South Africa Looking to Strengthen Gambling Laws

The “Rainbow Nation” of South Africa is looking to revamp its existing gambling laws. On Friday, July 20, 2018, Minister of Trade and Industry Rob Davies introduced the National Gambling Amendment Bill to Parliament. This legislation has been in the works since 2016, going through various drafts and revisions before the current text was announced.

Current Landscape for Gambling in South Africa

Real money gaming in South Africa is governed by the 2004 National Gambling Act. The most prevalent form of gambling is the national lottery, which is run under contract by an organization called ITHUBA. Casinos are also quite popular with close to 40 of them in business, while limited payout machines across the country offer slot-style gameplay with a restricted maximum bet, even in those areas that lack a casino. Meanwhile, racetrack and sports betting is widespread, and even bingo games can be found, although it’s a small sector with only a few dozen halls in existence.

These forms of wagering activity are governed by the National Gambling Board except for the lottery, which falls under the jurisdiction of the National Lottery Commission. However, each of the country’s nine provinces also maintains its own gambling oversight body, and therefore, regulatory power is shared between the national and provincial levels of government. It’s against the law to operate a gambling enterprise without a proper license from one of these agencies.

What About Online Gambling?

Perhaps surprisingly, there are forms of online gaming permitted in South Africa, but they are restricted to sports betting, race betting, and the lottery. Needless to say, only licensed businesses are allowed to offer these products over the internet, meaning those players who wish to participate in casino and poker games online are out of luck unless they frequent an offshore site.

Unfortunately, these international websites are against the law. A 2008 amendment to the law related to license games of chance over the internet was never implemented, and in 2010 a court case definitively ruled that online gaming is illegal unless conducted by a South Africa-licensed entity.

Unlike most jurisdictions that penalize operators while leaving individual players alone, South Africa has penalties for those who partake in as well as those who host illicit online gaming. Fines can reach as high as 10 million rand (about $750K), and there’s the possibility of up to 10 years in jail.

Actual sentences tend to be much less harsh, but the law is enforced albeit sporadically. In May 2017, for instance, several gamblers had their winnings from internet sites confiscated. The seriousness with which these offenses are taken can perhaps be understood by looking at the website of the National Gambling Board. At the bottom of its site, there appears the following warning:

“Online gambling is illegal in South Africa

Except online betting through bookmakers licensed in South Africa for online betting (e.g. sport events and horse racing)

– If you gamble online, your winnings will be confiscated by your bank before they reach your bank account.
– You will not receive your winnings.
– You will be investigated and could face criminal charges – this will impact the rest of your life.”

The Board is perhaps overstating its case because only a handful of people have ever been prosecuted for internet gambling-related infractions. Still, the theoretical possibility remains of facing charges for the crime of enjoying casino titles or poker tables online.

Proposed Changes

The National Gambling Amendment Bill aims to create a stricter environment for South African gambling. The National Gambling Board will be rechristened the National Gambling Regulator (NGR), and its inspectors will be given broader authority. Perhaps indicative of a new focus for the organization, the position currently known as chairperson will henceforth be called chief executive officer.

New B&M Gambling Rules

Under the terms of the new legislation, there will be restrictions on the number of ATM machines within gaming premises. Moreover, such facilities that are located in areas accessible to the general public, like shopping malls and business complexes, must feature hidden entrances that are not visible to the casual observer.

The rules pertaining to bingo have been updated to reflect the development of electronic bingo systems. The NGR will have the authority to place limits on the number of bingo licenses issued. In addition, limited payout machines will all be linked together in a national network, which the NGR will be able to centrally monitor.

A self-regulating body will be formed within the horse racing industry. Bookies will then have contribute a portion of their proceeds to this industry, while dog racing and betting on dog races, on the other hand, will be banned entirely.

New Online Gambling Rules

Of particular interest to online gamers are several provisions that will make it more difficult for them to engage in their hobby. Financial institutions will be directed to block transactions related to unlicensed online wagering. Technology providers are similarly enjoined to cease providing services to those who run unauthorized online gambling sites.

Any winnings derived from disallowed internet games could be forfeit to the NGR. Furthermore, any unlawful operators identified will be listed in a special register, and subsequently be unable to apply for legal gambling licenses for five years.

Consequences

Though the National Gambling Amendment Bill sounds a sour note for online gambling enthusiasts in South Africa, it may turn out to be largely symbolic rather than effectual. The payment processing restrictions can be easily circumvented by ignoring the traditional banking sector altogether and instead using innovative forms of money like Bitcoin.

In fact, the embargo on providing internet services to gaming sites is unworkable in practice because these web destinations are hosted outside the country. In the meantime, the five-year operator blacklist will probably be ignored by gambling firms because they don’t hold any licenses right now and are perfectly content to operate without them. In other words, we expect the status quo for real money online wagering in South Africa to remain in place, more or less unaltered, even if this legislation does pass into law.