Review of National Gambling Legislation: Family Policy Institute, Zonke Monitoring Systems submissions

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Trade, Industry and Competition

28 January 2010
Chairperson: Ms Fubbs J (ANC)
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Meeting Summary

The Family Policy Institute submission dealt with the socio-economic impact of legalised gambling on marriage and family, and the social impact of gambling advertising. It referred to research undertaken in Australia and the United States and quoted statistics that illustrated how society was affected by gambling.

The Institute identified at least nine types of gambling costs to society: crime; costs to business and employment through lost productivity and bankruptcy; suicide; illness such as depression and stress-related illness; social services costs; government regulatory costs; family costs and abuse of money. The legalised gambling industry did not contribute to economic development and its socio-economic costs overwhelmed the benefits.

The Committee discussed the Institute’s submission with all members expressing admiration for the amount of work put into it. The Institute was asked about the argument that it was better to regulate gambling rather than leave it unregulated. The Institute was asked to comment on the fact that South Africa had a secular constitution and could not impose the morality of one section of the society at the expense of other social interests.

Zonke Monitoring Systems also presented and it is the current national central electronic monitoring system operator in charge of monitoring the limited pay-out machine industry (as required by section 27 of the National Gambling Act). The submission looked at the legislative constraints to the growth of the industry. It provided scientific data analysis of the LPM industry performance focusing on LPM gaming behaviours in the different provinces. The general conclusion from the data was that there was a significant percentage of machines in various provinces that were not making money for operators and that the novelty effect was beginning to wear off. It was suggested that increasing the R500 payout would immediately make more sites profitable.

Members raised questions about the possibility of using technology to identify problem gamblers in casinos as a way of protecting society from the adverse consequences of gambling.

Meeting report

Family Policy Institute: Oral Submission on Gambling Reform
Mr Errol Naidoo, President of the Family Policy Institute, spoke about the socio-economic impact of legalised gambling on marriage and family, and the social impact of gambling advertising. He referred to research undertaken in Australia and the United States and quoted statistics that illustrated how society could be affected by legalised gambling.

These studies revealed that every video slot gambling machine took away R60 000 out of the consumer economy resulting in lost sales and lost jobs. It was estimated that gambling cost taxpayers R3 for every R1 in revenue to government. The Institute put forward the argument that for every R1 of revenue generated by gambling, taxpayers were penalised at least R3 in the form of increased criminal justice costs and social welfare expenses.

As far as the socio-economic impact on marriage and family, the Institute submitted that pathological gambling created enormous problems for afflicted individuals, their families, employers, and society, and it had disastrous financial consequences. The Institute argued that South Africa’s liberal Constitution had elevated individual rights and demands over the more socially responsible policy of protecting and restoring the family, which was the building block of society.

Mr Naidoo gave several case studies of the negative consequences of legalised gambling on ordinary members of society and more worryingly on young children - in one instance an eight year old girl was abandoned at the entrance of a Durban casino for seven hours while her parents gambled the night away.

The Institute identified at least nine distinct types of gambling cost on society: crime; costs to business and employment through lost productivity and bankruptcy; suicide; illness such as depression and stress-related illness; social services costs; government direct regulatory costs; family costs and abuse of money. The legalised gambling industry did not contribute to economic development and its socio-economic costs overwhelmed the benefits. [See document]

Discussion
The Chairperson thanked Mr Naidoo for what she termed a comprehensive submission.

Mr B Turok (ANC) commented that this was one of the best presentations that he had ever heard in this Committee. He asked Mr Naidoo how he viewed the argument often made that it was better to legislate than not to regulate gambling at all. He proposed that an answer could be given in writing.

Mr Naidoo responded by drawing a comparison with the argument that said that prostitution was the oldest profession and thus it was futile to attempt to bring a stop to it. He argued strongly against this reasoning and said that one could not solve a problem by surrendering to it. Government had a key role to strictly regulate gambling and the State’s focus had to be on protecting its people. He urged the Committee to adopt an uncompromising stance towards gambling and made the point quite firmly that there were some things that were simply not acceptable.

Mr Naidoo spoke passionately about the impact of gambling, especially on marriages and the resulting family problems this created. He condemned casinos as a source of addiction and as places where the poor were exploited of their sustenance by the deceptive allure and false hope of instant riches.

Mr Radebe (ACDP) agreed with Mr Turok that the presentation had indeed been a good one. He wanted to know from the presenter whether he had any thoughts about what would happen if gambling was banned. He expressed concern that a purely moralistic view went against the secular nature of the Constitution and he asked whether the Institute’s morality had to be imposed on the entire population.

Mr Naidoo responded to the comment about the secular nature of the Constitution with the argument that one could not accept immorality simply because of the secular nature of the Constitution. He argued that moral convictions were not based on religion alone and that he envisaged a common morality which cut across different religious and secular beliefs.

Mr S Njikelana (ANC) made reference to the institute’s submissions on the social costs of gambling. He was concerned that the institute did not seem to give any recommendation to government on how the social costs of gambling could be prevented or dealt with.

Ms P Lebenya (ANC) thanked the presenter for what she described as a wonderful presentation. She asked Mr Naidoo to explain to the Committee what the Institute did with the research that they had presented to the Committee. She was also curious to know if the institute had any recommendations or proposals to government about how people affected by gambling could be assisted.

Mr Naidoo responded that the research which the institute gathered was shared with church groups to assist them in developing ministerial outreach programmes. The research provided motivation to churches to reach out, for example, to women involved in prostitution and to rehabilitate them so that they could be reintegrated into society by encouraging them to take up employment, for instance.

The Chairperson commented that it appeared that the institute had cited several studies done in America and Australia and she wanted to know if they had conducted similar studies in the South African context.

Mr Naidoo responded that the institute had not been able to carry out its own independent research in the South African context as they had limited research capacity and were currently committed to studies on pornography and prostitution. They would embark on a study on gambling as soon as they were able to do so which would probably be after the completion of the studies on prostitution and pornography.

Mr Njikelana requested further information on the impact of gambling on society and proposed that this could be provided in writing.

The Chairperson referred to the statement quantifying the amount of money that gamblers spent on food in relation to what they spent on their habit on page 8 of the presentation. She asked if there was a particular study which had been done on this.

Mr Naidoo responded that there were a few bits of information on the effects of gambling but conceded that no particular study had as yet been undertaken by the Institute as a result of the human resources capacity constraints which they were experiencing.

Mr Naidoo suggested that there had to be a moratorium on gambling forthwith pending the review of the National Gambling Act and that the government had to ban deceptive advertising which lured people into gambling with false promises. He also proposed the removal of slot machines from residential areas.

The Chairperson requested Mr Naidoo to explain to the Committee in writing from which angle the institute had approached this subject. She asked if they had looked at the issue from a human behaviour perspective or from the point of view of legislation.

Zonke Monitoring Systems submission
Mr Hosea Malope, Chief Executive Officer gave a brief background on Zonke Monitoring Systems (ZMS), which was the current national central electronic monitoring system operator in charge of monitoring the limited pay-out machine (LPM) industry as required by section 27 of the National Gambling Act. Mr Nivesh Maharaj, Legal and Compliance Manager at ZMS, presented on the legislative constraints to the growth of the industry.

Dr Anthony Stacey provided scientific data analysis of the LPM industry performance focusing on LPM gaming behaviours in the different provinces throughout South Africa. The general conclusion from the scientific data was that there was a significant percentage of machines in different provinces across South Africa that were not making money for operators and that the novelty effect was beginning to wear off.

The LPM industry had not performed to expectations and it was suggested that increasing the R500 payout limit in line with inflation would immediately make more sites profitable. While substantial growth was expected in the short term through the issuing of new site licences, particularly in Gauteng, the long term sustainability of the LPM industry as currently structured was questioned.

Discussion
Mr Van Der Westhuizen (DA) asked if ZMS had the technical ability to monitor not only Limited Payout Machines (LPMs) but other forms of gambling. He also wanted to know if there was technology available to protect against problem gamblers.

Mr Maharaj responded that there was software which had been developed to identify problem gamblers.

Mr Malope added that the development of such technology was a question of will and was something that could be done once it became a priority.

Mr Van Der Westhuizen clarified that he was not simply referring to security technology designed to identify gamblers who tried to outsmart the LPMs.

Mr Malope responded that it was not currently part of their strategy to police problem gamblers.

The Chairperson questioned Zonke’s ability to roll out the monitoring of standard security technology such as facial recognition software for the LPMs and requested them to address this query in a covering note to the Committee.

Other business
The Committee could not adopt its outstanding minutes because of the lack of a quorum of committee members.

The meeting was adjourned.

 

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