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South Africa – DTI stalls online gaming bill in South Africa

By - 27 November 2014

Despite the launch of a bill by Democratic Alliance Shadow Minister of Trade and Industry Geordin Hill-Lewis in April, legislation allowing online gaming in South Africa remains derailed with one industry observer describing the short term prospects for legal online casino and poker games as being ‘remote.’

The Remote Gambling Bill put forward by Hill-Lewis has had to be re-gazetted this month due to too much time passing since it was first released for public comment, and ruled it needs to be released for comment again.

The Shadow Minister of Trade and Industry said: “This delay was as a result of the offline discussions I was having with the Department of Trade and Industry (DTI) about the issue in an attempt to find a unified position,” he explained. “In 2011, the Gambling Review Commission recommended online gambling be legalised as a matter of urgency. However, after several months, it became clear the DTI had not yet developed its own policy position and, if anything, favoured the prohibition of online gambling. I’ve, therefore, decided to press ahead with my Bill, and it will be tabled in Parliament in late January 2015.”

PriceWaterhouseCooper´s Nikki Forster, the Editor of Gambling Outlook: 2014 to 2018, a report charting the progress of gambling in South Africa, Nigeria and Kenya, said: “There is hesitation from government,” she said. “In the last month, the Department for Trade and Industry has said it doesn’t support online gambling and it doesn’t believe it creates jobs and it could add to gambling addiction problems. Based on these messages, I don’t see anything happening for quite a period of time.”
Ms Forster believes the South African government’s lack of enthusiasm towards online gambling is at odds with governments in most parts of the world.

‘Many countries are relaxing their restrictions, allowing online gambling to take place. Online gambling in the UK is the big market — it’s significantly bigger than casinos. The UK has recently implemented the Gambling and Gaming Act. As of November 2014, all online operators that provide service to the UK residents must pay 15 per cent tax and apply for a UKGC license. Certain states are now allowing poker to be played online. There is an increase in online gambling and a relaxation of some of the prohibitions.”

‘Overall, the gambling industry is vibrant and dynamic. However, as a business the margins are low, a large portion of the costs are fixed, regulatory compliance is stringent and profitability depends on volume,” she added. “We expect slower economic growth to lead to slower gross casino gambling revenues in Nigeria and Kenya and continued slow growth over the next two years. We then look for a pick-up in growth in each country as economic conditions improve.”

The South African authorities are still waiting for an appeal to be heard involving the 2010 case of Casino Enterprises (PTY) Ltd -v.- the Gauteng Gambling Board, where the Piggs Peak Casino was banned from offering an online casino product to its customers.

A spokesperson for the Democratic Alliance added: That is a very, very bad decision. I fiercely disagree with that view. It is completely shortsighted to say that it is better for South Africans not to be allowed to gamble online when there is patently significant demand in the country to do that. It is for government to facilitate that in the safest way possible.”

Whilst attempts to legalise online gaming seem stalled, efforts to ban it outright still have to be passed by South Africa´s Policy Council, after which they will be passed to the Cabinet for approval. There will then be a period of public consultation before parliament gets to vote.

The report by PriceWaterhouseCooper highlights that South Africa remains by far the biggest gambling industry out of the three countries covered with predictions of 6.2 per cent annual growth, with revenues increasing from R21.8b in 2013 to R29.5b by 2018.

A total of 37 casinos are in operation in South Africa with predicted annual growth rates of 3.9 per cent with revenues reaching R20b by 2018.

Nigeria’s three licensed casinos are expected to be hit by the Ebola crisis but PriceWaterhouseCooper still tips gambling revenue as a whole to grow by 7.7 each year to reach $58m by 2018.
Kenya has 13 casinos with PriceWaterhouseCooper predicting average annual revenue increases of 6.8 per cent over the next four years.

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