The Committee was informed that the Bill has three focus areas: the repositioning of the National Gambling Board (NGB) to the National Gambling Regulator (NGR); the extension of National Central Electronic Monitoring System (NCEMS) to all modes of gambling; and the effectiveness of the National Gambling Policy Council (NGPC). Comments were received from the Banking Association of SA (BASA), Ithuba Holdings, Casino Association of SA (CASA), South African Bookmakers’ Association (SABA), Cliffe Dekker Hofmeyr Inc (on behalf of the Goldrush Group), Bingo Association of SA (BASA), Boss Gaming Group (BOSS), Gold Circle, DH Van Eeden and the Payments Association of SA. The Department of Trade and Industry (DTI) gave responses to the submissions on these focus areas, on specific provisions, technical and legal issues as well as on general comments by stakeholders.
Members observed that DTI in its responses had not stated whether it agreed or disagreed with the proposals in the submissions. Members were concerned about stakeholders alleging that no consultation had taken place. DTI was asked why none of the submissions spoke about Lotto; why the Lottery Board did not fall under the NGR and a possible duplication of duties. Members asked how the NGR would ensure that meetings were quorate. Members were concerned that the NGR would be taking away powers from Provincial Licensing Authorities (PLAs) and that the NGR might not only have an oversight role. How would the Bill affect PLAs? DTI was asked whether online gambling was illegal. What was the status quo? Members were hugely concerned that over the last five years the National Gambling Policy Council (NGPC) had only had four meetings of which only two had been quorate. Members felt it absurd for the Committee to legislate on meetings needing to be quorate. Members felt that non-quorate meetings spoke to ill discipline on the part of the NGPC. Quorum ought to be covered as a policy rule within the NGPC.
Members asked whether the NCEMS was imposing an additional tax. If the NCEMS was intended to be a monitoring tool, what was to happen to the monitoring tools operators currently used? Members would have liked to have seen how the NCEMS worked in practice but the Fifth Parliament was nearing its end. Members observed that the Bill had technical errors which would be corrected. DTI was asked whether the correction of these errors would take the route of a formal amendments process. Would the Bill have to go back to the National Assembly? How would the errors be corrected? DTI was asked whether the 2008 Amendment Act referred to by legal advisers would be resuscitated with the Bill or with a future bill. Alternatively, would the 2008 Amendment Act be discarded? What was the future for the 2008 Amendment Act? Members understood that the 2008 Amendment Act legalised online gambling but observed that a great deal has changed in the virtual space since 2008. As explained by DTI the policy position of government on online gambling for now was for it to remain illegal. The Chairperson said that there was no need to be overzealous to tie up the 2008 Amendment Act. He did note the importance of the Committee’s successor to monitor the effectiveness of legislation. The Committee agreed to send a report to the provinces calling for final mandates on the Bill.
National Gambling Amendment Bill stakeholder inputs: DTI response
Dr Evelyn Masotja Deputy Director General: Consumer and Corporate Regulation Division (CCRD), DTI stated that the Bill had essentially three focus areas ie the repositioning of the National Gambling Board (NGB) to the National Gambling Regulator (NGR); the extension of National Central Electronic Monitoring System (NCEMS) to all modes of gambling and finally the effectiveness of the National Gambling Policy Council (NGPC). Comments were received from the Banking Association of SA (BASA), Ithuba Holdings, the Casino Association of SA (CASA), the South African Bookmakers’ Association (SABA), Cliffe Dekker Hofmeyr Inc (on behalf of Goldrush Group (Pty) Ltd), the Bingo Association of SA (BASA), Boss Gaming Group (“BOSS”), Gold Circle, DH Van Eeden and the Payments Association of SA.
The responses given by DTI were on specific issues/provisions of the Bill, technical / legal issues as well as general comments. One of the complaints from stakeholders was why the Bill had been split. The response was that the amendments in the Bill were the first in a series in the repositioning of the NGB to the NGR and posed no prejudice to the industry. The intention in the Sixth Parliament was to table industry-specific and substantive provisions. DTI would ensure that a gambling amendment bill be included in the parliamentary programme.
On the restructuring of the NGB to the NGR one of the concerns raised was that removing the NGB and replacing it with the NGR led by a Chief Executive Officer and Deputy CEO would lead to an abuse of power but also removed the collective expertise of the NGB. DTI responded that the NGR would be a public entity in terms of the Public Finance Management Act (PFMA) and would comply with all legal prescripts and was accountable to the Auditor General of SA and parliament. Checks and balances were in place to prevent an abuse of power. Another concern highlighted by stakeholders was that there had been no consultation on the extension of the NCEMS to other modes of gambling on the policy document that was published in 2015 and in the Bill published in 2016. The extension of the scope of the NCEMS to other gambling modes was proposed for the first time in the current Bill. DTI said that the National Gambling Policy (NGP) included the NCEMS in the approved version of February 2016. The Bill had gone through various changes and the NCEMS matter had been consulted upon during 2017 and was still subject of consultation as part of the National Assembly (NA) and the National Council of Provinces (NCOP) legislative processes prior to the Bill being signed into law. The NCEMS was a regulatory tool for the NGB and Provincial Licensing Authorities (PLAs) to provide independent oversight of gambling activities, taxes and levies due. The NCEMS applied to the Limited Payout Machine (LPM) industry.
On the effectiveness of the NGPC, stakeholders referred to section 63A which dealt with quorum and said that problems of quorum in NGPC meetings did not need legislative amendment. The provision on quorum would allow a few people to make a decision which affected the many. It would undermine the majority rule principle. DTI responded that the proposed insertion of section 63A served to empower the NGPC to be progressive in its decision making in that it would be able to deliberate on matters before the NGPC and in the second meeting the motion may be passed.
The Chairperson said that Mr Frank Jenkins, Parliamentary Legal Adviser, had looked at the DTI responses to submissions on the Bill. The Committee was not finalising the Bill in the present meeting. The Committee was waiting on mandates from the provinces.
Mr W Faber (DA, Northern Cape) asked why there were no submissions made on the Lotto. He asked why the Lottery Board did not fall under the National Gambling Regulator (NGR). The NGR seemed to come up a great deal in submissions. He was concerned about there being a duplication of duties. How would having the NGR ensure that meetings would quorate? He felt that the NGR took away powers from Provincial Licensing Authorities (PLA) and that the NGR would not have only an oversight role. How would the Bill affect PLAs? Stakeholders had stated that online gambling was illegal. Was online gambling illegal? What was the status quo? Stakeholders had alleged that there had been a mismatch of clauses in the Bill. DTI had responded that it was a legal matter (page 27). He asked the Parliamentary Law Adviser to speak to the matter. Was the matter controversial?
The Chairperson responded that many of these questions had been asked in the previous Committee meeting on the Bill.
Dr Evelyn Masotja, DTI Deputy Director General: Consumer and Corporate Regulation Division, agreed that some of the questions raised by Mr Faber had been raised in a previous meeting. On the National Lotteries Commission (NLC) merging with the National Gambling Board (NGB), she pointed out that the NLC had an exclusive competency. The NLC functioned differently. They raised funds for good causes. They had different dispensations. She pointed out that the Rationalisation Report had made recommendations but that it was a huge policy decision that needed to be made. Due to the nature of the Bill DTI had not gone into the lotteries area.
Mr Frank Jenkins, Parliamentary Legal Adviser, on the legality of online gambling, replied that there was Act 7 of 2004 and the 2008 Amendment Act which was signed by the President of SA but was not in operation. The 2008 Amendment Act was nevertheless live. The Bill could be seen to be doing preparation for the 2008 Amendment Act coming into operation. Until the 2008 Amendment Act came into operation, online gambling was illegal. The 2008 Amendment Act legalised online gambling. At present online gambling was still illegal.
Mr O Terblanche (DA, Western Cape) said that he understood there to be a further Bill in the pipeline. He agreed that the gambling industry needed to be regulated. He observed that DTI in its responses to submissions had not said whether they agreed or disagreed with the specific proposals made. Stakeholders had alleged that no consultation had taken place. He asked how the NCEMS system would work. Would PLAs have access to information on the NCEMS? The gambling industry had felt the NCEMS to be a cumbersome process. DTI was asked whether the NCEMS could be seen as placing an additional tax on the gambling industry. He was hugely concerned that over the last five years the National Gambling Policy Council (NGPC) had only had four meetings of which only two had been quorate. The Committee could not legislate to right something that was wrong.
Dr Masotja understood the point members were making about not legislating the matter of meetings needing to quorate. She did explain that there were huge policy implications if meetings did not take place when they should have. Policy decisions during meetings needed to be taken otherwise things would not move ahead. It might seem a drastic step but was needed. A great deal of thought had gone into it. Policy certainty was being affected.
Mr Jenkins on the quorum issue said that matter had been discussed by legal advisers. He noted that a quorum requirement was set because there was a purpose. If there was no quorum then the National Gambling Policy Council (NGPC) could not take decisions. The NGPC was there for consultative purposes. It was a problem when decisions could not be taken meeting after meeting. He stressed that it was a policy issue and not a legal one. He noted that whatever decision the NGPC took it had to be agreed to by the Minister of Trade and Industry.
Ms Caroline Kongwa, Administrator: National Gambling Board on whether the NCEMS would impose an additional tax explained that what was being charged was a monitoring fee. It was not a tax. A monitoring fee would be applicable. For those to whom the NCEMS had not been applicable it would be new to them. The amount was 6% on the LPM industry. This had already been in place for sixteen years. In all this time it had not been increased. Nationally, gross gambling revenue was around R28bn. Only 10% was tax. There was no real financial burden on the industry. Over years the gross gambling revenue was increasing but the tax percentage had not increased. She added that by no means was the matter of consultation closed.
Mr M Rayi (ANC, Eastern Cape) felt that DTI had explained the NCEMS well. He said that unfortunately the term of the Committee was coming to an end; he would have liked to have seen how the NCEMS worked. The NCEMS was after all a monitoring tool for the NGR. DTI was asked what was to happen to monitoring tools that operators currently used. The NCEMS was to replace these monitoring tools. He agreed with Mr Terblanche that he was not comfortable to legislate ill discipline when meetings had not quorated. He felt it to be a clumsy arrangement to legislate things. Things could have been covered as a policy rule of the NGPC. Stakeholders had stated that in Clause 30 of the Bill mention was made of section 65C which was an error. DTI had in its responses conceded that it was an error. The error had not been picked up by the Portfolio Committee on Trade and Industry. The Committee understood that it was an error. He asked whether deleting the error from the Bill would be considered as an amendment to the Bill. Would the amendment find it’s was in the C-list of amendments to the Bill if there was to be one. It all depended on what amendments the provinces proposed. If correcting the error was considered an amendment then the Bill would have to go back to the National Assembly. If this was to happen then there was a likelihood of the Bill collapsing when the fifth parliament ends.
Dr Masotja on the section 65C error said that it was a mistake in the Bill. She noted that some of the proposals by stakeholders were wording changes and did not necessarily affect the substance of the Bill.
Ms Caroline Kongwa Administrator: National Gambling Board on how NCEMS operated stated that the NCEMS applied to the Limited Payout Machine (LPM industry). There was a system that was developed. There were LPMs in various locations/sites. Each LPM machine had a LPM site data logger. It recorded all financial transactions. Thereafter the information was transmitted to the Site Data Logger (SDL). The SDL worked hand in hand with the NCEM System. The SDL sent information to the NCEM System. The NCEM System converted information and data. The PLA could access the data. The NCEMS secondly did monitoring. For the LPM industry if someone opened and tampered with a machine on site it would be detected by the System and the machine could no longer be used. On gambling standards all LPM machines could not function without the NCEM System. The System allowed provinces to detect illegal machines and destroy them. The System also ensured that the tax imposed on revenue at site was the correct amount. In this way the financials of the LCM site operator could be verified. On current system of electronic monitoring in terms of the Act of 2004 and in terms of provincial regulations every licensee had to keep proper financial records. Currently, PLA authorities accessed information from a casino for instance on a monthly basis. The question was whether provinces had collected the tax that they should have. With the NCEMS there was a direct connection to the machine itself. Some stakeholders stated that it was better to connect to the casino system itself. The National Gambling Board did regulation over provinces.
Mr Johan Strydom Legal Adviser DTI referred to Clause 15 on the Bill. There was a sub-clause (l) introduced by the Bill. In Act 7 of 2004 there were sub-clauses (a), (b) and (c). Clause 15 in the Bill reflected sub-clauses (a), (b),(c) and (l). Where were the sub-clauses between (c) and (l)? He explained that the sub-clauses between (c) and (l) were to be found in the 2008 Amendment Act. The 2008 Amendment Act had become an act but had not been promulgated by the President of SA. Hence the 2008 Amendment Act remained inoperative. The sub-clauses between (c) and (l) were not found in Act 7 of 2004 or in the Bill. He said that it was a purely technical matter. He continued that a bill goes through many incarnations and passed many people’s hands. He explained that in Clause 30 there was an error with the inclusion of Clause 65C. It was a purely human error. There should only be Clauses 65A and 65B. He conceded that the inclusion of Clause 65C was a mistake. How could it be rectified? Going the process of having a C-list of amendments and incorporating them into a D-bill would delay the Bill. He said that there was no need to go through the formal amendment route. It could be rectified when the Bill went to the President for assent and signature. He assured the Committee that it had been done before. Staying with Clause 30 line 53 he said that the word “and” should be deleted and replaced with “under”. The change was of no legal consequence and was needed. There was no need for the whole amendment process. The changes made would be done ethically.
Mr Jenkins agreed with Mr Strydom that when the Bill was passed by the two houses of parliament and went to the President for consideration technical corrections could be made at that time. The changes would not change the meaning of the Bill. He did point out that changes to the Bill could be done by the provinces. If there were proposed amendments by provinces the Bill would have to go back to the National Assembly. If this was the case then the technical changes could be done as well. He said that the technical changes would have no legal consequence.
The Chairperson said that it was important for the next Committee to monitor the effectiveness of legislation.
Ms M Dikgale (ANC, Limpopo) said that members had covered her over the matter of the NGPC meetings quorating. She did however say that perhaps traditional leaders, church leaders and Contralesa members should sit on its Board. Having representatives of this nature on the Board would ensure that meetings quorated. She could see that DTI was trying to resolve things.
The Chairperson asked whether consultation with operators had taken place.
Dr Masotja stated that there was consultation through the policy that was published. Consultation had taken place when the Bill was gazetted as well. She noted that some stakeholders felt that they were not consulted on specific clauses of the Bill. There had also been concerns around consultation on the NCEMS. She conceded that perhaps the consultation could have been wider and better. Overall consultation had taken place. Certain stakeholders did feel that enough had not been done on certain provisions of the Bill.
Mr B Nthebe (ANC, North West) asked whether the 2008 Amendment Act would be resuscitated with the Bill or with a future bill. Alternatively, would the 2008 Amendment Act be discarded?
Dr Masotja explained that the intention initially was to have interactive gambling. However, parliament decided to look at gambling holistically. The policy decision was now to prohibit gambling. For now online gambling was prohibited. The idea was not to repeal the 2008 Amendment Act. She pointed out that there was a huge outcry from some provinces to allow online gambling. The issue of online gambling still needed much discussion. There were some concerns around the social ills of online gambling. For one the concern was that children could participate in online gambling unbeknown to anyone. Was the South African society ready for online gambling? She said that control measures for online gambling needed to be strengthened.
The Chairperson stated that in provincial public hearings on the Bill members from the public had not participated. The Bill was intended to benefit punters. He also asked about the future of the 2008 Amendment Act. He stated that since 2008 the virtual space had greatly changed. How would one legislate the virtual environment? He concluded that there was no need to be overzealous to tie up the 2008 Amendment Act. He read out the Report of the Committee which invited provinces to furnish final mandates on the Bill.
The Committee agreed to the Report of the Committee.
Minutes dated 20 February 2019 was adopted.
The meeting was adjourned.
- DTI - responses to Stakeholder Submissions
- Summary of Written Submissions on National Gambling Amendment Bill [B27B-2018]
- Banking Association South Africa submission
- Oral submission
- Bingo Association of South Africa submission
- Gold Circle (Pty) LM submission
- Cliffee Dekker Hofmeyr submission
- lthuba Holdings RF (Proprietary) Ltd ("lthuba") submission
- South African Bookmakers' Association submission