The South African Costly Decision

January 31st, 2011
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Legalisation of online gambling could be generating millions for the South African government

ITWeb's blog has again questioned the decision of the South African government to prevent the legalisation of online gambling, focusing on financial losses resulting from such a standpoint.

The emphasis was put on the government’s potential revenues of several millions from tax and licence fees only, in addition to raising employment opportunities and generating income through various support services.

The blog also warned that it could take no less than a couple of years before the African nation has a properly licensed internet gambling industry. Moreover, the blog pointed out that a generous amount of time dedicated to a range of research, debate, drafting and fact-finding missions has not given an insight into when a policy-level decision may be taken, or whether the sector will be eventually legalised.

Online gambling is illegal in the country since last August, when a contentious North Gauteng High Court ruling has been proclaimed, though the case is on appeal by operator Casino Enterprises in Swaziland.

“Until the appeal has been heard and the outcome determined, our business will continue as usual, as agreed with the gambling boards,” Lew Koor, one of the Casino Enterprises executives, told ITWeb commenting on the operator’s decision to continue its activities as usual.

On the other hand, the owners of another locally-based internet gambling company have announced that their business has been put on hold pending the outcome of the Casino Enterprises appeal.

The blog also comments that online gambling is not envisaged by the National Gambling Act of 2004, but that decisions could be reached on the governmental level enabling legalisation of interactive gambling, with 10 licences initially proposed. Still, there are no positive signs that such a decision will materialize in the near future.

In 2009, Parliamentary Portfolio Committee on Trade and Industry issued the decision that gambling sector in SA should be reviewed, resulting in an annulment of the legislative amendments, claims ITWeb.

As a result, Gambling Review Commission performed an assessment of overall situation in South African gambling and presented a report to the Minister for Trade and Industry, who will allegedly consult provincial ministers prior to revealing the details of the Commission report.

Though it has not been said by the Government spokesmen when the report will be released, some hope that it might happen this March and facilitate new discussions.

The downside is that the red-tape procedures could be prolonged, and they are prerequisite for acceptance of licensing applications and evaluation of individual operators.

According to the statistics of the National Gambling Board, the local gambling market was worth Rands 215.8 billion in wagers in total in the year to March 2010, and the government earned Rand 1.6 billion in taxes from the official sector, ITWeb claims.

Further analysing the issue, the blog states that online gambling accounts for cca. 7 percent of all gambling globally according to relevant international estimates, and that consequently legalisation of online gambling in SA could earn Rands 110 million in taxes for government, from wagering of around Rands 15 billion a year.
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