1. The Socio-Economic Impact of Gambling Regulation
Presentation at GRAF – 28 August 2018
GAMBLING
Socio-Economic Impact
Gambling Regulation
Presenter: Ms Estelle Jonkheid (Snr Manager; Research & Information)

2. CONTENT Mandate and role of the NGB Benefits of gambling
Negative impact of gambling
Current status of gambling in South Africa
Challenges
Addressing the challenges
Conclusion

3. Mandate and role of the NGB

4. Mandate and role of the NGB
The NGBs mandate is to promote and support the development of a fair,
transparent, competitive, sustainable, responsible and efficient gambling
industry in order to:
Promote quality and sustainable livelihoods in communities
Serve the needs of historically disadvantaged persons
Promote reintegration of persons who are addicted to gambling into families and
communities for quality livelihoods
Set appropriate conditions for responsible gambling business
Conduct education, awareness and research on gambling harms and benefits
Combating illegal gambling and problem gambling in conjunction with
provincial gambling regulatory authorities

5. Mandate and role of the NGB
Gambling is a concurrent legislative competency between national
and provincial government
Compliance monitoring is one of the fundamental pillars of NGB’s
functions to regulate gambling
NGB commissions regular research to determine the socio-economic
impact of gambling (legal and illegal modes)

6. Mandate and role of the NGB
Gambling regulation needs to create a balance between revenue
generation and protection of the public, particularly vulnerable
persons, while taking cognisance of and supporting Government’s
developmental priorities, and specifically the Nine - Point plan in
terms of:
Encouraging private-sector investment (gambling industry)
Unlocking the potential of SMMEs, cooperatives, townships and
rural enterprises (i.e. corporate social investment programmes &
gambling licenses to individuals/consortiums, small and medium
businesses)

7. Benefits of gambling

8. Social benefits of gambling

9. Social benefits of gambling
Form of recreation and entertainment – often in a safe environment
Form of game play – humans use games to enhance their lives
Social benefits (e.g. new social groups and friends)
Corporate social programs – giving back to the community
The legal gambling industry is well-regulated to protect punters
Access to national and provincial regulators for assistance
Education and information through awareness programs/roadshows
Various ways to report fraudulent and illegal gambling activities
Punter protection, free counselling, access to rehabilitation
programs and access to an exclusions register

10. Economic benefits of gambling
Stimulates the local economy and contributes to government revenues (taxes/levies), Gross Domestic Product, investment and employment
GGR: GGR increased by 8.8% to R26,0 billion in FY2016, by 3.8% to R27,0 billion in FY2017, and by 6.7% to R28,8 billion in FY2018
Taxes/levies: Collection of taxes/levies increased by 11.9% to R2,8 billion in FY2016, decreased by 1.0% to R2,97 billion in FY2017, but increased by 5.7% to R2,9 billion in FY2018
GDP: 0.81% (2017) [contribution national economy]
Gambling promotes investment (infrastructure)
Creation of employment in gambling industry
(± direct jobs as at 31 March 2018

11. Economic benefits of gambling
Enhancement of public services (taxes used for education, roads, health
schools, infrastructure and development in communities, services to the
public, etc)
Increase in regulatory and infrastructural costs and value
Increase in property value (e.g. around a casino)
Potential for punter/player to win money
Gambling attracts tourism and results in more money for local areas

12. Economic benefits of gambling
Economic empowerment of the historically disadvantaged (B-BBEE)
Gambling enterprises are measured in terms of the generic score card and more specifically, the following: Ownership, Management Control, Employment Equity, Skills Development, Preferential Procurement, Enterprise Development and Socio-Economic Development.
Based on the information submitted by PLAs, the average B-BBEE status or level of the South African gambling industry as at 31 March 2018 was as follows – these levels have improved since FY2016/17and show general compliance
Average B-BBEE level for casino operators: 1.8
Average B-BBEE level for totalisators: 4
Average B-BBEE level for LPM operators: 2.8
Average B-BBEE level for bingo operators: 2.9

13. Economic benefits of gambling

14. Economic benefits of gambling

15. Economic benefits of gambling
Out of the total percentage of GGR generated in FY2017/18 per mode, casino GGR is steadily decreasing as a result of growth in other sectors

16. Economic benefits of gambling

17. Economic benefits of gambling
DIRECT EMPLOYMENT PER PROVINCE AND MODE, FY2018
PROVINCE FY
2018
Gambling mode
Gauteng
Wes-tern
Cape
KwaZulu-Natal
Mpuma-langa
Lim-popo
North
West
Nor-thern
Eastern Cape
Free
State
TOTAL
Casinos
5 491
2 307
2 497
729
254
763
248
863
713
13 865
Totalisators
205 15
1 456 79 22
123 13 75 80
2 068
Book-
makers
528
159
2 747
955
457
809 5 29
118
5 807
LPMs
138
2 966 98
150
510 53 23
218
4 185
Bingo
468
N/A
294
125
213
108
1 462
Regulators
NGB
PLAs 26 70 77 54 83 19 48 76
497
Total
6 856
5 517
7 162
2 115
1 551
2 044
308
1 341
1 016
27 910

18. Negative impact of gambling (legal and illegal)

19. Negative impact of gambling (legal & illegal)
Money spent on illegal gambling is also lost to the economy
Problem gambling & addiction and impact on the economy, family and society (e.g. disrupts personal / family / financial / employment relations), financial problems such as debt and bankruptcy, divorce, lost productivity, crime (such as theft and fraud), depression and suicide
Illegal gamblers have the highest risk of becoming problem gamblers
Cost to counselling, treatment and rehabilitation
Under-aged gambling & minors participating in gambling
Crime-related activities (e.g. money-laundering)
Risks (other addiction) associated with problem gambling
such as drugs, alcohol and sexual abuse

20. Negative impact of gambling (legal & illegal)
Punters in illegal gambling activities are unprotected
Less affluent (employed, suffering poverty and/or low income) may be vulnerable to gambling, including illegal gambling modes such as fahfee / mo-china / cards / dice
Social challenges as a result of problem and illegal gambling
Unlawful winnings associated with illegal gambling activities
Consequences if caught when participating in illegal gambling modes (e.g. court, fine, jail and confiscated winnings)
Many millions of rand in state resources spent on the criminal justice system (i.e. investigation and prosecution)

21. Negative impact of gambling (legal & illegal)
Unfair competition created by illegal enterprises and operators and reduced government revenue in the form of tax contributions
The estimated monetary flows associated with illegal (online) gambling in South Africa impact the economy with regard to employment and GDP (FY2016):
Total loss in value add of R1,9 billion for the economy as a whole per annum. This includes a direct impact of R972 million and an indirect impact of R972 million. This is less than 0.01% of the total annual GDP for South Africa
Total loss of 3,785 employment opportunities in the legal gambling industry based on employment in casinos (841) and employment in related services such as retail outlets and restaurants (2,945). This equates to 5.9% of the total employed persons in the casino industry of the country

22. Negative impact of gambling (legal & illegal)
Reports from the South African Responsible Gambling Foundation, amongst others, indicates that gambling creates huge social challenges as a result of problem and illegal gambling

23. Where does this leave gambling regulators?
The question arises – is gambling economically and socially beneficial to the country against the negative socio-economic impacts of gambling?
Are regulators currently successful and
efficient in managing the socio-economic impact?

24. Current status of gambling

25. Current status of gambling
In South Africa, four modes of gambling are legal, namely casinos, bingo, limited payout machines (LPMs) and betting on horse racing and sporting events
Gambling under these modes, using licensed operators, is regulated
Any gambling activity that is not one of these four, or is one of the four but not offered by a licensed operator, is illegal
Advertising any unlawful / unlicensed gambling activity is prohibited and punishable (S15 NGA)
Licensing of all gambling activities is conducted by Provincial Licensing Authorities

26. Current status of gambling
Variable
FY2017
As at 31 Mar 17
FY2018
As at 31 Mar 18
Number of operational casinos 38
Number of operational slots (casinos)
23 697
25 195
Number of operational tables (casinos)
907
976
Number of operational gambling positions (casinos)
33 249
35 929
Operational totalisator outlets
456
382
Operational bookmakers
266
284
Operational bookmaker outlets
515
542
Operational Limited Payout Machine (LPM) site operators
2 188
 2 211
Operational LPMs
11 502
11 896
Operational bingo outlets 37 50
Operational bingo positions
6 497
8 520

27. Current status of gambling
Variable
FY2017
Total
FY2018
National gambling statistics:
Turnover
R 372 987 
R 389 799 
GGR
R 26 958 
R 28 763 259 881
Taxes/levies
R 2 743 
R 2 898 

28. Gambling prevalence - 2017 Gamblers : 30.6% of South Africans
Non-gamblers : 69.4%
Comparison with NGB survey (SA)
Gamblers 2005 : 49.8%
Gamblers 2009 : 34.9%

29. Participation in gambling - 2017

30. Problem gambling in South Africa - 2017
5.8% of gamblers regarded as gamblers at high risk of problem gambling
Profile of problem gamblers: Less affluent segment of population
44.3% reported no income or monthly income less than R2 000
56.3% secondary school qualifications
42.3% unemployed
Include also middle to high income earners

31. Current status quo of gambling
Effective oversight function over PLAs
Countrywide gambling awareness campaigns – provided by the dti and the NGB, to educate the public about gambling especially legal vs illegal modes of gambling, symptoms of problem gambling, how to gamble responsibly, where to report fraudulent and illegal gambling activities, and where to get assistance with problem gambling
South African Responsible Gambling Foundation (SARGF) - programmes to educate the public, as well as rehabilitation programs and counselling services

32. Current status quo of gambling
Illegal gambling operatives register – blacklisting of illegal operators once their illegal status is confirmed so that they are not considered in future licence applications
Excluded persons register – register of persons not permitted to gamble due to problem gambling (one can apply for self-exclusion)
National Registers (e.g. machines and devices, information sharing,
probity, National Central Electronic Monitoring System (NCEMS))
and national gambling statistics database
Unlawful winnings are confiscated – winnings obtained through illegal gambling is forfeited to the State

33. Current status quo of gambling
Regulatory environment:
February 2016 – Cabinet approved the National Gambling Policy, which will bring new changes to the gambling regulatory environment
May The National Assembly rejected the Remote Gambling Bill, which sought to legalise online gambling in SA
The draft National Gambling Amendment Bill of 2016 was introduced to and approved for tabling in Parliament
It is proposed that improved provisions be included in the legislation to deal more effectively with illegal gambling

34. Challenges affecting the impact

35. Challenges affecting the impact
The public is unaware / unsure of the difference between legal and illegal
modes of gambling, consequences of illegal gambling, gambling legislation, and how to get assistance with regard to problem gambling
The mushrooming of illegal gambling (i.e. online as a borderless industry,
server-based and other illegal gambling modes)
South African financial institutions are the most used mediums of
exchange between an online gambler and illegal online
operators – contributing to participation in illegal online gambling

36. Challenges affecting the impact
Illegal (and specifically online) gambling is also not regarded as a high priority offence and the environment is difficult to monitor as a result of limited support from and collaboration between various role-players
Lack of uniform procedures
Insufficient resources at regulators to effectively enforce and control illegal gambling
Electronic bingo terminals not properly regulated
Cost burdens to approach the High Court for forfeiture orders in terms of unlawful winnings

37. Challenges affecting the impact
Changes in trends relative to GGR: Substantial increased in betting on sport (bookmakers), and to a lesser extent LPM and casino sectors, whilst negative growth (GGR) perceived in bingo sector (FY2016/17 to FY2017/18)
Potential impact of the 4th industrial revolution (advanced technology such internet, smart phones and watches, wireless sensor networks, cyber physical systems, large data analytics, cloud technologies, artificial intelligence, internet-connected objects, cryptocurrencies, skins & e-sports betting, virtual reality, augmented reality, speed of technological breakthroughs, hand-held devices, self-service terminals, biometrics, facial recognition, nano technology, gamblification of gaming, increased data speeds, new games to attract younger punters, games of skill, increased accessibility and convenience) on the current and future regulation of gambling
Slow transformation i.t.o. Broad-Based Black Economic Empowerment

38. Addressing the challenges

39. Addressing the challenges
Law to enable mass monitoring of online traffic to identify gambling related activities and gambling by minors, as well as prohibiting illegal operators from offering online gambling services to the South African public
Improved provisions in legislation to gather and consolidate intelligence with regard to illegal gambling and to blacklist illegal operators
Bilateral and multilateral agreements to allow enforcement across the South African borders – regulators also need to work together
Strengthen the capacity to prohibit and combat illegal gambling

40. Addressing the challenges
A national collaborative approach to combat and suppress illegal gambling – involvement of all gambling regulators to gather information, conduct inspections, investigate cases, cooperate with law enforcement agencies and act against illegal operators 
Efficient confiscation of unlawful winnings and forfeiture thereof
Successful prosecution of illegal operators to send a strong message
Ongoing information to the public (and problem gamblers) about the toll free line, exclusions register, and rehabilitation and treatment programs (collaborative efforts amongst all regulators, PLAs, SARGF and the dti)
Informing the public about the NGB tip-off line and where to report fraudulent and illegal gambling activities  

41. Addressing the challenges
Regulation of electronic bingo terminals (EBTs) based on outcome of research
Reduce the costs burden for forfeiture unlawful winnings (currently via High Court application)
Staying abreast of new technology (e.g. research, interaction), software, tools, type of games, profile of new emerging (illegal) gamblers and the socio-economic impact on current legalised modes of gambling

42. Addressing the challenges
Ongoing research to determine the following:
Socio-economic impact of legal and illegal gambling
Transformation and growth in the gambling industry
Impact of Electronic Bingo Terminals on traditional bingo, casino and Limited Payout Machines sectors
Potential impact of the 4th industrial revolution on the current and
future regulation of gambling

43. Conclusion
The South African gambling industry is a legitimate and well-regulated industry, that not only contributes significantly to the economy of the country, but also provides a number of social and economic benefits
Ongoing and efficient oversight over PLAs, feedback and ongoing interaction to ensure compliance in the gambling industry

44. Conclusion
Combatting of illegal gambling is gaining momentum and stakeholders’ cooperation in multi-task teams emphasise law enforcement activities as priority areas
Updating and maintenance of several registers and databases ensure that NGB remains the nodal point of national gambling related information relative to various matters such as machines and devices, probity, exclusions, NCEMS, illegal operatives and national gambling statistics

45. Conclusion
NGB ensures that the implementation of its Strategic, Annual Performance and Business Plans ensures the effective achievement of annual targets as per its mandate as dictated by the NGA
NGB perceive itself as successful in managing the socio-economic impact of gambling regulation and addressing challenges

46. Conclusion
The outcome of various research projects currently embarking on,
will provide much needed insight into the way forward and how to advise the Minister in terms of the current and future regulation of gambling in South Africa

47. CLOSURE Ms Estelle Jonkheid Gamble legally and responsibly! Presenter:
Snr Manager: Research & Information
National:
Web: 
Address:  420 Witch-Hazel Avenue
Eco-Glades 2, Block C, Eco-Park,
Centurion, 0144