Submissions on Remote Gambling Bill [PMB3-2015] & DTI Gambling Policy- Parliamentary Portfolio Committee on Trade & Industry 3 June 2015 Garron Whitesman BA LLB LLM

Brief Bio Attorney of the High Court of South Africa since Attorney of the High Court of South Africa since Practised in South Africa and London. Practised in South Africa and London. Practised internationally in the gambling industry since Practised internationally in the gambling industry since Recognised for many years internationally as one of the leading legal experts internationally and in South Africa on issues of online gambling. Recognised for many years internationally as one of the leading legal experts internationally and in South Africa on issues of online gambling. Been involved professionally for clients in licensing and compliance in most licensing jurisdictions. Been involved professionally for clients in licensing and compliance in most licensing jurisdictions. Litigated industry- related matters in the UK, US and the ECJ. Litigated industry- related matters in the UK, US and the ECJ. Act for many industry participants internationally but not on brief in respect of these submissions, which are being made as an independent professional and express my own views. Act for many industry participants internationally but not on brief in respect of these submissions, which are being made as an independent professional and express my own views.

Regulation In favour of Regulation over Prohibition. In favour of Regulation over Prohibition. Prohibition likely to be wholly unsuccessful- as it is now. Prohibition likely to be wholly unsuccessful- as it is now. Bona fide operators (e.g. those already regulated) are accustomed to regulated markets, are part of international trend towards increasingly being regulated and are comfortable with being regulated. Bona fide operators (e.g. those already regulated) are accustomed to regulated markets, are part of international trend towards increasingly being regulated and are comfortable with being regulated. Bona fide operators are already bound by strict advertising codes, AML and player protection obligations by their primary licenses. Bona fide operators are already bound by strict advertising codes, AML and player protection obligations by their primary licenses.

Regulation cont.. Bona fide operators are already strictly regulated and it is highly arguably just as “safe” for a player as a locally licensed operator. Bona fide operators are already strictly regulated and it is highly arguably just as “safe” for a player as a locally licensed operator. Bona fide operators want to be here and are happy to be regulated in South Africa. Bona fide operators want to be here and are happy to be regulated in South Africa.

Regulation cont… Regulation allows one to regulate vs. having a market in which one is reliant on others to create the control that we want to assert. Regulation allows one to regulate vs. having a market in which one is reliant on others to create the control that we want to assert. The driver for regulation is largely irrelevant: The driver for regulation is largely irrelevant: Player protection vs. Player protection vs. Raising revenue (e.g. Italy) Raising revenue (e.g. Italy) Can we driven by both. Can we driven by both.

Regulation cont… Little doubt that problem player behaviour can be more quickly and effectively identified and controlled online. Little doubt that problem player behaviour can be more quickly and effectively identified and controlled online. Not convinced that more harm will result by regulation as DTI would have it or that the number of players who currently play online is going to materially increase. Not convinced that more harm will result by regulation as DTI would have it or that the number of players who currently play online is going to materially increase. Questionable whether the demographic of persons currently playing online is the same as those desirable to view as “vulnerable” and protect against proliferation. Questionable whether the demographic of persons currently playing online is the same as those desirable to view as “vulnerable” and protect against proliferation. No doubt it will raise further funds for the fiscus even if it only redirects currently untaxed activity to be taxed. No doubt it will raise further funds for the fiscus even if it only redirects currently untaxed activity to be taxed.

Regulation cont… Highly unlikely that a prohibition can be effectively enforced despite anything the DTI proffers including its reference to “devices”. What “devices”? I have never heard of so- called “devices” that can do this. Highly unlikely that a prohibition can be effectively enforced despite anything the DTI proffers including its reference to “devices”. What “devices”? I have never heard of so- called “devices” that can do this. Is DTI going to have cooperation of the SA banks and ISPs? Enforcement highly unlikely to stem tide of proliferation. Is DTI going to have cooperation of the SA banks and ISPs? Enforcement highly unlikely to stem tide of proliferation. Highly undesirable to prosecute players (AU took this view despite its law permitting player prosecution). Highly undesirable to prosecute players (AU took this view despite its law permitting player prosecution). Agreed that this is a question of policy, which is a balancing act, but how does one resolve the fact that there has been a steady increase in the rollout of multiple forms of gambling over the past decade in SA. Agreed that this is a question of policy, which is a balancing act, but how does one resolve the fact that there has been a steady increase in the rollout of multiple forms of gambling over the past decade in SA.

Regulation cont… In a matter from the Netherlands, the ECJ held that it was contrary to EU law for the Netherlands to keep out EU- based competitors from its market on the ground of public health and control of proliferation whilst increasing the offering being made available by the Dutch monopoly (not binding on us but indicative of the logic applied). In a matter from the Netherlands, the ECJ held that it was contrary to EU law for the Netherlands to keep out EU- based competitors from its market on the ground of public health and control of proliferation whilst increasing the offering being made available by the Dutch monopoly (not binding on us but indicative of the logic applied). ECJ decision re. Germany took a similar view when dealing with the German regime on public health grounds. ECJ decision re. Germany took a similar view when dealing with the German regime on public health grounds. Most EU countries have regulated or are quickly heading towards regulation. Most EU countries have regulated or are quickly heading towards regulation. We can’t look at certain models of regulation by prohibition- we need to look to how similar societies with similar mores and similar democracies have dealt with the issue- UK, for example. The following jurisdictions are inappropriate: We can’t look at certain models of regulation by prohibition- we need to look to how similar societies with similar mores and similar democracies have dealt with the issue- UK, for example. The following jurisdictions are inappropriate: Singapore is a benign dictatorship (even chewing gum banned). Singapore is a benign dictatorship (even chewing gum banned). US is largely conservative and non- permissive. US is largely conservative and non- permissive. China is a communist dictatorship. China is a communist dictatorship.

Legally Questionable Substantial questions of law as to whether the desired prohibition is legally sustainable from both local and international law perspective (has been previously raised). Substantial questions of law as to whether the desired prohibition is legally sustainable from both local and international law perspective (has been previously raised). I question: I question: whether the DTI has properly considered this. whether the DTI has properly considered this. what the DTI believes is the material and defeasable distinction in law between current landbased casino and poker activities and e.g. virtual racing and equivalent online activities. what the DTI believes is the material and defeasable distinction in law between current landbased casino and poker activities and e.g. virtual racing and equivalent online activities.

Legally Questionable cont… In my view and experience the distinction is arbitrary and capricious and nigh impossible (if at all) to justify (GRC report seems to recognise this) In my view and experience the distinction is arbitrary and capricious and nigh impossible (if at all) to justify (GRC report seems to recognise this) Apart from this, most countries who have had some semblance of a local industry and banned other forms of gambling have been legally unable to sustain the prohibition on the basis of public health grounds. Apart from this, most countries who have had some semblance of a local industry and banned other forms of gambling have been legally unable to sustain the prohibition on the basis of public health grounds. Permissive (but well regulated and taxed) or total ban tolerated, but can’t be “half pregnant”. Permissive (but well regulated and taxed) or total ban tolerated, but can’t be “half pregnant”.

Conclusion I submit that whatever policy is ultimately adopted the same should be: I submit that whatever policy is ultimately adopted the same should be: Clear Clear Enforceable Enforceable Legally defensible Legally defensible Sensible within a constitutional democracy Sensible within a constitutional democracy Well- reasoned (not arbitrary or capricious) Well- reasoned (not arbitrary or capricious) Ultimately, however, I reiterate that I am in favour of regulation. Ultimately, however, I reiterate that I am in favour of regulation.