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Kevin Smith

South Africa Not Likely to Include Interactive Gambling in New Act

27 February 2004

South Africa is expected to pass a much delayed Gambling Act later this year, although the bill will not address interactive gaming, despite the wishes and input from many within the industry.

For more than four years the South African legislature has been studying the gambling issue, and had draft bills written up that address interactive gaming regulations and standards.

Marita Carnelley, a professor of law who has been closely involved in the new Gambling Act, said there is little doubt the bill will finally get passed, but even after years of evaluation there remains some uncertainty about what final shape the bill will have.

"There have been so many drafts and it is again up for discussion on Tuesday in a meeting between the national and provincial CEO's," Carnelley said. "The final decisions still need to be made. But it is small, selected issues."

One of those issues will not be Internet gambling though. Carnelley said the bill will most likely be amended in a few years to include interactive gambling, but government officials feel the time isn't right for the country to start regulating online casinos and sports books.

The decision to wait on interactive gambling regulations is due mainly to South Africa's unwillingness to become a licensing jurisdiction right now. There is a prevailing thought among many in the country that nothing should be done until an overhaul of gambling laws and regulations in the United Kingdom, which will include Internet gaming, goes through.

"The UK developments will have an indirect impact in that if they are successful, there is a good chance that the South Africans will follow its lead," Carnelley said. "It depends on what the proposed report recommends with regards to South Africans gambling interactively."

Steve Toneguzzo, an Australian who specializes in testing interactive gaming systems, was involved with the South African process early on and said he was unaware of any recent developments that brought the issue to the forefront.

The bill is expected to pass within the next month, as elections are scheduled for April 14 and many want the bill in place before the elections, according to Carnelley.

"Time is of the essence," Carnelley said. "Not that there is a chance of the ruling party changing or anything, but new Parliamentarians means more time would be needed to pass the bill if it isn't in place before the elections."

Carnelley said the long delay is par for the course in dealing with the gambling industry in South Africa, which is known for "unfulfilled expectations."

But through the whole process there has been little doubt among the gambling industry and South African lawmakers about eventually establishing some sort of Internet gambling criteria.

"The idea has always been to legalize and regulate some limited form of Internet gambling," Carnelley said. "They would like to create a legal alternative and generate some tax from foreign sources."

Another positive for the interactive gaming industry in South Africa is wide belief among lawmakers that any laws prohibiting the industry will be unenforceable.

One purposed draft of the Gambling Act would ban Internet gambling and the advertising of online casinos. A recent survey of South Africans last month revealed that nearly 250,000 South Africans, only 0.6 percent of the population, gamble online.

Francois Vorster, marketing director of Piggs Peak Casino, which operates out of South Africa, said each of the country's nine provinces controls its own gambling legislation, although the laws are broadly similar in implementation.

"For instance, the Gauteng Gambling Law says gambling takes place at the point of interaction," he said. "This means that if I gamble online in my office in Johannesburg, then it is illegal."

Other legislation in South Africa, namely the ECT Act aimed at the banking industry, states that the point of interaction is where the server is located.

"If we had to turn off our servers, which are located in Swaziland, then one would not be able to gamble," he said.

Like a lot of others in the interactive gaming industry, Vorster said the next month could determine what direction the industry takes in the short-term in South Africa. Like Carnelley though, Vorster is confident regardless of what happens with the immediate Gambling Act, South Africa will one day have online gambling licensing and regulation.

South Africa Not Likely to Include Interactive Gambling in New Act is republished from
Kevin Smith
Kevin Smith