling Act definition be adopted by the National Gambling Act, that online gambling operations be regulated by National and Provincial legislation, and that cross-border gambling be regulated by South African authorities. It felt that free and fair competition across the gambling industry would benefit the industry as a whole.

Discussion
Mr B Radebe (ANC) asked how many people played Bingo. He also asked about the profile of Bingo players. He enquired how many people the sector employed.

Mr Shabalala answered that the figures he quoted were supplied by the NRGP. These statistics were available on the National Responsible Gambling Foundation's website. The eight Bingo operators employed 836 people permanently. Bingo players were from upmarket social backgrounds, and the introduction of EBTs had attracted people who were in search of a gambling experience which was more intimate than other forms of gambling.

The Chairperson asked whether EBTs would be the same as Limited Payout Machines (LPMs).

Mr Shabalala answered that these devices were not LPMs. There had been a reluctance of other provinces to embrace these devices.

The Chairperson asked what Mr Shabalala had been referring to in the principal National Gambling Act when he spoke of EBTs being allowed.

Mr Shabalala clarified that BASA would like to see the definition of Bingo, as it currently stood in the National Act, being brought into line with the Provincial definitions.

The Chairperson asked for clarity around what BASA was proposing in this regard, as provinces followed, and worked within, the guidelines set by National legislation.

Mr Shabalala replied that the formula had worked in Gauteng. The incumbent Minister of Trade and Industry had responded to BASA's submission by stating that he would be establishing a National Gambling Council to look into this matter. This would, however, halt the expansion of the Bingo sector.

The Chairperson asked whether BASA had any other motives behind its expansion plans.

Mr Shabalala answered that the sector's want for expansion was not purely driven by money. The needs of those people who were only Bingo players needed to be met.

Casino Association of South Africa (CASA) presentation
Mr Barry Standish (Economist, University of Cape Town) said that the Casino Association of South Africa (CASA) believed one of the sector's main economic benefits was the eradication of the illegal industry. Prior to the legalisation of gambling, there were more than 2 000 illegal casinos which, in addition to not being tax-compliant, also did very little towards curbing problem gambling. The second benefit was that it provided some people with enjoyment. In addition, the sector had contributed towards construction (with a total nominal capital spending of R18.8 billion), regeneration (in centres such as Goodwood, Gold Reef City and Mont Casino), tourism (at Cape Town International and Sandton Convention Centres, Roggebaai Canal and Sun City), had raised the Gross Domestic Product (R20.3 billion was spent in the 2008/09 financial year, equivalent to 0.9% of GDP), job creation (around 90 000 direct or indirect jobs), taxes (since taxes in excess of R6 billion were paid for the 2008/09 financial year) and corporate social investment (through enterprise development, HIV/AIDS initiatives, orphanages, hospices and others).

Government was the largest receiver of the sector's turnover, at 29.23%. Its employees were, at 14.0%, the third-largest receivers. Procurement stood at 28.07%.

Discussion
Ms F Khumalo (ANC) asked whether the 90 000 jobs the sector had created were of a permanent nature and whether the employees were entitled to any benefits.

Mr Standish answered that most of these jobs were permanent and employees were therefore entitled to the benefits that came along with this.

Ms Khumalo asked for the reasons why punters having to register their bank details before playing.

Mr Derek Auret, Chief Executive Officer, CASA,  added that it was important for casinos not to be involved in any money laundering transactions. Having the cards placed the casinos in a better position to prevent this. There were also signs up in all casinos, warning against any money laundering activities. The card system also allowed casinos to better ascertain their client profile.

Mr Radebe asked what the sector had found to be problem areas in current gambling legislation. She also asked how the sector was controlling the seedier side of gambling, such as violence.

Mr Auret answered that, though he was aware of the associations with criminality that the sector had in the past carried, in fact the criminal activities so widely popularised by the media had  never taken place in South Africa. The sector had an excellent cooperative relationship with the South African Police Services. It also worked with them in cash-in-transit heist prevention.

The Chairperson asked which casinos were not CASA members. He asked if CASA could provide examples of the sector being over-regulated. The Chairperson also enquired how many poor people gambled in casinos.

Mr Standish answered that most of the people who visited casinos fell in the middle-income range. Though he could not provide exact figures, the Eastern Cape Gambling and Betting Board had recently completed a research report which could shed light on this question.

Mr Auret added that there were two casinos that were not members- one in Kuruman and one in Upington. Although they had shown interest in joining the association, they had not as yet done so. Despite casinos being good corporate citizens, Gambling Boards intruded on the running of their business. It was not Government's role to dictate to companies how to conduct their business. In addition to National Gambling legislation, CASA and the sector also had to satisfy the regulatory requirements of nine different Provincial Gambling Boards. Streamlining this situation would make it easier for operators to run their businesses successfully.

Ms Khumalo asked what the sector's employee HIV/AIDS policy was. She wondered if CASA considered there to be any relation between unemployment and gambling. She also asked whether the punters were mainly male or female.

Mr Auret answered that each company had cutting-edge policies in place relating to the HIV/AIDS policies. As casinos were generally more expensive than most other forms of gambling, the majority of the punters were not in fact unemployed or poor people. He could not provide exact figures around male/ female patronage.

Mr Radebe asked how much foreign equity there was in the casinos currently operating.

Mr Auret answered that the four major South African operators were wholly South African-owned.

The Chairperson asked whether people were being bussed in to gamble at casinos.

Mr Auret replied that bussing people in was not allowed, unless it was for a particular reason (such as an old-age home requesting such transportation).

The Chairperson asked whether the sector was concerned that interactive online gambling would have an adverse effect on its profits.

Mr Auret answered that, although CASA had not taken a position on this issue, the sector did not see interactive gambling as a threat. There were, however, concerns around tax limits.

Justice Alliance of South Africa (JASA) presentation
Mr John Smyth, Honorary Director, Justice Alliance of South Africa, described the Justice Alliance of South Africa (JASA) as a coalition of churches and individuals committed to upholding Judeo-Christian values in South Africa. It was strongly opposed to the legalisation of online gambling as it would, firstly, be impossible to ensure that children did not gamble in this manner. As gambling had destroyed many people's lives it was a moral issue. It agreed with the British Royal College of Psychiatrists report that the concept of promoting responsible gambling was disingenuous. That report had called for ministers to produce tougher regulations on the online gambling sector. A newspaper report noted that a survey had shown that the number of online gamblers had increased to 8.4% (up from 7.4% the previous year). JASA felt that online gambling would develop into a social evil as it would be available 24 hours a day, seven days a week.

JASA was also concerned about the integrity and independence of the NRGP as it was supervised by the South African Gambling Trust, which had no less than four representatives from the industry as Trustees. This constituted a conflict of interest. A submission by the Royal College of Psychiatrists exposed the dangers of relying on advice or statistics from a body that was industry-driven. A body with any links to commercial gambling could not, in JASA's view, give impartial advice on the matter.

JASA also feared that the Responsible Gambling Trust's schools programme in South Africa was potentially serving to introduce children who were at a very young and impressionable age to gambling. 

Discussion
Mr Radebe asked whether JASA had done any research to confirm or negate the finding that 80% of South Africans saw gambling as a legitimate entertainment activity.

Mr Smyth answered that JASA had not conducted any research in this regard as it did not have the resources to do so.

The Chairperson said that, though the submission was informative, there needed to be greater focus on South African research done in relation to gambling locally.

The meeting was adjourned.

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