ONLINE GAMBLING IN LIMBO IN SOUTH AFRICA
4/26/10 – Despite approving in principle the idea of online gambling legalization and regulation, the South African government continues to dither on actual implementation, leaving the pastime technically illegal.
That hasn't stopped online gambling companies from openly advertising their offerings in the country, but it has presented the Reserve Bank with a problem on international transactions that might involve ‘illegal' internet gambling.
The Times Live reports that there is no simple way to tell the difference between legal and illegal financial transactions….but there is nothing the Reserve Bank can do to stop them.
The Bank is apparently looking at ways in which to block transactions with offshore gambling sites, The Times reports, revealing that the Bank has issued a circular proposing to use the national payments system to flag and block transactions with offshore gambling websites.
While the banks have not yet formally responded to the circular, there are already grumblings about the implications, the article notes, underlining the many conceptual problems.
"The first one is how you know whether the merchant that initiates a transaction is an online gambling site," The Times opines. "The credit card companies have a basic classification system for merchants, like "accommodation" or "meals", when a transaction is processed.
"But there is nothing very scientific about those classifications. If you have a meal in a hotel, you might just be charged for "accommodation". Same if you pop into the hotel's casino.
"The second problem is whether or not the credit card holder is in South Africa. A transaction that is illegal for you to do from South Africa is perfectly legal for you to do when visiting Monte Carlo. The systems that process all such transactions have no easy way of telling the difference."
Like several other governments, the South African authorities have passed the buck to the banks, asking them to come up with a way of telling the difference. But that could mean the time, resources and expense of constructing new software to monitor and assess all transactions going through the banks' systems.
The report also points out that it will require the active collaboration of the credit card companies to determine just who the merchants are that initiate transactions.
According to the report, the banks – as in other countries – are less than enthusiastic about the idea, arguing that the costs simply are not worth it.
The Times also notes that there is some legal dispute over whether the gambling itself is in violation of South African gambling legalization, quoting the long-running litigation between the authorities and Piggs Peak Casino in neighbouring Swaziland, where the online casino argues that its online site does not amount to gambling in South Africa and is therefore not subject to South African gambling legalization.
"That's quite tricky philosophical territory," The Times reports. "Whether using an [online] casino's website amounts to gambling in your home or gambling on the website's servers based in another jurisdiction or country.”
At the end of the day, when it comes to dollar-based online gambling, the Reserve Bank wants to call a halt, says The Times, going on to ask if the costs of picking up on illegal transactions are worth it, especially when it would not be too hard for the merchant to get around the prohibition by reclassifying himself.
Meanwhile, online gambling continues to occupy a South African limbo-land, where the government appears despite several years of research, debate, hearings and legalization to be procrastinating, leaving the pastime technically illegal, if accepted in principle.