Economic Impact of Legalised Gambling since 1994: briefing

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
4 June 2003
ECONOMIC IMPACT OF LEGALISED GAMBLING SINCE 1994: BRIEFING BY NATIONAL GAMBLING BOARD

Chairperson: Dr. R Davies

Relevant documents
 

 

Powerpoint presentation by the National Gambling Board (NGB)
South African Advisory Council on Responsible Gambling - A Developing Nation Responds To Problem Gambling

SUMMARY

 

Presentations made by the National Gambling Board covered a survey done to study the economic impact of gambling and the campaign of the South African Advisory Council on Responsible Gambling. It had emerged that a high proportion of South Africans gambled and that the lottery was the most common form of gambling.

The Committee felt that gambling in the country was out of control and that the poor were being adversely affected the most. The plan for limited payout machines be introduced in entertaiment areas was a point of much concern. It was felt that this would cause even more harm and worsen the present situation.

MINUTES
National Gambling Board input
Adv T Majake, General Manager: Strategic Operations - National Gambling Board (NGB), addressed the Committee as in the Powerpoint presentation attached. It had emerged from research that the lottery was the most common form of gambling. The majority of people that gambled were employed. As far as expenditure was concerned, researchers had warned that underreporting might have been done by respondents. The displacement of expenditure as a consequence of gambling was not unique to South Africa, but also happened in other countries.

Discussion
Prof. S Ripinga (ANC) commented that although there were economic benefits from gambling, there was a negative impact socially. The positioning of casinos in rural areas was also disastrous.

The Chair remarked that according to the study, South Africa was fourteenth in the world where propensity to gamble was concerned. This meant that South Africa had a large gambling sector. Poor people were also very active participants in the lottery as it was more accessible. Since it was planned that limited payout machines be placed in shebeens, gambling would be even more accessible.

Ms. Hajaij (ANC) said that this was a very serious problem as the poor were getting poorer. She felt that the figures in the study were not realistic. The fact that more casinos were planned and limited payout machines were to be placed in entertainment areas was cause for concern. She asked how entertainment areas were defined and what would be done to alleviate all the problems caused.

Mr. Lockey (ANC) said that South Africa should not be compared to the US and Australia as in the survey. A comparison should rather have been done with countries who have a similar GDP per capita income such as Brazil and East European countries. It was a matter of concern that the areas which suffered in the spending displacement were the ones which were labour intensive such as the retail sector. Initially it was suggested that the casinos would attract tourists but this was not so as it was mainly South Africans and the lower income categories who were frequenting these places. He suggested that the proposal to place limited payout machines in other entertainment areas should be reassessed. He asked the reasoning behind the proposal and suggested that more people would lose money since nobody ever got rich from gambling except the owners of these establishments.

Ms. Ntuli (ANC) said that the survey shows that the people who gambled were urban and earned salaries. She asked if the survey also covered people in rural areas who lived on pensions and grants, but who also played Lotto. She felt that it was not morally right to introduce more machines since there was a problem already. She also asked what indirect employment was generated by the industry.

Adv Madasa (ACDP) remarked on the findings in the survey which mentioned that 73% of the population found gambling acceptable. He asked if the survey was done before or after the Lotto was started. He asked if there was any research done which linked gambling to other crimes. He felt that the whole issue of gambling had to be looked at again.

Ms. Moloi (ANC) asked if the capital contribution that casinos would make to a region was considered before it was decided where they would be built.

Mr. Rasmeni (ANC) agreed with all the concerns raised and added that since only 2% of people who played won at gambling, 98% were being impoverished. He asked what the social responsibility of the industry was.

Mr. C Fismer, NGB Chairperson, responded by saying that the aim of the report was to influence policy. The survey had delivered a mixed bag of findings from which much could be learnt. There were many concerning factors, but it was important to remember that the NGB did not invent gambling. It was a fact that gambling was popular in South Africa. The challenge was to regulate, to form policy and to limit the impact. The intervention therefore had to be stronger than in other countries. It was difficult to compare with comparable countries as these did not have the statistics which South Africa had. For this reason, comparisons had been made with the US and Australia. The trend was to have casinos in the urban areas as there was not much of an interest in the rural areas. The lottery was not within the NGB's mandate and there was no support for daily draws. With the limited payout machines, prizes would be restricted to a maximum of R500. This would therefore lessen the impact of the machines. The idea to install these machines should not become the easier target when confronting the gambling issue. The entertainment areas where these machines would be, would be areas where those under the age of eighteen would be prohibited from playing. The underreporting in the survey was estimated to be in the order of 15% to 25%. It was therefore not correct to say that the results were unrealistic. It was difficult to say however where the money to gamble was coming from in households. Mr. Fismer emphasised that there had been illegal gambling before and that the money could have come from there rather than from displaced expenditure from elsewhere. He also pointed out that 90% of money played at casinos was paid back. He did not believe that there was a link between gambling and the occurrence of other crimes.

Mr. Majake said that those who were indirectly employed by the industry were the suppliers and entertainers.

Ms. Rataemane, research manager of the NGB, pointed out that the survey had been conducted in April to June 2002 and covered the twelve months before this.

South African Advisory Council on Responsible Gambling
Mr. Fismer then continued to give a presentation on behalf of the South African Advisory Council on Responsible Gambling (SAACREG). Details of this presentation is found in the Powerpoint presentation attached. Mr. Fismer highlighted that the South African model was being promoted internationally as a very good one. The program that the SAACREG ran focused on education and training, research and collateral material.

Discussion
Mr. Lockey (ANC) once again highlighted that South African ranked very high when it came to gambling. The fact that it was ranked 91 in gross per capita income yet ranked 14 on propensity to gamble showed that something was not right. The limited payout machines would also cause more problems and would be a training ground for new gamblers. Even if 5% of the population were problem gamblers, it was high and the proposal to install the limited payout machines should be reassessed.

The Chair said that the Committee was not suggesting prohibition but rather regulation. The present activities should therefore not be expanded. Even though the limited payout machines would have a low payout, it was still making gambling more accessible. It was obvious that the poor would play on these machines as they would be more accessible. He proposed that notices be put on these machines informing people that a maximum prize of R500 could be won and that the odds of winning this prize was very small. He also suggested that if these machines were introduced, there should be a cutback somewhere else.

Mr. Fismer responded by saying that it was hoped tat 20 000 machine or less would be rolled out to all provinces. The NGB shared the concerns raised by members and wanted to improve on its regulatory work. He emphasised that the NGB had been successful in cutting down on illegal gambling. Before 1994, there were about 150 000 illegal slot machines in South Africa, at present there were 22 000 legal ones in casinos. There was thus a great improvement plus legislation in place which was not there before. He agreed that notices be put on machines as suggested by the Chair. He said that it was important that people understood the odds before they gambled.

Mr. Lockey (ANC) said that the advertisements promoting responsible gambling were very mild. There were also problems with the Lotto advertisements which promoted the fact that dreams could come true. He suggested that the media campaign be countered.

Mr. Fismer replied that they had just concluded a code of conduct within the industry. The Advertising Standards Authority would also be able to enforce problematic advertising. They were however not seeing eye to eye with the Lotto and it was not a participant in the code of conduct.

In closing, the Chair emphasised that there were big problems which needed attention.