With the legalisation of gambling becoming a reality in South Africa, various problems are arising, reports Simon Segal
THIS weeks parliamentary ad hoc committee debate on changes to the National Gambling Bill brings legalised gambling closer, and accentuates certain problems.
The enabling legislation provides for the granting of 40 licences, a National Gambling Board (NGB), a national inspectorate and determination of national norms and standards. The NGB will take over from the Lotteries and Gambling Board.
There are six major bidders in consortiums that all include black business groups. African Sun International, comprising Sun International, Thebe Investments, Khulani Holdings, Real Africa Holdings, Vela International, and the Womens Investment Portfolio, is the largest and only group with existing casino interests in South Africa.
The other groups are Tsogo Sun (Southern Sun and the Gaming Consortium each own 50%), Casinos Austria, Global Resorts, Karos and Stocks & Stocks.
All can be expected to get a slice of the 40- licence cake in a scenario that could see African Sun International end up with 10 licences and the rest end up with four to eight each.
In projects ranging from R25-million to mega- resorts of R1,5-billion, Global Resorts estimates that a total R13-billion or so could be invested in casino resorts by the end of the century.
It estimates that casino revenue of R3,1-billion in 1995 (half earned by Sun International and the other half earned by illegal operators) will reach R12-billion by 2000 or R6,8-billion in todays money (adjusted to net present value at 12%).
Many problems have to be resolved before these projections can be met.
Most important, especially for Sun International which has seven licences in both the eastern Cape and North west, is the number of licences a group can have in the same province.
The draft bill restricts a single casino operator to two licences per province and forces them to comply within two years of the legislations promulgation. After heavy lobbying, General Affairs Minister Chris Fismer this week suggested this be raised to three licences, and the deadline to dispose of any excess licences be extended to May 1999.
This deadline also demands that provincial governments with casino interests dispose of them. Provincial governments are not allowed to own a licence.
Then there is the growing discord between central and regional governments, essentially over who should get the spoils from gambling and how. Provinces have been allowed to proceed with their own gambling legislation before the national bill was passed. Now KwaZulu-Natal and western Cape are indicating that they are not bound by the number of licences granted them. Gauteng is paving the way for VAT on gambling to go into its coffers.
Potential conflicts of interest where officials are linked to consortia also have to be cleared. The most noted example is KwaZulu-Natal finance MEC Johnny Mhlungu who has links with African Sun International.
While there is plenty of serious money to be made in operating casinos, it is not a bottomless pit.
Herein lies another fight between government and casino operators. Government wants to maximise revenue, black economic empowerment and regional development. Casino operators, which consider these to be effective taxes, aim to maximise profit.
The all-important issue to be clarified before proposed developments can be detailed and licence applications submitted is the licence fee and gambling levy.
While all this is taking place the illegal casino operators are continuing unregulated.