1. PRESENTATION SECOND QUARTER PERFORMANCE REPORT:
1 July – 30 September 2015
PORTFOLIO COMMITTEE ON TRADE & INDUSTRY
11 November 2015
Cape Town
Presenter:
Ms Caroline Kongwa
(Accounting Authority)

2. CONTENT Executive summary Gambling Sector Performance
Research Results on Gambling Prevalence and Problem Gambling
Performance against business plan
Progress on actions in the risk register
Report against post audit implementation plan
Financial report
PFMA and Treasury regulation compliance checklist /calendar
Conclusion

3. EXECUTIVE SUMMARY
There were 17 Targets that were to be reported against in the entity’s Annual Performance Plan 2015/2016 in Quarter 2 and 100% of the targets were achieved.
The NGB continues to play an important role in the curbing of unlicensed gambling activities particularly online gambling.
Through the use of the Entity’s register for illegal gambling operatives, the NGB in collaboration with the law enforcement agencies, have identified online gambling syndicates in Gauteng and are in the process of securing arrests.
The NGB maintains its leading role in Project with the HAWKS.
The NGB has successfully performed evaluations and compliance monitoring of four (4) Provincial Licensing Authorities (PLAs), namely: Gauteng, KwaZulu-Natal, Northern Cape and North West.
The NGB gathered national gambling statistics and information about the performance of the South African legalised gambling industry from all Provincial Licensing Authorities (PLA’s).
The NGB has conducted research called the Khayabus on prevalence of gambling and problem gambling. This is a follow up study that was conducted to determine and track gambling behaviour over time from April 2011 to April 2015.

4. FY 15 ANNUAL AUDITED GAMBLING SECTOR PERFORMANCE
Casino’s account for the highest percentage contribution of total GGR at 72.1%, with Betting at 14.5% followed by LPM’s at 8.7%.

5. FY 15 AUDITED GAMBLING SECTOR PERFORMANCE
Gauteng is the highest contributor to GGR at 42.4%, followed by KZN at 18.4% and Western Cape at 15.8%.

6. Q1 GAMBLING SECTOR PERFORMANCE
Casino’s account for the highest percentage contribution of total GGR at 71.9%, with Betting at 15.9% followed by LPM’s at 8.8%.

7. Q1 GAMBLING SECTOR PERFORMANCE
Gauteng is the highest contributor to GGR at 41.2%, followed by KZN at 18.8% and Western Cape at 15.8%.

8. NCEMS LPM SECTOR PERFORMANCE
Kwa-Zulu Natal accounts for the highest distribution at 23%, followed by Gauteng at 21% and Western Cape at 17%. Northern cape has in the month of October effected its first distribution.

9. NCEMS LPM SECTOR PERFORMANCE
Limpopo is closest to reaching 50% of its total allocation at 36% (or 72% of provincial allocation) followed by the Eastern Cape at 28% (or 55% of provincial allocation). The total National rollout stands at 22% (or 44% of provincial allocations).
NGB in terms of reg. 13 of National Gambling Regulations 2004, is required to conduct a social economic (LPM industry) impact study for Minister consideration prior to Phase 2 rollout.

10. RESEARCH RESULTS ON GAMBLING PREVALENCE AND PROBLEM GAMBLING
Summary of the main trends are as follows:
Gambling participation has increased from 14.3% to 15.3%;
National lottery participation has increased from 77.0% to 78.9%;
Illegal gambling has seen a significant decrease from 41.0% to 17.5%;
54.4% of gamblers may be considered as “no risk”, a significant increase from 43.4%;
9.9% of gamblers may be regarded as “problem gamblers”. This is down from 20.2%;
Illegal gambling has the highest risk of people becoming problem gamblers;
There is a slight increase in gambling across both genders of South African gamblers;
More coloured South Africans are participating in gambling, an increase to 19.8% from 11.3%;
The ages groups 25 and older all show an increase in gambling participation;
Problem gambling has decreased from 3.1% to 1.8% for those gamblers earning R1 to R2 999; and
Both metro and non-metro problem gamblers have decreased.

11. RESEARCH RESULTS ON GAMBLING PREVALENCE
Those who participated in gambling activities (including the national lottery) between April 2014 to April were more likely to be male than female, between 35 – 49 years old, and regionally appeared to be more prevalent in Gauteng and among the highest income groups.
Participation in the national lottery remained the most popular choice (78.9%) in terms of gambling. (refer to graph below)
Illegal gambling accounts for 17.5% of gambling activities participated in – this is the second highest gambling mode. (refer to graph below)

12. RESEARCH RESULTS ON GAMBLING PREVALENCE
The has been a decline in incidence of gambling at casinos, buying of scratch cards, participation in lucky draws, betting on horse racing and sport, playing on LPMs and bingo
Overall gambling modes reflect buying national lottery tickets is the only mode to show an increase in incidence since November 2012 – up from 77.0% in November 2012 to the current 78.9%. Based on the data, the percentage of participants in 45 year and older age category, and the male gender category, continued to grow steadily.
Although a decline was recorded in participation in legal and illegal modes of gambling since November 2012, the prevalence of participation in illegal gambling as at April 2015 at 17.5% and is alarming.

13. RESEARCH RESULTS ON GAMBLING PREVALENCE
93% of the South African population are at no risk with regard to gambling, compared to just over half of South African gamblers (54.4%) who are at no risk with regard to their participation in gambling activities; and
Only 1.5% of the South African population are at high risk (or regarded as problem gamblers) with regard to gambling, compared to 9.9% of South African gamblers who are at high risk (regarded as problem gamblers) with regard to their participation in gambling activities.

14. RESEARCH RESULTS ON PROBLEM GAMBLING
The decrease in the proportion of South African adults and the South African gambling population falling into the high risk (problem gambling) risk category from November 2012 to April 2015 has been balanced by a corresponding increase in the percentage of the South African gambling population and gamblers who are not at risk. Refer to graph below.

15. RESEARCH RESULTS ON PROBLEM GAMBLING
Underage gambling: Gambling in South Africa (including the buying of national lottery tickets) is illegal under the age of 18.
Incidence of gambling among 15 – 17 year olds remains low, although the data shows a slight increase since November 2012 (from 2% to 4%). The gambling activity that 15 – 17 year olds are most likely to take part in is the buying of national lottery tickets, which is also the most preferred form of gambling.

16. CHALLENGES Proposed action Key challenges
Capacity constraints impacts on our ability to effectively reach out as broad as possible to sections of our communities when doing public awareness and education.
The Legal Skills in the NGB are scarce and this presents a major challenge in the regulatory environment within which NGB operates.
The NGB Trust which existed as a separate entity was de-registered and all confiscated winnings were transferred into an NGB-owned separate bank account. The NGB is experiencing challenges allocating the confiscated winnings due to inadequate documentation.
Collaborating with the dti in participating in the public outreach and initiatives organised by the dti.
Capacitating the organisation in mission critical areas such as compliance generally, prevention and detection of illegal gambling as well as enforcement.
The NGB continues to liaise with the banks in an attempt to obtain source documents for the confiscated suspected unlawful winnings.

17. PERFORMANCE AGAINST APP - Compliance
Performance Indicator
2nd Quarter Milestone
Actual Achievement
Reason for Variance
Corrective action
Nine (9) Consolidated three tier compliance
evaluation assessment reports
Conduct desktop evaluation of three (3) province and report findings
Achieved
Conducted 3 (three) desktop and onsite evaluations between August and September 2015 and reported findings for the KZN, NW and NC PLAs.
N/A
Evaluate applications, conduct onsite evaluations and
report findings of all LPM applications in excess of 5 machines
Evaluated 7 (seven) applications reported findings of 6 (six) applications from NW-GB, and 1 (one) GGB and Conducted onsite evaluations of 3 (three) PLAs, namely; KZN, NW and NC Province and reported findings of all LPM applications in excess of 5 (five) machines.
Report on
intervention and support provided to regulators and law enforcement agencies
intervention and support provided to regulators, law enforcement agencies
Provided support to PLA’s and participated in a collaborative multidisciplinary Law Enforcement Agency through a National Project for suppressing online gambling with various regulators and law enforcement agencies as members .
Number of investigations finalised
Reporting on unlawful winnings and related matters
Reported on unlawful winnings and related matters and in addition, Collated NGB2 forms reporting confiscated winnings developed a register with approximately 150 unlawful winnings related entries. Approached State Attorneys for assistance with court applications for forfeiture of unlawful winnings.

18. PERFORMANCE AGAINST APP - Compliance cont…..
Performance Indicator
2nd Quarter Milestone
Actual Achievement
Reason for Variance
Corrective action
Annual Analysis and reporting data in accordance with the prescribed requirements
Monitor significant events associated with LPMs and analysis and report data
Achieved
Monitored significant events associated with LPMs and analysed and reported thereon through OCC and MC reports and meetings Attended to testing of LPMs and recommended the testing of NCEMS and LPMS that were found faulty (Meter reading)
N/A
Developed and accessible registers
Maintain National functional Registers
Maintained the national registers by inter alia: assessment of status, identification of gaps for improvements and recommended mechanisms to close gaps. Tabled the matter with PLAs through LCF/CEO forums. Communication was sent to Minister regarding the re-instatement of the National Exclusion registers; draft regulations availed by Minister to the NGB for comments.
Illegal Operator register development., implementation and roll out
System development
NGB developed and implemented a manual system for the development of the illegal operatives register (Excel format) to collect information about illegal gambling activities from all Provincial Licensing Authorities (PLAs).
The NGB is also tasked to combat illegal gambling, and especially online gambling in South Africa. The main aim of such a system is to gather provincial information, consolidate data and identify illegal operators suitable for blacklisting and prevented from acquiring gambling licenses in South Africa, as requested by the Minister.

19. PERFORMANCE AGAINST APP - Stakeholder Liaison and Advisory Services
Performance Indicator
2nd Quarter Milestone
Actual Achievement
Reason for Variance
Corrective Action
S65 Advisory reports presented to the Accounting Authority
Advisory report on feasibility of regulating forms of gambling tabled at MANCO
Achieved
Provided researched advisory report on feasibility of regulating forms of gambling and also conducted comparative analysis of other jurisdictions to ensure that the advice is substantiated.
N/A
Conduct research on the impact of gambling and present the report to the Accounting Authority
Field work conducted and analysis of data
Field work conducted and data analysed. Report on impact of gambling (prevalence) submitted and presented to the accounting authority.
Audited gambling sector
performance report
Report on Gambling Sector Performance (1st quarter, 2015/2016)
Audited report on Gambling Sector Performance (2014/15)
Presentation on national gambling statistics (1st quarter; 2015/16)
Audited presentation on national gambling statistics (2014/2015)
Achieved.
Report on Gambling Sector Performance (1st quarter, 2015/2016) submitted.
Audited report (2014/15) submitted.
Presentation on national gambling statistics for (1st quarter 2015/16) was submitted.
Audited presentation on national statistics (2014/2015) submitted.
BBBEE concept document presented and approved by the Accounting Authority
MANCO workshop on inputs on BBBEE concept document to the Accounting Authority for approval
BBBEE Concept document was submitted to the AA. For approval, approval was granted on 30 September 2015.

20. PERFORMANCE AGAINST APP - Stakeholder Liaison and Advisory Services
Performance Indicator
2nd Quarter Milestone
Actual Achievement
Reason for Variance
Corrective Action
100 Percentage implementation and assessment of the framework
Progress report on 50% implementation against the plan
Achieved
Progress report on 100% Implementation against the approved framework was achieved.
N/A
100 Percentage Implementation of the Stakeholder management
strategy and plan (framework) presented and approved by the Accounting Authority
Progress report on 50% implementation against the framework
Progress report on 60% of communication the Implementation Plan has been achieved
73% of the Implementation Plan on the approved stakeholder strategy and plan has been achieved.
Progress report submitted.
 N/A

21. PERFORMANCE AGAINST APP – Corporate Services
Performance Indicator
2nd Quarter Milestone
Actual Achievement
Reason for Variance
Corrective action
Unqualified audit report with a reduction in the number of audit findings reported in the management report
Quarterly reports submitted reflecting the status of the audit action plan.
(reflecting reduction to less than 50 audit findings)
Achieved
Quarterly reports submitted reflecting the status of the audit action plan. Report reflects decrease in audit findings was submitted to the AA.
N/A
Report on the implementation of Human Capital Strategy and Plan
Report on progress made against the implementation of the human capital strategy and plan
Report on progress made against the implementation of the human capital strategy and plan submitted. This reported included but was not limited to matters that related to the status of vacancies at the NGB, performance information reporting etc.
98% uptime of NGB servers
98% Up-time or above.
100% uptime was achieved.

22. SUMMARY PROGRESS ON ACTIONS IN THE RISK REGISTER
STRATEGIC RISKS
Risk name
Risk control
Residual risk
Action
Lack of cooperation by PLAs, lack of participation in the fora, lack of response when inputs are sought for consolidation purposes, lack of coherence on policy positions.
Prepare deficiency reports and set timelines for rectification and communicate at Fora and other collaborative structures in place. 16
Compliance monitoring of PLAs on their monitoring of compliance by licensees as well as evaluation of the performance of the PLAs regarding applications for licensing LPMs have been performed in 3 (three PLAs during this quarter, and the NGB obtained cooperation by all PLAs evaluated.
Proliferation of illegal forms of gambling and loss of revenue to the fiscus.
Fora and other collaborative structures in place Enhanced identification, reporting and provision of support to the PLAs.
Through a Project to combat illegal gambling which is a national projects providing a collaborative structure to curb online gambling, identification, reporting and provision of support to the PLA was achieved.
Unavailability of reliable data from external stakeholders.
Reliability on audited data from external stakeholders. 12
The maintenance of quality registers is a project that is currently in progress. The NGB has allocated resources to address this matter in conjunction with PLAs who have been addressed at the ICT Forum that was held in September This matter is be escalated to the CEOs forum that will be held in December Currently identification of gaps in the entire systems including the NGB and the PLAs have taken place in collaboration with the PLAs (through the ICT Forum) and the NGB internal resource.

23. REPORT AGAINST POST AUDIT IMPLEMENTATION PLAN
34 audit findings were received for the 2014/15 financial period, 24 were resolved, 10 in progress as at 30 September 2015.
134 audit findings received during the 2013/14 financial period, 131 were resolved, 3 in progress as at 30 September 2015.

24. FINANCIAL STATUS AND PERFORMANCE
NGB has spent 32%of its annual budget as at the end of Q2.
Cash balance of R24.4 million is on hand. This balance includes confiscated winnings amounting to R4.7 million.
Variance Analysis for Key Areas of Expenditure
The positive variance of R1, 933,678 on Personnel Costs is attributable to unfilled vacancies
The positive variance of R839, 986 on professional fees is due to an unspent allocation on the socio-economic impact of illegal gambling in South Africa.

25. SECTION OF THE REGULATION/ACT
COMPLIANCE CALENDAR FOR THE FIRST QUARTER: 1 JULY 2015 – 30 SEPTEMBER 2015
DATE
SECTION OF THE REGULATION/ACT
ACTION NEEDED
Done (Yes/No)
JULY
31 July 2015
Shareholder’s requirement
Submit monthly expenditure and income statements with projections for the remaining months, explanations for material variances as well as possible remedies to be applied to ensure that expenditure and income are in line with the approved budget
Yes
TR , , , , &
Submission of the first quarterly report signed by the Accounting Authority to the Minister via Public Entity Oversight (PEO). The report should be aligned to the Annual Performance Plan (APP) and Business Plan TR
Schedule 3B entities to submit quarterly reports on borrowing programme to National Treasury on actual borrowing for quarter and update on borrowing plan
N/A
Submit a copy of the audited annual financial statements including the audit committee report
AUGUST 
28 August 2015
31 August 2015
Accounting Officers meet with the Director-General to discuss the outcome of the Cabinet Lekgotla and other key strategic operational issues
Executive Authority meet with Chairpersons of entities Audit Committees and AGSA to discuss the outcome of the previous audit cycle
Yes meeting with AG
PFMA 65 (1)
Submit 80 copies and one (1) copy of the CD of the final Annual Reports to the Parliamentary Officer, 120 Plein Street, 6th floor, Cape Town, 10 copies to the Public Entity Oversight (PEO) and 10 copies to the National Treasury

26. SECTION OF THE REGULATION/ACT
COMPLIANCE CALENDAR FOR THE FIRST QUARTER: 1 JULY 2015 – 30 SEPTEMBER 2015
DATE
SECTION OF THE REGULATION/ACT
ACTION NEEDED
Done (Yes/No)
31 August 2015
Shareholder’s requirement
Submit copies of  management letter receive from the AGSA or independent auditors as well as the audit report for the last financial year
Yes
Framework for Strategic Plans and Annual Performance Plans
3A public entities submit r first draft of the Annual Performance Plans to the National Treasury, Department of Performance Monitoring and Evaluation (DPME) and the Minister via the PEO
SEPTEMBER
To be confirmed
Chief Financial Officers(CFO’s) convene with the Shareholder for a CFO’s Forum to discuss key financial issues
Board Secretaries convene with the Shareholder for Board Secretaries Forum to discuss key corporate governance issues
N/A
Cluster Forums convene with the shareholder to discuss matters relevant to the cluster
25 September 2015
Submit monthly expenditure and income statements with projections for the remaining months, explanations for material variances as well as possible remedies to be applied to ensure that expenditure and income are in line with the approved budget
30 September 2015
Shareholder submit first draft shareholder’s compact for entities consideration

27. CONCLUSION 100% of the annual performance targets were achieved.
Balancing of the socio economic impact of gambling versus growth in the gambling industry through effective compliance monitoring of PLA’s continues to be of priority.
The NGB will continue to monitor the market conduct and market share.
Multi-disciplinary law enforcement agency to combat illegal gambling has been strengthened.
NGB will continue to double its efforts with regards to curbing illegal gambling. Illegal operatives register has been formulated.
Through strengthened stakeholder relations there has been success in areas of concurrent jurisdiction.
The financial position of the entity has been stabilised and 32% of the budget has been reported as spent with plans to spend NGB’s full allocation by year end.
NGB has reported a decrease in audit finding from 134 to 34. There has been improvement regarding management of internal controls relating to prevention of irregular expenditure.
Cost containment measures have been implemented with regards to travel.

28. Eco-Glades 2, Block C, Eco Park, Centurion
Thank you
420 Witch-Hazel Avenue
Eco-Glades 2, Block C, Eco Park, Centurion
Telephone:
Facsimile: