South Africa is often praised for its regulatory approach to gambling, especially the degree to which legislators take cognisance of the socio-economic impact of this pastime.
Despite recent British and United States ovations for these accomplishments, however, the country is about to undergo another round of introspection aimed at softening the impact of the demons of ”inner urges” that lead to addiction and ”problem gambling”.
Introducing that introspection on Wednesday was the National Gambling Bill, intended to replace the National Gambling Act of 1996. The Bill provides for a new system of voluntary and court-ordered exclusion of vulnerable persons from casinos to prevent them from gambling.
Cautionary notices will have to be posted on licenced premises and in gambling adverts, and such advertising will also be restricted. The measure further bans the use of credit to pay for gambling, as well as the placement of ATMs in licenced premises.
Other new provisions include the introduction of minimum daily closing hours and a ban on discounts for related services by licensees, such as free drinks, meals or accommodation. The Bill also makes provision for the non-enforceability of gambling debts in certain instances.
Professor Peter Collins, executive director of the National Responsible Gaming Programme, welcomed the emphasis placed by the Bill on attempting to address the ”problem of problem gamblers”. The programme is supervised by the South African Responsible Gambling Trust, a public/private partnership headed by Dr Vincent Maphai, who is also SABC chairperson.
According to Collins, the fund receives R7,5-million per annum, R2-million of which is spent on interventions ranging from a help line to consultations and tailored courses. The programme constitutes another world first for South Africa, with the United Kingdom contemplating similar steps. Collins believes that a vigorous public education programme is the best way to minimise the impact of problem gambling.
While most people gamble for fun, the poor and the less educated display a lack of understanding of the randomness of numbers, Collins noted. ”Equally alarming, they don’t understand the big odds associated with the Lotto,” he added. The manager of the Lotto, Uthingo, is currently not part of the casino-funded trust.
Gambling contributed more than R9-billion to the South African economy in 2000 — that’s 1,13% of South Africa’s total gross domestic product. New investment has exceeded R10-billion since 1996 and the industry has created nearly 51 000 direct and indirect new jobs, many for first-time workers. There have also been significant successes in terms of black economic empowerment in the industry, with just more than 40% of the equity on average in the casino sector in empowerment hands.
South Africans have a high propensity to gamble, averaging an expenditure of 1,9% of disposable household income last year. This is higher than in the US (0,6%), but less than Australia (3,1%).
The National Gambling Board’s study into the economic impact of legalised gambling since 1994 also reveals that internationally South Africa ranks 23rd in terms of gross gambling revenue. Yet it comes 91st in terms of per capita gross national income as a welfare indicator.
Chris Fismer, the chairperson of the National Gambling Board, told the Mail & Guardian that South Africans have overcome their initial huge expectations of the gambling industry. The focus now incorporates its possible negative social impact.
Fismer believes, however, that a comparison of negative and positive aspects would show that the positive slightly outweighs other effects.
The new Bill also addresses the need for competition in the market by replacing the arbitrary limits on the number of casinos with a criteria-based system of regulation.
The criteria require the minister of trade and industry to balance the competing considerations of the marketplace, black economic empowerment and the incidence and consequences of overstimulation of gambling.
The Bill introduces a new scheme of national licences to avoid certain licensees having to seek multiple approvals in more than one province. It sets uniform licensing norms and standards applicable to provincial licences.
Licensing authorities will have to consider applicants’ commitment to addressing the social consequences of gambling and make licences subject to conditions in this respect. It will also monitor achievements by licensees. Similar provisions are made for applicants’ commitment to black economic empowerment.
Provisions concerning registration of gambling machines and devices have been streamlined in the Bill to establish a single national registry. These will simply have to be registered at the time of import or manufacture.
The draft Bill also seeks to establish a new National Gambling Policy Council, in addition to the existing National Gambling Board, which will then only be responsible for oversight, not policy.
The popularity of gambling has been dramatically illustrated by casinos’ huge profits and underscored by the subsequent additional revenue for the national Treasury.
African resorts group Gold Reef Casino Resorts recently reported a 26,6% jump in headline earnings per share to 30,9c for the six months ended June 30. The group, which operates four resorts — Gold Reef City, Golden Horse, Casino Mykonos and Garden Route Casino — reported headline earnings of R62,353-million.
I-Net Bridge reported that the company said the decrease in interest rates during the review period contributed to the casinos’ strong performances. Gold Reef City continued its robust performance, with R323,8-million in revenue — up 11,3% from the previous comparative period.
South Africa’s comprehensive review of legislation started in 1994 when a high level of illegal gambling prevailed. It was estimated that there were more than 150 000 illegal gambling machines in the country.
Sun International also had a monopoly, operating all legal casinos in the country. Also, the debate about legalisation was influenced by some discrimination in favour of the horseracing industry.
South Africa joined the International Association of Gaming Regulators in an effort to determine best international practices. It proved to be an enthusiastic member, which ultimately led to Fismer’s appointment as chairperson of the association, the first African to fill that position.
Fismer’s recent address to the institution is instructive in terms of what he thought governments should try to achieve in regulating gambling. This includes the desire to keep gambling crime-free and its concurrent need for probity investigation to prevent money laundering.
Another aspect is consumer protection, or what may be called ”ensuring the fairness of games”. This is done by calibrating and testing machines and setting standards for machines and games. Pay-out levels should also be determined, and they should be public knowledge.
The vulnerable should be protected and problem gambling should be addressed. Measures must be put in place to ensure that minors do not participate in gambling activities and that comprehensive programmes to deal with problem gambling are in place.
”No government can afford, in modern times, to allow gambling in whatever form without ensuring that a comprehensive programme is in place to address those who experience problems from gambling, more specifically compulsive or pathological gambling,” Fismer said.
He also said a proper tax regime should be established. This will endure maximum tax income for the government without sacrificing the sustainability of the industry. It should ensure that taxes and levies are being paid and that illegal operators do not avoid paying taxes.
But it is the economic modelling of a regulatory regime that has attracted the attention of regulators in the US and the UK. Such a model needs to recognise the conflicting interests of different forms of gambling.
For instance, if a lottery is allowed to have a daily or even an hourly draw, with extremely high prizes attached to it, then it may have a negative impact on casinos. Likewise, if bingo halls are allowed to install an unlimited number of casino slot machines, the impact on casinos could be negative.
Independent research commissioned by the National Gambling Board has found that South Africans love gambling and spend household income on it. Yet the study also found that South Africa’s new regulated gambling industry has a high level of public acceptability.
Almost 75% of South Africans approved of a regulated industry. Three out of four had participated in some form of gambling in the 12 months before the study. More than 70% bought lottery tickets, while less than 20% visited casinos.
Additional reporting Sapa, I-Net Bridge.