Interactive Gambling Regulations

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Interactive Gambling Regulations

• PRESENTATION TO SELECT COMMITTEE ON TRADE AND
  INTERNATIONAL RELATIONS - PARLIAMENT
• 17 JUNE 2009

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Delegation

• Zodwa Ntuli Deputy Director General - Consumer
  Corporate Regulatory Division (CCRD), the dti
• Tel [phone]
• Nomfundo Maseti Chief Director Policy and
  Legislation
• Tel [phone]
• Mpho Mosing Director Regulated Industries
• Tel [phone]
• Themba Marasha Chief Operations Officer,
  National Gambling Board (NGB)
• Tel [phone]
• Nkoatse Mashamaite Deputy Director Regulated
  Industries

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Purpose

• The purpose of this presentation is to request
  the Select Committee to note and provide input on
  the proposed regulations for the implementation
  of interactive gambling

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Introduction

• The National Gambling Act of 2004 (the Act)
  regulates various forms of gambling activities in
  order to
• - protect the public against adverse effects of
  gambling
• - limit, control and monitor possible
  proliferation of gambling and illicit gambling
  activities
• - enforce responsible gambling operations by
  requiring operators to contribute to social
  development initiatives, SMME (Small Medium and
  Micro Enterprises) development access to
  business, and facilitate empowerment of HDIs
  (Historically Disadvantaged Individuals) B-BBEE
  (Broad-based Black Economic Empowerment)
• - contribute to infrastructure development in
  rural communities e.g. limited pay out machines
• The Interactive Gambling legislation contributes
  to the advancement and achievement of the above
  socio-economic benefits

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Introduction

• Section 11 of the Act makes interactive gambling
  unlawful in South Africa
• However, this Act required the Minister of Trade
  and Industry to introduce into Parliament, within
  two years of the effective date, legislation for
  the regulation of interactive gambling (IG)
• As a result, the introduction of the National
  Gambling Amendment Act of 2008 authorizes the
  operation of interactive gambling
• The National Gambling Amendment Act of 2008
  empowers the Minister to prescribe regulation for
  Interactive Gambling.
• Regulations were drafted and published for public
  comments, the closing date was 7 May 2009

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Intro cont.

• Bodies and stakeholders consulted before the
  Regulations were introduced to Parliament
  included
• The National Gambling Board
• Provincial licensing Authorities
• National Treasury
• South Africa Reserve Bank
• South Africa Revenue Services
• Industry role players (e.g. Casino Association of
  South Africa)
• National Responsible Gambling Programme
• Problem Gamblers anonymous
• Feedback sessions with stakeholders to provide
  clarification will be held in July 2009

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Purpose of the Act

• Provide for the regulation of interactive
  gambling (IG) so as to
• protect society against the over-stimulation of
  demand for gambling
• provide for registration and verification of
  players
• protect minors and other vulnerable persons from
  the negative effects of gambling
• ensure compliance with Financial Intelligence
  Centre Act (FICA) other relevant legislation
  and
• prevent gambling from being associated with
  crime, money laundering, or financing of
  terrorist and related activities

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Scheme of the Regulations

• Interactive Gambling is internet-based gambling
  which can be accessed through computer, mobile
  phones etc.
• The current form of electronic betting and
  wagering is not regarded as a form of electronic
  communication for the purposes of these
  regulations
• Scheme of the regulations include
• - Provision of IG games
• - Player protection
• - Advertising
• - Licensing
• - Compliance and enforcement
• - Problem gambling
• - Money Laundering
• - Taxation

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Provision of IG Games Player protection

• The games of IG must meet technical
  specifications and standards approved by the
  Board
• Player will interact with or against the house /
  operator
• Games approved by the Board will not include
  person to person
• Player registration with operator will require
• - statement under oath that player is 18 yrs
• - State in which the player resides allows IG
• - full details of the player in terms of FICA
• - bank stamp to confirm that the player is the
  account
• holder

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Player protection

• Establishment of player account for transfer of
  monies
• - player will establish a nominated account
  limited to credit card / cheque account
• - operator will create a player account to
  hold monies for bets that will be linked to
  nominated account
• - No cash transactions and only one nominated
  account will be allowed
• - The maximum amount allowed in the player
  account R20 000
• - A player is allowed to set a monetary limit
  prior to play
• - Increase of monetary limit set will take
  effect after 7 days of request
• The registration condition will be displayed at
  all times on website

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• Responsible Gambling

• Notice on website of IG provider must depict
• - voluntary player exclusion information 1
  year
• - link to National Responsible Gambling
  Programme and responsible gambling hotline
• - self-diagnosis test
• - treatment of addictive gambling
• Operators must audit playing patterns and
  behaviour
• Operator must in his employ have trained
  personnel to advise on problem gambling and
  policy on Responsible Gambling
• To address proliferation of gambling only 10 IG
  licenses will be issues

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Licensing

• IG licences to be issued as national licences due
  to the borderless nature of IG
• Types of licences envisaged
• Operator for 5 years renewable annually
• key personnel e.g. at management level to hold
  licences
• Manufacturer, software supplier and maintenance
  provider
• any other category or activity that the Minister
  may deem expedient

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Licensing

• Licensing requirements conditions
• SMME development
• player protection
• empowerment of HDIs BBBEE
• Accounting systems keep records of betting
  winnings
• Appointment of Auditors for annual report
• Contribution to accredited National Responsible
  Gambling Program etc
• Licensing/testing and certification of
• IG equipment including software and servers

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Money laundering

• Registration of players and verification of
  player identity
• Minister will publish with FIC a list of
  countries prohibited from IG due to
  non-compliance with Financial Action Task Force
  (FATF)
• Transfer of funds is limited to one nominated
  account so as to trace origin
• Probity check by NGB of Operators
• Monitoring of Compliance with FICA requirements
  by NGB
• Operators responsibility to keep records of bets
  and winnings
• Funds not to be converted into any form of value
  especially cash.
• External companies must have a physical presence
  in SA. E.g. records of transactions to be located
  in SA.
• Regulating the method of payment to the provider,
  e.g. credit card as a method of payment.
• Obligation on IG provider to report suspicious
  and illegal activities
• Provision for control systems to be prescribed
  and approved by NGB

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Compliance and enforcement

• NGB is responsible to
• - license IG operators, manufactures, suppliers
  and maintenance providers effectively and in a
  transparent manner
• - ensure compliance with licence conditions
  issues
• - supervise and enforce compliance by licencees
  with
• FICA etc.
• - conduct inspections i.r.o IG websites and
  premises
• where IG equipment and software is located
• - monitor advertising by licensed operators
  that adverts are not misleading not directed to
  minors
• Revoke or suspend IG licences for non-compliance
  
• NGB may delegate some of its enforcement and
  compliance powers to the Provincial Gambling
  Boards
• Ensure disputes are resolved by conducting
  hearings
• Refer offences to prosecuting authority
• Ensure integrity of the industry by elimination
  illegal IG operations

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ADVERTISING

• Advertising will be limited to licensed operators
• An IG operator must ensure that any advert
  includes a clear message on underage gambling
• Internet cafes /similar agencies may not display
  IG websites on their homepage(s)
• No endorsement by personalities that suggest
  gambling contribute to their success
• No spam e-mails, even by 3rd parties, to punters
• The Board to deal with complaints by reviewing
  the advert. If the complaint is valid, the advert
  must be stopped or changed

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Conclusion

• Fees Taxation on IG
• Fees for IG
• - application fees R500 000
• investigation fee R350 000
• license fees - R200 000
• annual renewal fee R300 000
• Fee on alteration of license R75 000
• administration charge e.g. change of name/address
  R10 000
• Manufacturer, Supplier or Maintenance provider
  fees
• application fees R250 000
• license fees R180 000
• Taxation
• Money Bill under National Treasury
• - proposed levy is 6
• - NGB will collect tax for National Treasury

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THANK YOU