Click to edit Master subtitle style 11/1/11 The Bingo Association of South Africa REPRESENTATIONS ON FINDINGS OF GRC REGARDING BINGO

11/1/11 Introduction BASA is a voluntary association that represents the interests of the bingo industry. Galaxy and Viva are the two largest bingo licensees in South Africa. BASA, Galaxy and Viva are grateful to this Committee for the opportunity to present to it on the report of the Gambling Review Commission.

11/1/11 Delegation Members Lawrence Smith – Viva Bingo Allan Scott – Viva Bingo Chris du Toit – Galaxy Bingo Steven Budlender – Johannesburg Bar John Zieff – Edward Nathan Sonnenbergs

11/1/11 The findings of the GRC regarding Bingo The GRC made two main findings regarding Bingo: 1. A policy on Bingo should be developed, including limits on the number of Bingo licences and seats per province 1. Electronic Bingo Terminals (“EBTs”) should be banned.

11/1/11 BASA position on the first recommendation BASA supports the view of the GRC that it would be appropriate for limits to be placed on the number of Bingo licences and seats per province. Indeed, BASA specifically proposed to the GRC that national norms and standards be issued dealing with total number of bingo licenses to be rolled-out in each province, the provincial allocation of licenses and the total number of seats / gaming positions per license. BASA has also been engaging the National Gambling Board on this issue for a number of years. Once this issue is dealt with, bingo will be as tightly regulated as any other part of the gambling industry.

11/1/11 BASA position on the second recommendation BASA strongly opposes the recommendation that Electronic Bingo Terminals (“EBTs”) should be banned. It is clear that: Bingo, including EBTs, is one of the smallest sub-sections of the gambling industry Since EBTs were introduced in 2005, there has been no negative impact on casino operators Compared to other forms of gambling, Bingo and EBTs have very little connection to problem gambling Bingo and EBTs have little or no impact on the poorest members of our society Technological advances such as EBTs are essential if Bingo licensees are to survive No need has been demonstrated for EBTs to be banned.

11/1/11 DOES THE PROPOSED BAN ON EBTs FIT WITH THE PURPOSE OF GAMBLING REGULATION?

11/1/11 The views of the Minister on regulation “…the roll out of a regulated industry can bring economic benefits, but that these have to be balanced against potentially negative socio economic impacts, particularly on the poor… Apart from the phenomenon of compulsive or addictive gambling that exists wherever the activity takes place, we need also to take account of high levels of poverty and inequality in our society and the possibility, therefore, of undesirable overstimulation targeting low income people.” -Minister Rob Davies, 24 October 2011

11/1/11 The views of the GRC on regulation “It is common cause that policy and regulation needs to take cognizance of the high levels of poverty and inequality in South Africa, and to ensure that gambling does not negatively affect the most vulnerable sectors of our society.” -GRC report page 73

11/1/11 The objective facts Bingo is one of the least prevalent forms of gambling in South Africa (see GRC Report, page 75) Bingo patrons fall within the wealthiest strata of society, who are at the lowest risk for problem gambling (see GRC Report, pages 77 and 85) Bingo patrons are the least affected by gambling-related problems (see National Responsible Gambling Programme statistics) Bingo centres have strict access controls which prevent under-age gambling (see GRC Report, page 89)

11/1/11 No basis to ban EBTs There is no serious suggestion by the GRC that EBTs negatively impact the most vulnerable sectors of our society. There is also no evidence before this Committee that EBTs negatively impact the most vulnerable sectors of our society. There is therefore no rational or lawful basis to ban EBTs.

11/1/11 THE ASSERTIONS OF THE GRC REPORT

11/1/11 The assertions of the GRC Report The GRC recommendation to ban EBTs is based on three main assertions: 1. EBTs contribute to a proliferation of gambling 2. EBTs are casino slot machines 3. EBTs mean that casinos face an uneven playing field The first assertion is dealt with by the BASA proposal to introduce norms and standards placed on the number of Bingo licences and seats per province. The second and third assertions are simply incorrect.

11/1/11 EBTs ARE NOT CASINO SLOT MACHINES

11/1/11 Paper Bingo and EBT Bingo The features of the game of paper Bingo are identical to the features of the game of Bingo on EBTs: More than one player is required Each player has a bingo card with set of numbers Numbers are drawn by a random number generator and are matched against each player’s card The outcome of the game is determined by the order in which the numbers are drawn and matched against each player’s card There is always at least one winner

11/1/11 There are material differences between EBTs and casino slot machines EBTsCasino Slot Machines Allow the player to play the game of Bingo No Bingo game played Minimum of two players – usually more Played by one player at a time At least one winner per gameNo guaranteed winner All terminals in the game linked to a central random number generator to generate the bingo numbers Each machine operates independently with its own random number generator Not as profitable as Casino Slot machine – R ave GGR per terminal per month (Gauteng Extremely profitable – R ave GGR per machine per month (Gauteng)

11/1/11 The “look, feel and sound” approach is unsustainable (1) The GRC relies on its perception that EBTs “look, feel and sound” like casino slot machines. However, the GRC’s perception is entirely besides the point and impossible to deal with via legislation, in a series of respects: 1. It is clear that the game played on EBTs is Bingo. Thus, the GRC’s real complaint relates only to the components of the EBTs that are purely for entertainment purposes. 1. There is no proper basis for Parliament to prevent or constrain Bingo operators in providing entertainment to people who want to play bingo on EBTs. There is no constraint on the forms of entertainment provided by casinos via slot machines.

11/1/11 The “look, feel and sound” approach is unsustainable (2) 3. It is impossible to craft a valid legislative provision that distinguishes between electronic bingo that “looks, feels and sounds” like a slot machine and electronic bingo that does not. 3. It is impossible to test and verify whether a bingo terminal “looks, feels and sounds” like a slot machine. All that can be tested and verified is whether the game of bingo is played on the terminal. 3. Attempting to ban the “look, feel and sound” of EBTs would therefore result in a complete ban on electronic bingo. It would be irrational and unlawful to ban electronic bingo, but allow electronic poker, electronic blackjack, electronic roulette and so on.

11/1/11 EBTs DO NOT CREATE AN UNEVEN PLAYING FIELD FOR CASINOS

11/1/11 No uneven playing field (1) 1. The GRC expresses concern about the lack of corporate social investment (“CSI”) requirements for Bingo licensees. Bingo licenses in Mpumalanga, the North-West and KwaZulu-Natal already contain conditions relating to CSI commitments. The GRC apparently took no account of this. The Gauteng bingo operators are equally willing to make binding CSI commitments. Moreover, s53(1) of the National Act already requires provincial licensing authorities, when considering applications for both Casino and Bingo licenses, to take into account any socio-economic impacts, and impose such conditions regarding CSI as are reasonable and justifiable. If any provincial licensing authority has not imposed adequate CSI requirements, this can be remedied by the relevant authority. It is certainly not a rational or lawful basis for the banning of EBTs.

11/1/11 No uneven playing field (2) 2. The concern of the GRC on license fees/taxes is equally incorrect. In Gauteng, the bingo gaming tax is 12% of GGR while the casinos pay only 9% of GGR. In any event, if there is a problem with license fees/taxes, this must be dealt with provincially – not by banning EBTs. 3. All existing casino licenses allow EBTs to be installed and operated. Eg: Emperor’s Palace Casino obtained approval to install 137 bingo seats, but chose not to implement any form of bingo – demonstrating that EBTs are not as lucrative as suggested. 3. If the playing field is skewed, it is skewed against bingo operators. The casino industry in Gauteng generates revenue of R6.3 Billion per year. After six years of EBTs, the bingo industry in Gauteng generates revenue of less than R0.2 Billion per year (only 3% of the casino GGR). It therefore cannot be seriously suggested that the two sectors require identical treatment to protect casinos.

11/1/11 Competition is not a basis for banning EBTs (1) The casinos’ fear of competition from bingo operators (even if it were well-founded) in any event provides no rational or lawful basis to ban EBTs. The Constitution protects competition as being in the public welfare: “Any form of competition will pose a threat to a rival business. However, not all competition or interference with property interests will constitute unlawful competition… The Bill of Rights does not expressly promote competition principles, but the right to freedom of trade, enshrined in s 22 of the Constitution is, in my view, consistent with a competitive regime in matters of trade and the recognition of the protection of competition as being in the public welfare.” Phumelela Gaming & Leisure Ltd v Gründlingh 2007 (6) SA 350 (CC) at paras 32-36

11/1/11 Competition is not a basis for banning EBTs (2) Moreover, the GRC’s justification for banning EBT’s is entirely inconsistent with the approach to competition it recognises is required. In a different section of its report, the GRC states: “Much of the opposition to betting exchanges appears to be derived from concerns by existing operators that their markets will be put under pressure from competition by betting exchanges. The Commission is of the view that the fact that betting exchanges would present competition to existing forms of gambling is not a good reason to oppose their introduction. The Commission has taken cognisance of the arguments raised by the horseracing industry in other jurisdictions that the lower contributions by betting exchanges to levies supporting the industry has a negative impact on the survival of the industry. The industry must, however, accept that the innovation exists and that they will need to find new ways to ensure their sustainability.” GRC Report, p 173

11/1/11 THE BENEFITS OF BINGO

11/1/11 The Benefits of Bingo A typical Bingo Centre provides: A safe and secure, socially interactive environment A quality destination venue for customers Employment for people per Bingo hall from the local previously disadvantaged community Contributions in the region of R5 million per site per year in gaming taxation and VAT The promotion of BBBEE Spin-off opportunities for local businesses

11/1/11 Job Creation Over 400 jobs directly created in Gauteng alone 70% of junior and senior management in the Bingo industry are historically disadvantaged individuals Additional jobs created in Gauteng (using NGB multiplier)

11/1/11 The Reality of Bingo It is subject to stringent legislation It creates jobs and makes investment Strict access controls eliminate exposure to under 18’s Locations in affluent areas prevent exposure to the poor It has no proven negative impact on the other gambling sectors It has a very low incidence of problem gambling It is offered in various formats including wholly electronic (EBTs), paper and other forms It generates taxes in the form of Gaming Taxes, VAT, PAYE and Corporate Tax

11/1/11 Conclusion BASA reiterates its support for the issuing of national norms and standards dealing with total number of bingo licenses to be rolled-out in each province, the provincial allocation of licenses and the total number of seats / gaming positions per license. However, BASA strongly opposes any attempt to ban EBTs. As has been demonstrated, such a ban would be unjustifiable, irrational and unlawful.

11/1/11