National Gambling Amendment Bill: Department response to submissions

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
23 August 2007
NATIONAL GAMBLING AMENDMENT BILL: DEPARTMENT RESPONSE TO SUBMISSIONS

Acting Chairperson: Prof B Turok (ANC)

This meeting was not recorded

SUMMARY
The Committee looked at basic principles and issues raised at the public hearing. The Department’s legal drafter replied to the proposal that Interactive Gambling should not be legislated on by means of an Amendment Bill but by way of a completely new Bill. He also looked at the potential discrepancy between provincial gambling licences and the Interactive Gambling licence that would be on a national scale. The National Gambling Board was not in favour of extending the current licences of the casinos to include Interactive Gambling. Other issues responded to were under-age persons, the obligation to confirm the probity of the licence holders and operators, money laundering, external Interactive Gambling service providers, indebtedness and the poor having access to Interactive Gambling and being subject to advertising from Interactive Gambling providers. The Department agreed to present a working draft of the Bill with the various proposed amendments on the 29 August.

MINUTES
The Acting Chair noted that the meeting was in response to the issues raised at the hearing on the National Gambling Amendment Bill the day before. He was of the opinion that this was insufficient time for the Members to have considered all aspects and ramifications of the principles involved and so he proposed that only the broad issues be looked at.

Mr Johan Strydom, Legal Advisor: Department of Trade and Industry (DTI), began by looking at the submission that suggested that this matter of Interactive Gambling should not be undertaken by means of an Amendment Bill but by way of a completely new Bill. He referred to the currently enacted Gambling Act and the provisions therein, both by way of the Definitions and the Act itself that envisaged provisions to be made for Interactive Gambling. He continued that it was not for the legal drafters to pre-empt Parliament but to proceed according to the stated intentions of Parliament as reflected in legislation. If Interactive Gambling was regarded as of such an advance that a dedicated or special Act was required then Parliament itself should indicate this but in the meantime, because of provisions within existing legislation, the subject of Interactive Gambling should be dealt with by way of an amendment to the existing Act. He pointed out that in gambling the only exception was the Lottery. This was covered by a separate Act, and for good and proper reasons Government wished to retain this both as a special category of gambling and as a monopoly. All other gambling be it Horse Racing, Casinos, Bingo or Interactive Gambling was gambling and had to be regarded as such, and treated accordingly by means of one Act.

Prof B Turok, interim Chair, interposed that nevertheless there were fundamental issues about Interactive, or as he preferred to term it Internet, Gambling which were troubling the people.

Mr Strydom continued that this Amendment Bill was designed to cover a legal vacuum, or to be the power in a present legal vacuum. With regard to the “conflict” or potential discrepancy between provincial gambling licences and the issue and regulation thereof and an Interactive Gambling licence which would be on a national scale, he referred to the provisions in the current Act. These provided for a National Licence and asserted that the current Act overrode certain provincial powers. He continued that the Bill was not designed in a vacuum but had been drafted in accordance with existing powers.

Mr Chris Fismer, National Gambling Board chairperson, expressed the view that the Board was not in favour of extending the current licences of the Casinos to include Interactive Gambling. He pointed out that no other land-based gambling licences contained this right and the National Gambling Board was of the opinion that the Interactive Gambling Licences should only be awarded to fit and proper persons with the expertise.

The question of the taxation of Interactive Gambling was referred to, and there was reference to national Treasury having been consulted and working in close association but the Bill did not provide for special taxation of Interactive Gambling as this was not regarded as similar to the National Lottery. However National Treasury was considering a separate Interactive Gambling Taxation Bill.

On the question of gambling exchanges, Mr Fungai Sibanda, DTI Chief Director, conceded that such were complex and expressed the wish that the Department be allowed to reconsider this aspect and return with proposals at the meeting scheduled for 29 August.

With regard to age verification and the fear that under-age persons would be able to be players of Interactive Gambling, it was pointed out that the current regulations in terms of the existing Gambling Act required licence holders to verify the age of the participants and these regulations would cover the Amendment.

The acting Chair, Prof Turok, intervened and noted the earlier agreement to consider only general principles that day. It seemed that there was a movement towards the minutiae and he wanted to know whether this was going to be done then, or later as he understood the agreement.

Mr L Labuschagne (DA) then said that he had listened carefully to the Legal Advisors and others and their reasoning as to why there was an Amendment Bill to the Gambling Act. He was of the opinion that a New Act, not an Amendment to the Act, was required because Interactive Gambling was part of IT and the Internet, which was such a rapidly changing field, in which today made yesterday obsolete, not to mention tomorrow. He referred to the information that Interactive Gambling had created 300 new jobs in the United Kingdom but pointed out that some local Casinos employed more than 300 waiters and he felt that there should be a distinction between de facto and rights. He felt concerned that Treasury should be contemplating a Special Interactive Gambling Taxation Bill, when there could not be a Special Interactive Gambling Bill.

The DTI Chief Director responded by repeating that the National Lottery fell within the authority of the State by way of special arrangements but that all gambling, or other gambling fell within private spheres and there was an obligation to confirm the probity of the holders and operators of any gambling licences.

Prof Turok expressed his agreement with this approach.

Mr Strydom conceded that Parliament may well have a different approach and attitude, but that at present the Legal Advisors were guided and controlled by existing legislation. When they were instructed differently they would respond differently.

Mr Labuschagne wished clarification as to whether the British covered gambling and especially Interactive Gambling with one Act or two.

Mr D Olifant (ANC) wished the Department to respond in due course to the concerns raised and the representations made at the meeting on the previous day.

The Acting Chair expressed the view that a decision had been made not to canvass views at today’s meeting.

The DTI Chief Director explained that the intention was to operate the Amendment to the Act in conjunction and co-operation with the other regulatory authorities, especially the Financial Intelligence Centre to prevent money laundering. In terms of the Financial Intelligence Centre Act (FICA), all clients of banking institutions had to be properly identified and it was in terms of these regulations that credit cards were issued. Without a credit card, no one could participate in Interactive Gambling. In signing up with an Interactive Gambling licence holder, an account for the withdrawal and payment towards was required to be nominated and such had to accord with the player’s details. Thus there could not be an instance of a potential money launderer signing up for playing and then ordering that another unidentified account be the recipient of funds.

Prof Turok interrupted to explain that he had been a member of the Finance Portfolio Committee at the time of consideration of the FICA Act and this Committee had received representations from many interested parties and authorities including American and had been satisfied that the regulations passed had covered all eventualities. He recalled that at that time Interactive, or Internet, Gambling had been considered. He was of the opinion that anyone who wished to play would have to identify him/herself but conceded that there was always the possibility of fraud. 

Mr S Rasmeni (ANC) said that he felt the regulations would be the same as those for online banking and that there should be a risk analysis approach.

Prof Turok felt that all parties needed to be on the same wavelength and that Treasury needed to be very sensitive and that this question could not be left to the service provider.

A Member pointed out that there had been a meeting the day before at which they had been provided with an abundance of documentation, over 170 pages, and that there had been insufficient time to study such.

The Acting Chair asked the DTI officials what time frame there was for the return by the officials with a re-worked presentation. He added that while the Committee did not want to bulldoze the department neither did it want to be bulldozed.

Various members interjected and stated their concerns with the principles of the Bill and the Acting Chair stated that he felt that a systematic approach was required so that they could work in a proper manner. He did not want to be a rubber stamp.

Mr Strydom, the Legal Advisor, then addressed the question of internal and external Interactive Gambling service provider. He said that there was a specific requirement that foreign providers should be registered in the Republic of South Africa, to have a footprint within the RSA and that their records should be retained within the RSA. In terms of any contractual relationship, provision was made that domestic law should prevail.

Mr Labuschagne sought clarification on requiring a foreign operator to post a guarantee bond, to secure compliance with any RSA judgments against a foreign service provider.

Prof Turok was of the opinion that the banking provisions regarding foreign banks having an operational footprint in the RSA, might well be appropriate. Mr Strydom undertook to consider the suggestion and revert to the Committee.

The DTI Chief Director referred to question of over-indebtedness and the question of the poor participating in Interactive Gambling. He conceded that the initial approach or view was that there would be no problem as Internet access had been limited, and the poor excluded. However, computers were becoming more available. Shortly it was intended that every school would have computers. Additionally the poor did not have credit cards which was another entry barrier, and also players when signing up for Internet Gambling were to provide limits beyond which there could be no gambling. However, he felt that the Department could look at this aspect afresh. Equally, with regard to advertising, the 2004 Act made provision for this but this was a policy decision and should be looked at afresh.

Mr D Olifant (ANC) wished for a new look at the definition of the poor, who defined the poor and he was concerned that today’s definition could soon be history. Another Member interposed and said that she felt that she was one of the poor yet she had a credit card and wanted the question of gambling indebtedness to be viewed alongside National Credit Act.

In the light of the concerns expressed about the poor having access to Interactive Gambling and being subject to advertising from Interactive Gambling providers, it was agreed that at the next meeting the DTI would present the current Bill with the recommendations from the submissions. Included. At that meeting there could be an itemised point by point discussion of the Bill, together with each and every representation made about every clause where applicable.

The Acting Chair concluded that it was clear that many people had concerns about this Bill and that as this was a People’s Parliament, it was incumbent upon the Members to take the views of the public into account when considering any legislation.

Meeting adjourned.