Editorial

Tuesday, 16 February 2010 22:49

Online gambling is popular and well subscribed in South Africa. The only problem is that it is illegal and those doing it are at risk.

Online gamblers in South Africa are breaking the country's law and until that law is changed, they run an unsavoury array of risks including the forfeiture of any winnings, heavy fines and even imprisonment if caught. However, it is a risk that an estimated half a million gamblers are willing to take as despite the illegality of this pastime, it is a law that is rarely seen to be enforced. For this reason, its business as usual for the foreign online gambling operators that offer their services to South African citizens that have access to the Internet and possess the means to pay for their gambling entertainment.

It is the lack of clarity in the law that makes the risk worth taking for South Africa's new wave of Internet gamblers. The chief director for policy and legislation for the Dept of Trade and Industry, Nomfundo Maseti has explained that gambling online is currently not permitted in South Africa as long as there is a lack of legislation to regulate this huge industry.

This has led to a situation where the courts have no hard and fast rules with which to work with and the police have better things to do than go chasing after people sitting in their own homes on a computer placing bets in an online casino. Perpetrators are aware of this and carry on gambling regardless.

Maseti admits that her department lacks any information on the scale of online gambling or on the amount that is illegally being won by South African citizens. South Africa's Gauteng Gambling Board has added that Internet operators offering online gambling services to South African citizens are also operating illegally. On its website, the Board says that based on a court ruling from 2006, punters risk punishment with up to R10 million in fines or a maximum sentence of ten years in jail.

A bill to tighten the country's regulations on Internet gambling and minimise the profits taken out of the country by offshore operators was set for introduction into legislation last year, but so far the National Gambling Amendment Bill has not been officially signed into law. This should have been done by the president, Jacob Zuma but in August 2009 this was postponed. A request by the Parliamentary Portfolio Committee on Trade and Industry was made so that the bill could be reviewed and has effectively stalled the process which could see the country profiting from the industry rather than watching those potential profits leaking away to foreign operators.

Internet gambling could still be legalised in South Africa pending the findings of the department's review. The department is currently reviewing the industry and it aims to complete its initial report by the middle of this year. It will then present its findings to Rob Davies, the minister for trade and industry who will subsequently take it to Parliament for consideration.

It is no secret that the government are fully aware that online gambling has the potential to be a huge revenue-spinner for them. Already there have been several applications for licences for online gambling submitted to the department. However, there are some aspects that have to be first taken into account. They include putting in place a means of limiting online gambling only to adults as well as dealing with concerns over possible associations that gambling could have with criminal acts, such as money laundering. The department will also need to investigate how a legal online gambling industry might affect the present land based industry, such as the potential for erosion of the industry market share.

Additionally, the Financial Intelligence Centre Act requires the disclosure of all personal details by individuals. This includes their ID number as well as providing proof of their residential address and will also become applicable to anyone taking part in Internet gambling. To conform to this, players will be required to create accounts that are limited to funding via credit card or a cheque account. They would then have to present a valid bank stamp that will confirm the respective account's validity. In their accounts players could be allowed to hold up to a maximum of R20000, although cash transactions would not be permitted.

If government does decide to allow legalised online gambling, there would only be 10 licences issued by the National Gambling Board. Gambling operators would also be required to provide proof of a physical presence within South Africa. Their financial transactions will similarly be required to be located inside South African borders. This should not present any problems to legitimate operators who already act within the laws of the countries that they already provide their services in, while restricting the business of those who habitually operate outside of the laws.