Provincial Treasury & WC Gambling and Racing Board on Corporate Social Investment initiatives included in the casino licences

Meeting report

The Chairperson welcomed Members, officials from the Western Cape Provincial Treasury, and officials from the Western Cape Gambling and Racing Board (WCGRB), noting the presence of its chairperson, Mr Claude Bassuday, and Mr Primo Abrahams, its Chief Executive Officer (CEO). He noted an apology from the Member of the Executive Council (MEC), Ms Diedre Baartman, who was unable to attend the meeting, and the Head of Department, Ms Juliana Gantana.

WCRGB Casino corporate social investment presentation

Mr Robin Bennett, Head of Department (HOD): Regulatory Compliance, WCGRB, began his presentation by explaining that the focus would be on the corporate social investment (CSI) contributions made by casino licence holders, as part of their bid commitments, which formed part of their licence conditions. He noted that gambling activities offered by these licence holders were governed under the Western Cape Gambling and Racing Act. The WCGRB was tasked with regulating all gambling activities and related matters, with the authority to impose, amend, suspend, or revoke licences based on the performance of licence holders.

While ensuring that responsible gambling practices were a priority when issuing licences, this responsibility extended beyond CSI projects. It included reviewing the areas where gambling services were provided, particularly considering the proximity of sensitive locations. When applicants submit proposals, their commitments to CSI funding are evaluated as part of their application, and once successful, these commitments are incorporated into their licence conditions.

Mr Bennett highlighted that in addition to the CSI initiatives required from applicants, the successful applicant in the metro was obligated to contribute R135 million, which was allocated to the establishment of the Cape Town International Convention Centre (CTICC) and the development of youth through academic initiatives. Other successful applicants also contributed to community projects, although the WCGRB did not prescribe specific CSI projects, leaving it to the discretion of the applicants during the competitive bidding process. Many of the projects supported by casinos included previously disadvantaged individuals (PDIs) or historically disadvantaged individuals (HDIs), and the funding of specific community trusts benefiting the areas surrounding the casinos.

He presented a table showing the financial contributions of casinos to CSI over the years. In the first five years, when not all five casinos were operational, the contribution amounted to R9.3 million. From 2006 to 2010, when all five casinos became operational -- Golden Valley in Worcester being the last to open -- the contribution had risen to R71 million. Between 2011 and 2015, it was R68 million. From 2016 to 2020, including part of the COVID-19 pandemic, the contribution was R88 million, and from 2021 to 2023, it was R27 million.

Mr Bennett added that, in addition to the corporate social responsibility (CSR) contributions specified in their licence conditions, each live casino operator had to contribute 0.1% of their gross gaming revenue to the South African Responsible Gambling Foundation. This organisation provides free education and training to the gambling industry, and offers free treatment for individuals with gambling addiction. It also runs educational and outreach programmes across South Africa, with recent campaigns targeting senior schools. Additionally, the foundation has introduced a programme called “Taking Risks Wisely”, linked to mathematics lessons, into the school curriculum. For the 12-month period ending 31 March 2023, casinos had contributed R2.6 million to the South African Responsible Gambling Foundation under the 0.1% requirement.

Mr Bennett also noted that the Board imposes additional financial CSR contributions on casino licence holders who request an increase in their gambling facilities, such as slot machines or gaming tables. He pointed to a notable instance in 2006, when GrandWest Casino and Entertainment World had requested an increase in their slot machines from 1 750 to 2 500, resulting in a substantial additional payment beyond their CSR obligations.

Mr Bennett elaborated on the varying licence conditions for casinos, which often include community-based projects, such as maintaining access routes to religious sites, and ensuring the involvement of PDI or HDI in shareholding arrangements. These shareholdings benefit the communities in which the casinos operate, with dividends guaranteed to community trusts, which were used for community projects, bursaries, educational needs, and social development initiatives.

He also explained the financial commitments of the casino licence holders, which included contributions such as 2% of pre-tax profits, along with additional sums paid to the local tourism authority. In some cases, licence holders contribute 5% of pre-tax profits, or 1% of turnover, to community trusts. Many casinos also make financial donations to various causes, often through an emergency fund set aside for disaster relief in the event of flooding or other calamities.

Over the past 20 years, five casinos have collectively contributed R265 million to CSR initiatives. However, Mr Bennett acknowledged that contributions had dropped significantly between 2021 and 2023 due to the COVID-19 pandemic, which led to reduced operating hours and, in some cases, the complete suspension of operations.

The types of projects funded by casinos included early childhood development (ECD), infrastructure maintenance, the provision of teaching aids, and the refurbishment of educational facilities. Casinos also funded uniforms, backpacks, schoolbooks, and tutoring programmes for students. For tertiary education, bursaries and tutoring services have been provided. In terms of social services, contributions supported the National Sea Rescue Institute, day clinics, disaster recovery, safe houses for abused mothers, and shelters for abandoned babies. Other projects included funding for the rehabilitation of disabled persons, animal rescue shelters, community infrastructure projects, and feeding schemes.

Mr Bennett emphasised that the WCGRB exercises oversight of these CSR initiatives through regular audits to ensure compliance with the licence conditions. The Board also reviews quarterly reports on the projects funded by licence holders, and Board committees visit these projects to assess their impact. He concluded by noting that numerous positive reports had been received from school principals, particularly in the metro, who attributed improved matric results to the support provided by casino funding, which had helped to provide essential facilities for Grade 12 learners.

[See attached for full presentation]

Discussion

Mr N Constable (PA) raised concerns regarding the geographical distribution of projects funded by the Board. He requested a list of these projects and their specific locations, as it appeared that the focus was predominantly on the metro. He emphasised that the Western Cape was much larger than just the metro area, and since the Board was funded by the provincial government, he would like to see a broader distribution of projects.

Mr N Masipa (DA) acknowledged the good work being done by the Board in its corporate social investment efforts. He supported Mr Constable’s point, highlighting the importance of oversight by Members of Parliament. He suggested that seeing some of the projects in person would aid in fulfilling their oversight responsibilities and make their work more efficient.

Responses

Mr Bennett explained that the five casinos in the Western Cape -- located in different regions such as the Overberg, the Southern Cape, the Breede Valley, and the West Coast -- funded projects in their respective areas, covering much of the province. However, he agreed that details of these projects could be made available. He also mentioned that the funding came from the licence holders, not directly from the Board, and was sometimes restricted by the terms of the trust deed, which may limit funding to specific regions or projects.

Mr Constable clarified that the five regions mentioned by Mr Bennett did not cover the entire province, specifically noting the absence of funding in the Central Karoo. He requested further clarification on what was being funded in that region.

Mr Bennett acknowledged this point, and assured Mr Constable that the Board would review its records and provide the requested information, noting that funding decisions were often based on the trust deed obligations of the licence holders.

The Chairperson thanked Mr Bennett and the entire team from the WCGRB for their presentation and participation.

Mr Bassuday also expressed his gratitude to the Committee for the opportunity for the WCGRB to present and engage with the Members' questions.

After this, the officials from the WCGRB and Provincial Treasury were excused from the meeting, allowing the Committee to proceed with administrative matters.

Committee Matters

The Chairperson recalled that during the previous meeting, a request had been made for the WCGRB to present on their corporate social investment projects. He commented that the presentation had been concise, and invited Members to add any topics or requests for more information to the list of resolutions and actions.

Resolutions/Actions

The Chairperson said the Procedural Officer would oversee the resolutions and actions. He asked Mr Constable if he wished to formally propose adding his earlier request regarding the Central Karoo to the Committee’s agenda.

Mr Constable confirmed this, stating he wanted a list of projects funded by the casinos, particularly in the Central Karoo. He also asked for information on the process by which a casino could be established in the region, which could then contribute to local social projects. He stressed that the WCGRB received grants from the provincial government, and should ensure that funding benefits students and projects across the entire Western Cape, not just the metro.

Mr Masipa raised concerns about the idea of expanding gambling into the Central Karoo, cautioning that it might not benefit the community due to the socio-economic challenges in the region. He acknowledged that gambling could be an economic driver, but he also pointed out its potential drawbacks. However, he supported Mr Constable’s request for information on current projects funded in the area, and encouraged the WCGRB to consider adopting additional projects in the Central Karoo.

The Chairperson clarified that the Committee had no authority to establish casinos, and assumed that Mr Constable was merely seeking information on existing programmes in the region.

Mr Constable clarified that his remarks were not intended to debate with Mr Masipa, but to express his frustration over how the Central Karoo was frequently overlooked by the provincial government. He stressed that investments, such as casinos, could benefit the region, particularly in helping municipalities generate revenue. He highlighted the Central Karoo’s financial struggles due to its small population base, suggesting that such investments could bolster its economic sustainability. He also emphasised that the WCGRB, which receives provincial grants, should benefit the entire province, including the Central Karoo. He concluded by reiterating his request for a list of projects funded by the Board and his desire to explore how the Central Karoo could be included in these initiatives.

The Chairperson suggested that the resolution could be rephrased. Instead of making the request area-specific, they could ask how decisions were made regarding which areas to consider for opening a casino.

Mr D Wessels (DA) suggested asking the WCGRB to provide a development plan that outlines how they foresee the gambling industry evolving in the Western Cape. He pointed out the need to address the revenue losses caused by online gambling and proposed that this resolution could offer the Board the chance to explain its plans for different areas. It would also provide insight into the potential impact on provincial revenue, and how they intended to counter the downward trend.

The Chairperson acknowledged that Mr Wessels' suggestion aligned with the earlier points.

He then summarised the resolutions under consideration:

• Firstly, Mr Masipa’s request for details on whether the Central Karoo had ever been considered for casino licences, and if not, why;
• Secondly, Mr Wessels' proposal for a business plan or strategy to address the growth of the gambling industry; and
• Thirdly, a broader development plan.

Mr Wessels further clarified his intention, stating that the goal was not to focus on a specific region but to gain a comprehensive understanding of how the WCGRB envisioned the development of the gambling industry across the province. He stressed that the Committee could delve into specific regions during the questioning phase. His resolution sought to request the Board’s perspective on the future of the industry and how they intended to counter the declining revenue from current gambling systems.

The Chairperson thanked Mr Wessels, and confirmed with Ms Zaheedah Adams, the Procedural Officer, that the resolution had been noted.

Ms Adams confirmed that she had noted the resolution.

The Chairperson then returned to Mr Constable’s earlier question about corporate social investment initiatives, specifically those concerning the Central Karoo. He clarified that Mr Constable’s inquiry was not related to opening a casino, but to establishing if there were any CSI projects within the Central Karoo. He invited further comments from Members, particularly regarding Mr Constable’s resolution.

Mr Wessels added to the resolution by asking whether the corporate social responsibility contributions correlated with the income generated in a specific region, such as a casino in that area, or if all funds went into a central pot before being distributed. He expressed concern that the various projects might not be directly related to the revenue generated within a particular region.

The Chairperson thanked Mr Wessels for his input, and invited other Members to propose any resolutions or requests for further information.

No further proposals were raised.

Adoption of minutes

Minutes dated 13 August

The Chairperson moved on to adopting the draft Committee minutes from the meeting held on 13 August.

The minutes, which included presentations from the Gambling and Racing Board and the Provincial Treasury, were reviewed. After confirming that the minutes had been circulated to all Members, the Chairperson called for a proposer and seconder for their adoption.

Mr Masipa proposed, and Mr Constable seconded.

The meeting was adjourned.