Committee input on the Gambling Review Commission Report

NCOP Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour

24 April 2013
Chairperson: Mr D Gamede (ANC, Kwazulu-Natal)
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Meeting Summary

The Committee deliberated on its Draft Gambling Review Report. One of the major issues which elicited much discussion was online gambling and the regulation thereof. In as much as its regulation was a monumental task it was nevertheless possible. It was being done internationally in the European Union and in the United States of America. Illegal and informal gambling was another issue which Members felt should be addressed. There was consensus that Lotto needed to make contributions towards the National Responsible Gambling Programme. The funds could be used for education and rehabilitation. Concerns were also raised about the well being of animals participating in races. The issue of greyhound breeding and its regulation were discussed.
From the Committee and stakeholders side there seemed to be a sense of urgency that a legislative framework was needed in the sector.
The Department of Trade and Industry however explained that the process leading up to legislation was a lengthy and cumbersome process. The whole system needed to be overhauled and there were many issues to be dealt with. It was not advisable to do piecemeal amendments. The Department informed the Committee that it would consolidate the reports of both the Portfolio Committee on Trade and Industry and the Committee. It would analyse the reports and come back with a response to the Committee. The next step would be to produce a policy based on the two reports. The policy would then lead to a bill being drafted.

The Committee asked the Department to have something of substance in place by November 2013.

Meeting report

Draft Gambling Review Report
The Chairperson stated that Members should feel free to comment on the Draft Report. The Department of Trade and Industry would also be given the opportunity to respond to Members comments. Stakeholders present in the meeting would be given the opportunity to make inputs as well.

Ms E Van Lingen (DA, Eastern Cape) wished to highlight a few aspects. She noted that legalised gambling was not the problem. The problem arose when funds from gambling were in the hands of government. Illegal gambling in shebeens was a huge problem. What was being done about it? A gambling body had been allocated funds to do research and publish five reports. The Committee needed to see those reports.

Ms Van Lingen further asked what would happen with the present Draft Report. She commented that the short lifespan of gambling licenses was another problem. Gambling licenses were now only valid for five years. The period was far too short given the huge capital investment made by casinos etc. In the past there was no lifespan on gambling licenses. There would be legal implications regarding the lifespan of gambling licenses.

Ms Van Lingen stated that the gambling industry was one of the most transformed as far as Black Economic Empowerment (BEEE) was concerned. The gambling industry should not be over regulated. It was a good source of funding for education and sport. In relation to responsible gambling, she felt it only right that Lotto should be required to contribute towards national programmes on sport and education even though it contended that it funded its own social responsibility activities.
Ms Van Lingen questioned why online gambling was illegal? In her view, it should be legalised. It was a reality in South Africa. Land based gambling establishments were over regulated. If they contravened then they could lose their gambling licenses. South Africa’s gambling industry was 40 times smaller than the United Kingdom’s industry but it was regulated more strictly. Advertising of gambling in South Africa was very limited. There was huge censorship. Advertising regulations should not be expanded upon.
Who was supplying illegal shebeens with gambling machines? It needed to be tightened up.
She pointed out that she had seen the Electronic Bingo Terminals (EBTs) at shopping centres. The shops that had these machines had no gambling licenses. These machines were similar to slot machines.
On the issue of poker she felt that licensing should remain with provincial gambling boards as they were strict. The function should not be given to municipalities. On limited payment machines she felt that if one limited the numbers of seats allowed, it would amount to over regulation.
If casinos and gambling was to be over regulated then it would mean less tax revenue for government. She emphasised that Lotto was a form of gambling and should be treated as such. She did not see what the difference was between horse and greyhound racing. 

Ms Linda Devries, Chairperson of the National Gambling Board (NGB), said that the NGB worked closely with the DTI. Firstly, she addressed the issue of limited payment machines. In terms of legislation provinces could grant licenses for up to five machines to establishments which had a primary business like for example a pub. The license was linked to the primary business. It was legal and was tightly regulated. The primary business needed to be registered in order to obtain licenses for machines.
She noted that legislation at present was not specific about bingo. The National Gambling Board in consultation with the DTI and the provinces had come up with a National Council Gambling Framework. Consultation on the framework needed to take place. There were national regulations for EBT. Limits needed to be set for bingo gambling. License conditions did take into consideration social requirements. There had to be compliance. Consultation with the industry was needed for compliance with BEEE.
Research had shown that Lotto was a key contributor to problems in South Africa. She agreed that Lotto should contribute to the National Responsible Gambling Programme. The funds could be used for education and rehabilitation. On online gambling, the NGB was awaiting guidance from Parliament on the issue. The NGB was working closely with the European Union, which had made a success of regulating online gambling. The USA had also started to regulate online gambling.

Mr K Sinclair (COPE, Northern Cape) noted that the focus of the Committee should be on the processes in order to determine what the review attempted to achieve. Certain issues were evaluated whilst reviewing the industry. The Draft Report made mention of consultations with stakeholders. He was unable to recall such consultations. The Draft Report also spoke about Ministerial Members of Executive Committees (MinMECs) failing to quorate meetings. Looking at concurrent functions as laid out in the Constitution, the intention of the review was to propose legislative frameworks. National and provincial governments each had their own mandates. The review had to address the issue of concurrent functions.
He emphasised that it was almost impossible to regulate online gambling. The issue was about how to put in place a legislative framework.

Mr Nkoatse Mashamaite, Deputy Director: Regulated Industries, DTI, responded that MinMECs were required in terms of legislation to meet at least twice a year. He conceded that what Mr Sinclair said was true and that it was a problem to meet a quorum of members.
On the Draft Report itself the DTI had not responded as yet. The reports of both the Portfolio Committee on Trade and Industry and this Committee would be consolidated and once that had been done the DTI would respond.
The Chairperson conceded that online gambling was a problem. He noted that the Minister of Police had raised the issue of cyber actions and internet policing. Thorough consultation was needed on the regulation of online gambling. Whilst the DTI could issue licenses it lacked the capacity to police online gambling. The South African Police Services (SAPS) should come onboard and acquire the necessary skills to do so. There were persons who felt that social responsibility and rehabilitation should be prerequisites when gambling licenses were granted. There should also be minimum standards set on animal welfare in animal racing.

Ms Van Lingen said that SAPS lacked the skills to police online gambling. The majority of SAPS was on the ground. It would be a huge task for SAPS.

Mr Laghlan Peddie, from the National Responsible Gambling Programme, raised concerns about the informal gambling sector. Ways should be found to infiltrate the sector and to shut it down. He agreed that Lotto should contribute towards the NRGP. There were many problem gamblers because of the Lotto.

Mr Charl Fourie, General Manager, Casino Association of South Africa, asked what the legal status of the moratorium on EBTs was. 

Mr Tyrone Dobbin, Managing Director of NETBET, explained that NETBET was an online bookmaker licensed in the Western Cape. He noted that he had an understanding of online gambling. He asked how NETBET would fit in when online gambling legislation came into effect. He informed the Committee that NETBET had received a letter from the French Gambling Organisation requesting NETBET not to target French citizens. South Africa could do the same for foreign online gambling operators. NETBET did social quick bets. 80% of its clients were recreational users.

Ms Adheera Bodasing, Director: Polarity Consulting, addressed the issue of greyhound races and said that problems were encountered with the over breeding of greyhounds. The racing hound itself could be regulated but there was no regulation of hound breeding. Most puppies did not make it into racing and were often tortured. Online gambling regulation was a long time in coming. There was insufficient protection for users in the industry. She agreed that regulating online gambling was difficult but it was possible. The best way was to have regulated licensed operators. A licensing framework was needed which would protect the punter. Regarding monitoring and policing she said that regulated operations were constantly monitored.  With an online gambling framework all transactions could be tracked.

The Chairperson asked Ms Bodasing who did the monitoring. Would SAPS be responsible?

Ms Bodasing explained that all transactions by punters were recorded. It was stored by provincial regulators and the NGB. Information could also be stored. She found it hard to imagine that SAPS would be able to monitor all these activities.

Mr Dobbin reiterated that NETBET was an accountable association. A few months ago suspicious transactions had taken place with a client’s stolen credit card. Immediate action had been taken.

Mr Macdonald Netshitenze, Chief Director: Policy and Legislation, DTI, said that the Department would like to be advised in the main. The DTI would go through the Draft Report and thereafter formulate a policy. On online gambling a concerted effort was needed to put regulations in place. It was a mammoth task and it involved DTI, National Treasury and the Department of Communications. Education, awareness and monitoring should be emphasised. DTI would like to put systems in place.

Mr Sinclair asked what the next step was.

Mr Netshetenze responded that the DTI would consolidate the reports of both the Portfolio Committee on Trade and Industry and the Committee. The DTI would analyse the reports and come back with a response to the Committee. The next step would be to produce a policy based on the two reports. The policy would then lead to a bill being drafted.

Mr Sinclair commented that the intention was to create a legislative environment. From what was said it seemed that the process was long and cumbersome. Was it necessary to draft new legislation or could existing legislation be amended?

Mr Netshitenze responded that government’s processes might be slow but the end result was satisfactory. The whole system needed to be overhauled and there were many issues to be dealt with. It was not advisable to do piecemeal amendments.

Mr F Adams (ANC, Western Cape) was concerned about the welfare of greyhounds that were breeded. He was also concerned that breeders were saying that if regulated there would be job losses. Breeding of greyhounds was a specialised skill. In the UK greyhound breeding was one of the fastest job creators. One should thus be careful about regulating. Job losses should not result. He asked whether the UK model had been looked at. He agreed that online gambling should be regulated. Gambling establishments and betting places opened up early and closed late at night. Operating hours should be regulated.

Ms Van Lingen was shocked to hear that the process was to be so cumbersome. Things needed to happen. The long process and delay was a sign that there was a lack of political will. The DTI needed to do its job and Members had to deliver. It was time that the DTI learnt to multitask.

Mr A Nyambi (ANC, Mpumalanga) agreed that the piecemeal approach was not the way to go. Short cuts could not be taken; the process must be allowed to unfold.

Ms M Dikgale (ANC, Limpopo) encouraged Mr Netshitenze to do what was correct.

Mr Adams took over as Chairperson as Mr Gamede had to be excused from the meeting.
He said that the process would be long as the bill would impact upon provinces and would most likely be a section 76 bill. Consultations and engagements also needed to take place. He encouraged the DTI to move with caution and with utmost speed. By November 2013 the Committee expected to see something of substance in place.

Mr Netshitenze responded that DTI was moving with speed and would do its best to deliver.

Mr Adams said that Members were aware that sometimes the wheels of government turned slowly. He was sure that Mr Netshitenze and his team was doing the best they could. Partnership participation was needed and inputs from the industry were useful.

Committee Minutes
The minutes dated the 6 June 2012, 20 June 2012, 8 August 2012, 14 August 2012, 29 August 2012, 5 September 2012, 12 September 2012, 19 September 2012, 5 November 2012, 28 November 2012, 13 February 2013 and 20 February 2013 were adopted unamended. 

Mr Sinclair asked what happened to issues that were raised during meetings.

The Committee agreed that the Committee Section should after minutes were adopted make note of issues which attention should be given to. The Committee in its management meetings could discuss the issues.

The meeting was adjourned.


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