National Gambling Board B-version: DTI briefing

Meeting report

The Chairperson welcomed everyone and extended apologies for running late. She thanked the Permanent Delegate as well as the National Department of Trade and Industry. This meeting will be dealing with the National Gambling Amendment Bill B 27B-2018 (Section 76). She said she would allow the Western Cape delegate to do an introduction before handing over to the National Treasury. The aim was to review and discuss the unusual process regarding the National Gambling Amendment Bill B 27B-2018 (Section 76) and also to answer a few questions regarding the Bill.

Mr J Londt (DA, Permanent Delegate of the NCOP; Western Cape) said that nothing has been changed on this Bill. A mandate has been received. His job was now to allow the Western Cape Provincial Parliament and this Committee to give a mandate again to the Select committee. He said that it was an interesting dilemma that the Select Committee and the Department are submitting the same Bill with no changes and they are expecting the same results.

Briefing on the National Gambling Amendment Bill B 27B-2018 (Section 76)

Mr Klaas Mokaba, Deputy Director of Consumer Law and Policy: Department of Trade and Industry, said that he would take the Committee through the presentation with the same information and the same Bill which had been presented earlier this year. He would then leave it to the Committee to take their decision in this regard. He would be joined by his colleagues from the Gambling Board. He expressed appreciation for the opportunity to be here to brief the Provincial Legislature on the National Gambling Amendment Bill. This has been outstanding for some time. The process to brief all the provincial legislatures throughout the country has actually started. Just by way of a background, before 1994, South Africa did not allow gambling; only horse racing was allowed. The TBV states had their own legislation that regulated gambling. After 1994 a debate sparked on whether we should regulate gambling as a country. The TBV states and the Transkei had their own legislation that was regulating gambling. In 1995, a commission was appointed to decide whether South Africa had to regulate gambling. The Commission came back with the recommendation that South Africa needs to have strict regulations on gambling. That Report was given in 1995. The process led to the promulgation of the National Gambling Act in 1996 which also made provision for the establishment of the National Gambling Board, the structure that is managing or implementing the National Gambling Act. As time went on, there was a need in 2004 to review or to reform the same Act that was promulgated in 1996.

After that, the National Gambling Policy Council was instituted in order to coordinate gambling in the country between both the provinces and the National Government. The National Gambling Policy Council is a very important body in terms of the coordination of policies surrounding gambling. It also happened that in 2008, an Act was passed which allowed interactive gambling where one could gamble over the internet, but that particular Act did not really see the light of the day as it was not implemented. There were a number of issues that were proposed in terms of that particular Bill. There was also a need to look further so that gambling could be properly regulated in the country. The Gambling Review Committee was then appointed. It then actually made recommendations which resulted in the current Bill which was before the Committee today, the Bill that the Committee was actually trying to amend, the 1996 gambling legislation.

There are various reasons why gambling was important for the country. The first was for revenue collection, and the opportunity to generate tax that could be collected from gambling revenue. The other reason was that gambling was good for economic empowerment, growth, development and employment. That was the background to why gambling was still recognised in the country.

There was a proposal to review the gambling Bill – which was promulgated in 1996 - which was actually published for public consultation sometime around May 2015. That policy was then adopted in Cabinet in 2016. Flowing from that, the Bill was then developed, drafted, and actually published for wider public comment around 2016. The process proceeded as far as 2017 until the Bill was certified. It was then introduced into Parliament sometime around August 2018. If one looked at the current Bill it can be seen that a number of revisions had been made. There were a number of pressing priority issues that needed to be addressed and the end result was the Bill developed last year in 2018. At present there was now a reduced version of the Bill because the Portfolio Committee felt that because of time, they were not able to deal with a number of the provisions that were contained in the Bill. It was actually important for the Portfolio Committee and the Department to just focus on the key priority issues that are in the Bill.

Early this year the Committee actually commenced with a process of the briefing after it was actually introduced into Parliament. The briefing of Committees as well as the Provincial Legislatures happened sometime around February and March this year.

Mr Mokaba said that from 2018 to 2019, the amount of revenue generated in the industry totalled around R30 billion, with the Gauteng Province grossing most of the revenue at 41%. In terms of revenue generated they were actually followed by KwaZulu-Natal (KZN). The Western Cape was the third in terms of generated revenue and accounted for 17.2%, which was about R5 billion in terms of revenue collected through the gambling industry. When one looked at the revenue collected from 2017 to 2018 compared to 2018 to 2019, there was some consistent growth of revenue which was actually good for the country.

If one looked at the slides, the bluish part of the pie shows the Gauteng Province with 41 %, the green part shows the Western Cape sitting at 17.2%, and the red part shows KZN which was number two in terms of revenue collection within the gambling industry. In terms of the collection of taxes which is one of the benefits from gambling, this is the money which goes to the fiscus. It amounted to about R30 790 766 660 and because there was a tax of 10% that was actually taken from the collection of this particular revenue. For the 2018 to 2019 financial year, the Western Cape contributed about R5 295 882 784 in taxes collected from the revenue generated in the gambling industries. Casinos are contributing to most of the revenue collected.

Currently, the Western Cape has a total of 38 Casino licenses that are operational out of the 51 that are actually allocated for the country. The key to the Gambling Amendment Bill is the establishment of the National Gambling Regulator which is a structure that actually replaced the current Gambling Board. The Bill also provides for a procedure in terms of the forfeiture of unlawful winnings where it empowers the National Gambling Policy Council to take decisions away from the quorum. This was going to be proposed in the next meeting regarding the Bill to provide that a decision could actually be taken without a quorum. This was one of the amendments that the Department would be introducing in the Bill.

Another rationale of the Bill is to include Casino’s away from the Medium Payout Machines (MPM’s) so that this monitoring system is extended to other modes of gambling. This would enhance the powers of the National Inspectorate to deal with issues regarding compliance and enforcement of the legislation especially to empower the Inspectorate to deal with illegal gambling. I am going to take you through the few processes which are actually amending the further provisions in the current National Gambling Act.

Mr Mokaba said that the insertion of Clause 10 provides for the registration of unlawful operators for disqualification to actually obtain a new licence in the next five years. There will be regulations that will indicate how this particular process will actually unfold in order to give effect to this particular provision.  

Section 14 - which allows for the removal of persons from marketing by operators – will be amended. Those people actually excluded will not be able to receive any marketing material from any marketing operators. National Central Electronic Monitoring Systems should be extended to other modes of gambling, for example, casinos and Bingo playing machines.

The other clause that was introduced would be the amendment of Section 16(4) which would actually make provision for unlawful winnings. The proposal was that initially, in any unlawful winnings, the money acquired must be forfeited to the state. The amendments would include that any unlawful winnings should be forfeited and given to the National Gambling Regulator (NGR), the current gambling board. The intention was to empower the NGR to be able to enforce the legislation. This money can be used to actually deal with enforcement issues, hence, the proposal that any unlawful winnings should be forfeited to the regulator and no longer the state.

A Section 6A will be inserted which will empower the National Gambling Council - this is a body that actually coordinates all gambling activities - to make decisions especially if they were not able to form a quorum in the previous meeting.

One of the key provisions in the Bill is a proposal that the current structure of the board should actually be replaced by the Chief Officer (CO). The NGR made this proposal as they were actually advocating for the total removal of the board structure. The DTI was making a proposal that even the National Gambling Board should be led by a CO other than a board. The current board structure is to be removed completely.

The DTI is proposing that the CO should be appointed for a period of five years which is renewable with qualifications and requirements to be met for one to be appointed as a CO of the NGR. Provisions have been made for the functions of the CO with management functions and any other functions. The CO will actually be the Accounting Officer of the NGR and all the management and administrative functions would rest in the office of the CO. The CO will also be assisted by a Deputy CO who would take over in the absence of the CO.

In terms of intergovernmental relations, Section 66A will be introduced in the legislation to encourage the NGR to tie relationships with similar entities and government departments both national and provincial. This will also entail that the NGR will have to enter into some agreements with those institutions. That would include them establishing some form of working forums between the NGR and those entities.

It is very important that the current National Inspectorate be empowered to investigate any cases of illegal gambling. That is why in terms of Clause 40 another provision which is Section 76A will be inserted which should give additional powers to the National Inspectorate to deal with enforcement and compliance issues. An example of one of the proposals that was being made was in terms of this particular provision which was to allow the National Inspectorate to enter any province and conduct any inspection with or without Provincial Inspectors. However, there will be some communications with the Provincial Inspectors with for example the National Inspectors who will be conducting any particular inspections in their absence. If the Provincial Inspectorate is not available, then the National Inspectorate will be empowered to proceed and conduct an inspection in the particular province. Furthermore, the Inspectorate will be empowered to issue notices to Operators, especially those that are operating illegally to stop their operations. These are the other methods being proposed to empower the National Inspectorate.

In terms of the consequential amendments in the legislation, they should only relate to references made to boards which must be replaced by the National Gambling Regulator (NGR) or the CO, whatever the case may be. The entire board structure is to be removed and replaced by the office of the CO. Regarding the regulations to ensure that this Bill becomes operational; this is the responsibility of the Minister of Trade and Industry. 

In terms of transnational arrangements, this talks about the current staff of the National Gambling Regulators. An appeal was made to the Provincial Legislature to note this presentation by the Department on the National Gambling Amendment Bill.

Discussion

The Chairperson thanked the Department and mentioned that the Committee was going to discuss two segments. The first was the questions on the subject matter and the process going forward. He asked if this information on the Bill was different from the previous one.

Mr Mokaba replied that yes it was, provided that it was still the same Bill that the Committee was briefed on in February and March this year. There have been no changes to that.

Ms N Nkondlo (ANC) mentioned that she wanted to understand the National Inspectorate and the additional powers proposed. ‘What will the relationship be of this particular function to the broader set of security functions right down to the local government within provinces and various problems of crime which includes illegal gambling which is found happening informally in some clubs or corners in the township’? ‘What is the relationship between such issues and the SAPS’?  She referred to page 26 where rationalisation in the cost argument was discussed. She asked if there was a copy of that particular study available so that one could have an insight into the issues that are raised as part of the research. ‘What is the structure of accountability of the CO itself when one looks at it from a governance point of view’?

One of the matters discussed as a policymaker was the custodianship of the gambling board. For example, in her province it was the Treasury. She said that she just wanted to understand the location. ‘Is it a standardised thing that will be located in the Treasury instead of in the Department of Economic Development’? In trying to find out from the National Act she asked if it was optional for provinces to make their own determination of where the gambling function should be hosted.

Mr Mokaba replied that he was going to take one question relating to the availability of the study that was conducted on Agency Rationalisation. His colleagues from the National Gambling Board would also take other questions. They would enquire from the Department if they were able to make the particular study available to the Committee.

Ms Caroline Kongwa, the Administrator of the National Gambling Board, apologised for being late. She was joined by the Chief Operations Officer Ms Poppy Kweyama. The Senior Manager, Mr Shelton Pagiwa sent an apology. She said she would answer the questions in the reverse order the first one being on the NGPC and custodianship of the gambling board and whether it is optional. She said that they did have similar questions from other provinces especially when they were suggesting that the board structure be changed to that of the CO. The reason why they were considering that is for internal efficiencies and there is no obligation for the provincial gambling board to change their structures as well because provincial boards are adjudicating licences. That is one of the reasons why they were more efficient and effective having the commission style or CO structure as opposed to a board and they have been operating that way with an Administrator in the office. The decision at the end of the day would be the consideration of the legislature as to how, and one would want to derive a tool towards economic development from licencing.

In provinces, the gambling board may have reported to the Treasury or the Department of Economic Development and she referred to slide 5, considering the National Gambling Boards Report into the DTI. There are various things which are considered, especially on the last bullet when it comes to economic growth, development and employment. They were also continuously checking issues of transformation in the gambling industry and BBBEE where one was trying to ensure that these licences that are awarded actually provided opportunities for HDI’s to take part in the mainstream economy through obtaining a gambling licence and being able to create jobs. On the question regarding the National Inspectorate and additional powers and the relationship with the SAPS the good thing was that there are good relations from an intergovernmental point of view.

Currently with what there is in place, if these provisions actually go through, it will solidify and enhance what there is. In terms of the National Gambling Act, whether it's National Inspectors or the provincial inspectors, the NGB has the power to inspect the gambling establishments. The board is deemed to have Chief Officer status; however, it does not exercise that power until it gets approval from the Minister of Justice and Constitutional Development. The NGB currently does rely on the SAPS, so when a gambling-related crime is then committed, a case is opened and reported to the SAPS. The SAPS goes about the investigation and they work with the board to collect evidence and then they will hand over to National Prosecuting Authority for prosecution.

In terms of coordination, the NGB has been working closely with the National Commissioners Office and a National Joint Committee has been set up. From the National Joint Committee where the National Commissioner sits, there is another committee where the board works with the commissioner’s office. Provincial Commissioners have then set up provincial committees. That is what was currently  in place and then provincial committees were comprised of provincial officers, the provincial gambling board, the national gambling board and other stakeholders who are involved to assist with illegal online gambling and they then sit together and find out if there is an establishment that needs to be raided or closed down.

The Chairperson asked if the provincial department has anything that they would like to add for the Committee to consider.

Mr Claire Horton, Western Cape Provincial Treasury, mentioned that she does not think they would like to brief the Committee at this stage.

The Chairperson said that she had a question about the revival process but was not sure if it pertained to legal advice or something the NCOP through the Mr Londt may need to take up. She had read about two revival mechanisms but only one on the NCOP and she was not sure if there was a second one and that was something the NCOP needed to look at, whether the revival has been appropriate.

Mr Londt mentioned that there are other people that got paid a lot more and he did raise this with the Chair on whether the right process was followed, but, there were some concerns about this process. He said that he could get lawyers to provide opinions.

The Chairperson suggested that the National Gambling Board and the Department be allowed to go and the Committee will discuss the processes going forward. The Committee will also discuss if as a province they wanted to do the process over again or go through the mandate that was given previously and see whether there was agreement or disagreement. If there was agreement they could reconfirm this particular mandate and forward it and if there was disagreement they could discuss the process going forward.

Ms Kongwa mentioned that they did not answer the question on the accountability of the CO. In terms of the Bill, it would be similar to what the NGB had in place. In terms of accountability, the CO would be in terms of the National Gambling Board, accountable to the Minister. In terms of the PFMA, the accounting authority was also accountable to the National Treasury and also accounts to the Minister, and then there is also accountability to Parliament. The requirement to report to the Committee and then to the ordinary government structures are in place. For example, an Audit Committee would also assist in terms of the reporting and working with the AG. Then there is the Provincial Committee which is the Stakeholder Priority Committee for Addressing Illegal Gambling.

The Chairperson thanked the Department for the presentation.