The South African government could be earning millions from online gambling legalization
Posted 2/1/11 : The South African government could be earning millions from online gambling legalization
The ongoing procrastination by the South African government over the legalization of online gambling (the issue has been dragging on for years – again came under the spotlight on ITWeb's blog this week.
Pointing out that the government was losing out on millions in tax and licence revenues, and on the possibility of generating income and employment from support services, the blog claimed that it could take at least two years before the African nation has a properly licensed online gambling industry.
Despite years of research, debate, drafting and fact-finding missions, there is still no clarity as to when a policy-level decision may be taken, or even if the sector will be legalised.
Following a controversial North Gauteng High Court ruling last August (see previous InfoPowa report on the ruling, which effectively upset the location of servers and where gambling actually takes place argument) online gambling is currently illegal in the country, although the case is on appeal by operator Casino Enterprises in Swaziland.
ITWeb claims that National Gambling Board numbers show that the local gambling market in total was worth Rands 215.8 billion in wagers in the year to March 2010, from which government earned Rand 1.6 billion in taxes from the official sector.
Extrapolating that in line with international estimates that online gambling amounts to some 7 percent of all gambling globally, the blog figures that legal online gambling in SA could generate Rands 110 million in taxes for government, from wagering of around Rands 15 billion a year.
The blog points out that the National Gambling Act of 2004 does not provide for online gambling. However, a government-level decision could see the realisation of plans to legalise interactive gambling, with 10 licences initially envisaged. Unfortunately, there is little indication that such a decision will emerge soon.
Legislative amendments in 2009 came to naught when the Parliamentary Portfolio Committee on Trade and Industry decided that the gambling sector in SA should be reviewed, reports ITWeb.
Consequently, a Gambling Review Commission was established to look at South African gambling in its totality. The Commission has completed its work and submitted a report to the Minister for Trade and Industry, who will apparently now consult with provincial ministers prior to releasing the contents.
Government spokesmen have not been able to say when this might take place, giving clarity to a controversial issue.
Meanwhile legal experts have volunteered the depressing news that it could be another two years before there is a licensing regime in place…if at all. Some hope that the minister will release the Commission's report this March, which could then inform the future debate.
However, the bureaucratic process of regulatory drafting, redrafting and argument could be prolonged, and would have to take place before the acceptance of licensing applications and the evaluation of individual operators could receive attention.
Meanwhile, the online gambling company contesting the High Court ruling, Casino Enterprises, holds that until the appeal is heard it's business as usual. One of the company executives, Lew Koor told ITWeb: “Until the appeal has been heard and the outcome determined, our business will continue as usual, as agreed with the gambling boards.”
The owners of another locally-based internet gambling company differ, and have announced that operations are suspended pending the outcome of the Casino Enterprises appeal.
