South Africa Still Considering Online Gambling

Another public hearing held

At a new public hearing on the pros and cons of legalizing and regulating online gambling, organized by Parliament’s trade and industry committee, lots of opinions were heard regarding the main issues related to the pastime, such as the prevention of money laundering, underage gambling and illegal gambling operators.

At the moment, the Department of Trade and Industry is drafting legislative amendments that will fulfill the recommendations of a gambling review commission that internet gambling be regulated and taxed.

According to the Committee chairman Joan Fubbs, online gambling is ubiquitous in SA so it cannot be ignored. It was added by Democratic Alliance MP Geordin Hill-Lewis that "online gambling is a fact in SA. Prohibition is impossible and at the moment it is taking place in a completely unregulated environment and we are deriving no economic benefit from it.”

On the other side, potential problems were pointed to by Pieter Smit of the Financial Intelligence Centre who urged that online betting exchanges and online poker be prohibited. “If they were allowed, operators would have to be subject to the regulatory measures as required by the Financial Intelligence Centre Act,” he stated, adding that gaming facilities could be used by online punters to transfer funds from one person or location to another, increasing the risk of money laundering which would be difficult to trace and as it’s not a face-to-face business.

Therefore, he suggested that new technology would be needed to identify customers, as well as measures to identify and exclude unlicensed operators from the South African market.

Also, a recommendation arrived from National Gambling Board representatives that, if legalization is approved, the number of online gambling licenses should be restricted to manageable numbers and be strictly regulated. They also suggested that licenses should only be valid for eight years and that measures should be introduced to protect gamblers against fraudulent operators and exclude underage or problem gamblers.

In addition, the Board warned that the latter – exclusion of unlicensed operators – may prove to be quite a challenge, as it can be both expensive and unsustainable, and it would require cooperation with other licensing jurisdictions.

Regarding the same question, experts from the Banking Association of SA opined that the real activities of illegal operators are often concealed by front operations, so it would be difficult for banks to identify and differentiate between legal and illegal transactions related to internet gambling.