THE NATIONAL GAMBLING AMENDMENT BILL, 2007 Briefing to the Select Committee on Economic and Foreign Affairs 10 October 2007

2 Purpose of the Bill 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 and other relevant legislation; and –prevent gambling from being associated with crime, money laundering, or financing of terrorist and related activities

3 Approach to IG To introduce IG by way of an amendment to the NGA as opposed to a separate piece of legislation Policy on IG recommended that IG should form part of the broad policy for the regulation of all forms of gambling and be subjected to the general administrative and oversight role of the Board, rather than creating a separate regulatory authority for IG Existing regulatory regime in terms of the NGA largely applies to all forms of gambling including IG

4 Introduction The National Gambling Act, 2004 (“the NGA”) requires the Minister to introduce into Parliament, within two years of the effective date, legislation for the regulation of interactive gambling (IG) A research committee was established by the National Gambling Board (NGB) to investigate the implications of the regulation of IG within the Republic The research report was finalised in October 2005, and tabled before the National Gambling Policy Council (NGPC), which recommended an enabling legislation Draft Bill was approved by Cabinet in December 2006 and published for comment on 18 December 2006

5 Intro cont. Approximately 20 written submissions were received Issues raised by stakeholders included: –Licensing, location of server, money laundering, player protection, problem gambling etc –Most of these issues were incorporated in the revised Bill Bill submitted to State Law advisors by end of June 2007 and introduced to the National Assembly on 26 July 2007

6 Intro cont. The initial presentation of the Bill to the Portfolio Committee on Trade and Industry took place on 8 th August 2007 Public hearings were held in August 2007 The Bill was amended in light of inputs from the Portfolio Committee on Trade and Industry and stakeholders comments The Bill was adopted by the Portfolio Committee on Trade and Industry on 5 th September 2007 and by the National Assembly on 11 September 2007

7 Intro cont. Bodies and stakeholders consulted before the Bill was 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

8 Intro cont. Stakeholders who made comments in the Public hearings included: Industry role players (Casino association of SA, Betfair) Provincial licensing Authorities (Gauteng, Western Cape, Mpumalanga) National Department (National Treasury: Financial Intelligence Centre) Churches (Jewish Board of Deputies, Justice Alliance of SA) COSATU National Responsible Gambling Programme Civil Society for South African Counsel on Responsible Gambling

9 Intro cont. Key issues raised from the public hearings included: Adequacy of the consultation process Money laundering Taxation Person to person betting exchanges Advertising Licensing powers of the National Gambling Board Curbing of gambling in the Republic Problem gambling

10 Scheme of the Bill Provision of IG games Player protection Advertising Licensing Compliance and enforcement Problem gambling Money Laundering Taxation

11 Provision of IG games Establishes a legal basis for the provision, regulation and control of IG within the Republic Provides for authorised forms of electronic communication for purposes of IG Provides for authorised IG games, systems and methods

12 Player protection Registration of players Establishment of player account for payment of monies Prohibit South Africans from engaging in IG activities provided by providers not registered in the Republic Method of payment of wagers and prizes to players and remittance to foreign players and external companies Strict probity of providers IG provider not allowed to extend credit to a player Dispute resolution The licence condition of provider must be displayed on website

13 Prohibition of all forms of IG advertising and promotion within the Republic. Advertising

14 Licensing IG licences to be issued as national licences due to the borderless nature of IG IG licences include: - operator licences; and - employee licences (key employees, management staff and Directors/shareholders); Licensing/testing and certification of: –IG software –IG equipment –Manufacturers, suppliers, and maintenance providers of IG equipment

15 Compliance and enforcement NGB is responsible to: - ensure compliance with the NGA and conditions of licence; - supervise and enforce compliance by licensees with FICA etc. - conduct inspections i.r.o IG websites and premises where IG equipment and software is located NGB may revoke or suspend IG licences for non-compliance The server to be located in South Africa NGB may delegate some of its enforcement and compliance powers to the Provincial Licensing Authorities (PLAs)

16 Problem Gambling Electronic system for the monitoring and reporting of registered players Players must set limits on accounts Providers to audit playing patterns and behaviour Self-diagnosis system Notice on website of IG provider i.r.o: - voluntary player exclusion - treatment of addictive gambling (National Responsible Gambling Programme)

17 Money laundering Registration of players and verification of player identity Restriction of IG facilities on players from selected countries that complies with Financial Action Task Force (FATF) or designate organization Compliance with FICA requirements i.r.o licensing, registration of players, and other compliance and monitoring Establishment of player account and of nominated accounts held with authorised financial institutions Winnings to be transferred to nominated account only

18 Money laundering cont. Funds not to be converted into any form of value 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 method of payment Obligation on IG provider to report suspicious and illegal activities Provision for control systems to be prescribed

19 Taxation The Bill empowers enactment of legislation on taxation Taxation to be introduced as a separate money Bill Tax to be considered for use to curb the extent of gambling

20 Conclusion Regulation of IG will ensure: - accountability by IG industry; - eliminate illegal IG operations; - protection of players; and - provide for effective and transparent licensing.

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