1. THE NATIONAL GAMBLING AMENDMENT BILL, 2007
Briefing to the Portfolio Committee on Trade and Industry
8 August 2007

2. IG in SA
Estimated 3.5 million people have access to the Internet and only a small percentage of these will access gambling sites (niche market)
Cost of telecommunications high
Reports indicate that a number of South Africans visit foreign IG websites daily
Global IG industry has grown from US$2.2bn in 2000 to about US$9.2bn and is expected to reach US$18bn by 2008 (Interactive Gambling Report, 2005), there are implications for South Africa

3. Objectives
Protection of players
Revenue to the fiscus
Retain spend on IG within the country
Policy rationale:
-Cost of prohibition high
-Share in the global IG industry revenue

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. Approximately 20 written submissions were received
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 certified on 13 July 2007

6. Bodies and stakeholders consulted included:
Intro cont.
Bodies and stakeholders consulted included:
The National Gambling Board
Provincial Licensing Authorities
National Treasury
South African Reserve Bank
South African Revenue Services
Casino Association of South Africa
Industry role players
National Responsible Gambling Programme
Problem Gamblers Anonymous

7. Background
The key impact areas identified by the report included:
Protection of vulnerable persons;
Addiction to gambling;
Exposure to money laundering and organised crime;
Competition within local gambling industry;
Cost of regulation and monitoring

8. Approach
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 i.t.o the NGA largely applies to all forms of gambling including IG

9. Scheme of the Bill
Definitions of new terms
Provision of IG games
Player protection
Advertising
Licensing
Compliance and enforcement
Problem gambling
Money laundering
Empowerment
Taxation

10. Provides for authorised IG games, systems and methods
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

11. 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
Provider not allowed to extend credit to a player
Dispute resolution
The license condition of provider must be displayed on website

12. Advertising
Existing provisions w.r.t advertising in NGA apply to IG, e.g. advertisement to carry notice of dangers of addictive and compulsive gambling
Only licensed IG providers are permitted to
advertise IG
The Minister to prescribe the content which may be reflected on the IG website

13. - operator licences; and
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);
Licencing/testing and certification of:
IG software
IG equipment
Manufacturers, suppliers, and maintenance providers of IG equipment
Capital maintenance regime: Maintenance of capital regime is a rule which insists that paid-up capital may be diminished or lost in the course of the company’s trading but assumes that persons who deal with, and give credit to a company, naturally rely upon the fact that the company is trading with a certain amount of capital already paid and they are entitled to assume that no part of the capital which has been paid into the coffers of the company has been subsequently paid out, except in the legitimate course of its business.
Solvency liquidity This is a rule which allows a company to make a distribution as long as it can satisfy the two requirements that
The company’s assets are equal to or exceed its liabilities (Solvency); and
The company is able to pay its debts as they fall due in the ordinary course of business (Liquidity).

14. Compliance and enforcement
NGB is responsible to:
- ensure compliance with the NGA and conditions of
license;
- supervise and enforce compliance by licensees with
FICA etc.
- conduct inspections w.r.t 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)

15. Players must set limits on accounts
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 w.r.t:
- voluntary player exclusion
- treatment of addictive gambling (National
Responsible Gambling Programme)
Solvency and liquidity Test
A company satisfies the solvency and liquidity test at a particular time if, considering all reasonably foreseeable financial circumstances of the company at that time –
(1)          the company’s total assets equal or exceed its total liabilities; and
(2)          it appears that the company will be able to pay its debts as they became due in the course of business for a period of –
(a) 12 months after the date on which the test is considered; or
(b) in the case of a distribution, 12 months following that distribution.

16. Money laundering
Registration of players and verification of player identity
Players from selected countries that comply with FATF or designate organization
Establishment of player account and verification of nominated accounts
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

17. Conditions for awarding of IG licences subject to commitment to:
Empowerment
Conditions for awarding of IG licences subject to commitment to:
- socio-economic upliftment
- BBBEE requirements
Registration process in terms of new law
The Application must complete and lodge a Notice of Incorporation and prepare the only governing document of the company, which is a Memorandum of Incorporation. The memorandum does not have to be lodged with the Commission, unless the company is widely-held. A lot of current forms are done away with in terms of the new Bill (for example, CM5, CM2, CM 22, CM29, CM31, CM44, CM46 and CM47).

18. - provide certainty and thereby enhance;
Conclusion
Regulation of IG will:
- provide certainty and thereby enhance;
- provide revenue to the fiscus;
- ensure accountability by IG industry;
- eliminate illegal IG operations;
- protection of players; and
- provide for effective and transparent licensing.
Existing regime for name reservation and registration
Currently, a company or a CC cannot be registered and incorporated before the self standing process of name reservation has been completed (by means of CM5). In addition a whole number of other documents are required, i.e.
Memorandum and Articles (CM5 and CM44) which must be certified by Notary Public.
Notice of Registered office (CM22)
List of Directors, Officers and Auditors (CM29)
Auditor’s Consent Form (CM31)
Application for Commencement of Business (CM46)
Sufficiency of Capital Form (CM47)

19. THANK YOU