Gambling in South Africa has been heavily restricted since 1673, with South Africa's Gambling Act of 1965 officially banning all forms of gambling except betting on horse racing which existed as a sporting activity. In the late 1970s casinos started operating in the bantustans (the nominally independent areas called homelands) of Bophuthatswana, Ciskei, Transkei and Venda.
South African Authorities Confiscate Winnings
- June 4, 2017
Last week, South African authorities confiscated over £70,000 worth of winnings from online gamblers and finally put to rest any ambition that the industry might have had to see online gambling regulated within the country.
Nine months ago, South African authorities sent out, what they felt was a clear message to all potential online gamblers in The Rainbow Nation. The Trade and Industry Department (DTI), headed by Rob Davies, minister of Trade and Industry in South Africa, released the Draft National Gambling Amendment Bill, stating, in reference to winnings made from online gambling:
“The winnings held by the National Gambling Regulator in terms of subsection (3) shall be automatically forfeited to the National Gambling Regulator.”
That threat became a reality earlier this week when the National Gambling Board (NGB) honoured the bill, seizing R1.25m worth of winnings from a number of gamblers who made profits from activity in online casinos. The money will be held by the NGB and the winnings will be forfeited to the state.
The NGB have been working alongside banks in South Africa to confiscate winnings from anyone found making deposits that be traced back to online casinos, stating that:
“In instances where account holders have made transactions with offshore online gambling sites, the banks will share the information with the NGB, which then has the power to launch an investigation under Section 16 of the National Gambling Act.”
At the time of the release of the National Gambling Amendment Bill many were sceptical that the above would ever see the light of day. Various proposals had been either shelved or had never been activated over the years and for many the threat was one that was worth ignoring. The concept that the government would check the bank details of its citizens also seemed too far-fetched. For many the bill reeked of scaremongering and was unlikely to have any impact unless someone was made an example of.
Furthermore, given that online gambling has been illegal in the country for years, why would a new law change the state’s propensity to look the other way? Essentially, South African gamblers have gambled online for years under the premise that it’s only illegal if eyes that are purposely blind to what is going don’t regain their focus. Few expected the threat of an intrusive coalition between the nation’s banks and their government to actually become a reality. Yet, bluffs have been called and eye of South Africa’s NGB now appears to be watching.
Over the years there have been calls in South Africa to legalise online gambling, with draft proposals that were never actually signed off. In 2008 The National Gambling Act proposed changes to the law that would “provide for the regulation of interactive gambling so as to protect society against the stimulation of the demand for gambling; to provide for the registration of players and opening of player accounts; to provide for the conditions applicable to interactive gambling licenses.” Essentially the amendment would have made interactive gambling legal in South Africa. However, the reality is that the whilst the changes were written into law the starting pistol was never actually fired. Nearly ten years down the line, and the amendments remain but a date has still to be cemented that will give the industry the go-ahead.
On top of all of this, to further herald 2008 as the year where the seeds of change were sown, the then chairman of the NBG, CL Fismer, wrote the following in his annual review:
“The NGB Board is fully aware of the challenges that are inherent in legalising interactive gambling and maintain that the problems of regulating it can be mitigated by enabling legislation to an acceptable level, rather than controls to ensure complete prohibition of participation of international and local operators and players.”
By the end of 2008 South African punters must have thought that it was only a matter of time and that if the legislation was on its way then what harm would a temporarily illegal flutter make? If the changes were coming, then surely the government wouldn’t waste time, money and resources battling something that they were due to licence, regulate and tax?
The message at this point seemed to be that it was only a matter of time, and yet a few years passed and the changes still hadn’t materialised.
In 2010, the government still apparently undecided on the matter, launched the Gambling Review Commission to take another look at interactive gambling. The results of the finding were clearly not music to government’s ears. The Review concluded:
“In a world driven by technology, online gambling is unlikely to disappear. Internationally, jurisdictions that prohibit interactive gambling often appear to have different forms of online gambling available, which are linked with land-based gambling activities. In addition, it is very resource intensive to enforce prohibitions in such an easily expanded area of gambling. Unlike land-based activities, online gambling operations can be relaunched within minutes.”
Absurdly enough, the report appeared to be the nail in the coffin for legalised online gambling in South Africa. The report was launched, it’s message was clear but Rob Davies and the DTI were having none of it. What the report said didn’t matter, in fact it seemed to give the government something to rail against more aggressively, with Davies claiming that illegal transactions would be monitored and gamblers would have their winnings confiscated.
Since then the industry has sat in limbo. Illegal online gambling has continued, without much in the way of prosecution, as the players take huge risks placing bets in unregulated betting sites.
Fast forward to 2016 and the threat that winnings will be confiscated is levelled again. Without a regulated industry to verify figures it is difficult to know how much of a deterrent the threat had, although, given the empty threats that proceeded this one and the recent forfeiture of R1.25m it’s likely to have fallen on deaf ears.
Last week’s crack down should now have hammered the message home and signalled that any possible reform is light years away. South African authorities have stated that their main objection to legalising interactive gambling is the impact that this will have on problem gambling, social deprivation and the possibility of money laundering.
If the government in South Africa are setting out their stall and implying that online gambling will be hammered then the same message surely needs to be levelled at casinos using the .co.zu domain registration. Obviously this will not be easy to enforce, given the fact that most casinos using the South African domain registration operate outside of the country.
The authorities in South Africa have stated that along with confiscating winnings, they will prosecute online gamblers and that “those found guilty, or running an establishment that allows people to gamble online, could face imprisonment and/or a fine of up to R10 million ($760,000).”
Whilst it has been a long time in coming, South African authorities lived up to the first part of that promise last week. It will be interesting to see if they fulfil the rest of their mandate and turn their attention to the establishments who, so far, have remained untouched by the long arm of the law. What is apparent is that those who continue to gamble online are playing against odds that are far too unfavourable. To play knowing that your winnings could end up in state coffers, that you could end up with a hefty fine or behind bars would, surely at this point, be bordering on insanity.
Anyone willing to take on such unfavourable odds must surely be considered a problem gambler, which brings us to the contradictory heart of the matter. South African authorities will claim that interactive gambling needs to remain illegal because they want to prevent problem gambling. Yet, if illegal online gambling can flaunt the laws that seek to repel them then problem gamblers will always have an outlet for their cravings. A regulated, licenced system, with self-exclusion policies might not solve the problem but at it would allow those who have that particular addiction to openly admit so without fear of persecution. A regulated and licenced industry would create jobs, bring in tax revenue and generate an infrastructure that could support problem gamblers.
Yet, to even consider it now feels like a waste of breath. We are now nearly a decade on from the proposals that sought to legalise online gambling in South Africa and we couldn’t really be any further away from the future that those bills, acts and amendments tried to shape.
