1. Response of the dti to the Portfolio Committee on issues raised in GRC public hearings Delegation: Ms Z Ntuli: Deputy Director General Mr M Netshitenzhe: Chief Director, Policy and Legislation Mr T Mavhutugu: Director, Legislative Drafting Mr N Mashamaite: Deputy Director, Regulated Industries 15 February 2012

2. PURPOSE To outline the dti’s perspective in relation to submissions made before the Portfolio Committee on the Gambling Review Commission Report (GRC).

3. PROCESS LEADING TO THE GRC In June 2009, the dti briefed the Portfolio Committee on proposed regulations relating to interactive gambling emanating from the Gambling Amendment Act, 2008 The National Gambling Policy Council approved the creation of the Gambling Review Commission in October 2008 The GRC was established to study inter alia the gambling industry holistically looking into the socio-economic impact, proliferation in the industry, new forms of gambling and the technological evolution In December 2009, Minister appointed Ms Astrid Ludin (Chairperson), Adheera Bodasing, Professor Simphiwe Nzimande, Mr Clement Mannya, and Dr Stephen Louw as members of the GRC. September 2010 the GRC completed the study and Minister tabled the report in Parliament.

4. REGULATORY ENVIRONMENT Gambling is a matter of concurrent jurisdiction between national and provincial spheres of government. Gambling is regulated in terms of the National Gambling Act, 2004 and respective Provincial Gambling Acts. Regulators are the National Gambling Board and respective Provincial Gambling Authorities. National gambling policy is determined through the National Gambling Policy Council which is composed of the Minister and nine provincial MECs Provinces issue licences to operators while national plays an oversight role to ensure the dignity of the industry. Issues relating to alleged abuse in the horse industry needs attention

5. REGULATORY COORDINATION There is lack of uniformity in the regulation of the gambling industry by national and provincial authorities. There is no effective coordination and different approaches from province to province create regulatory uncertainty for industries Cost of compliance with multiple licence conditions that vary from province to province is likely to increase the cost of doing business for the market players Inconsistency in application of rules encourages forum shopping and abused of various provisions by industry players The coordination structure through National Gambling Policy Council is proving to be ineffective and leaves significant regulatory gaps which industry players take advantage of Failure to apply common norms and standards has no basis and is not justified

6. TRANSFORMATION Transformation generally is lagging behind in the gambling industry and calls for concern Ownership, management and representation in the board structures of most participants in the industry is not reflective of the demographics and geographic spread of the society There must also be caution on the possibility of a monopoly especially with the mergers that are taking place in the industry - new entrants may find it difficult to enter the gambling industry. Competition laws should be invoked to deal with competition where required

7. PERPECTIVE ON THE ISSUES FROM SUBMISSIONS The issues raised in submissions before this Portfolio Committee relate broadly to the following: –Policy Process –Legislative Changes –Rules and Regulations –Coordination –Implementation the dti admits that issues raised in this regard all require attention. Priority needs to be given to aspects that emanate from implementing challenges, which do not require legislative changes, such as regulations, thresholds, enforcement, etc. Policy review to relook the gambling industry following the recommendations of the GRC is a must, and timelines should be set for the process to unfold.

8. Gaps in the legislation that require immediate change without interfering with policy can be processed depending on the urgency and their critical nature The aspect relating to norms and standards will work if there empowering provisions in the current legislation, and that there are penalty provisions for failure to adhere to such Regulations issued without empowering provisions will be of no force as they would be ultra vires, irrespective of the good intentions Regulators should enhance coordination in the area of monitoring, enforcement, licence conditions to prevent forum shopping PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

9. Restriction on Advertising the dti is of the view that the manner in which gambling is advertised needs to be managed and monitored carefully There is a need to improve on advertising regulation to cater for the new forms of gambling and the technological advancement within the industry This will require intervention that will prevent unintended consequences taking the following into consideration: –Issues relating to the content of adverts –The monitoring of adverts –Approval/guidelines of adverts PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

10. Electronic Bingo Terminals Currently Electronic Bingo Terminals (EBTs) are subject of contention between regulators and between operators themselves. There is a need to distinguish between the games played electronically and the electronic bingo terminals that were subject to a court process the dti has facilitated a process for regulators (both national and provincial) to come up with proposals on regulatory framework to regulate EBTs within the framework (number of licences, location, etc). Interactions with the industry indicates positive approach to deal with concerns that were raised by the regulators regarding EBTs This is the matter to be considered together with the recommendation from the Portfolio Committee on the GRC report. PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

11. Interactive Gambling The National Gambling Amendment Act was passed in 2008 to introduce interactive gambling. The submissions before the Portfolio Committee suggest that the dti needs to improve on the legislation to ensure that it covers all activities related to online gambling. Online gambling is broader than interactive gambling – the dti does agree that alignment is needed as all relates to gambling online Consideration is needed in allowing the dti to finalise the current regulations on interactive gambling to address interactive gambling specifically – improvements are needed in areas relating to protection of minors, controls to detect money laundering, etc. the dti recommends that the Portfolio Committee proceeds to deal with interactive gambling regulations for finalisation. PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

12. Online Gambling The current legislation does not provide for adaptation of provisions to games that are played online – technological advancement places a challenge Sites advertised for online gambling, including playing the lottery over the net raise concerns Online gambling raises issues of accessibility of games to persons, control of exposure to minors to gambling, misleading consumers through adverts to entice them to illegal sites, money laundering, capacity to monitor the dti agrees that the legislation needs to be improved to ensure that it covers all activities related to online gambling and do an impact assessment/cost benefit analysis to support any policy decision in this regards. the dti will also appreciate feedback from the Portfolio Committee PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

13. Racing There is a need to holistically look at the issue of animal racing, the principles, the concerns and challenges Horse racing - issues relate to inter alia funding, the value chain, competition and transformation Greyhound – industry calls for unbanning despite animal welfare concerns There is need to determine whether there is a need to regulate all forms of animal racing If a policy decision is taken to regulate animal racing, welfare measures for this should be of paramount importance Without a deterring redress mechanism and penalty system, no respect will be shown – regulator/s must have teeth PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

14. Responsible Gambling Programme The funding model relating to the NRGP must be looked at to determine its effectiveness and available funding model options The contribution of the lottery operator to NLDTF vis-à-vis to responsible gambling must be assessed objectively to achieve the right balance A proper strategy that aligns to the challenges faced may be required and coordinated to reach the majority of affected SA citizens Effective monitoring mechanisms should be put in place to ensure the activities of the funds are not diverted from the intended cause - impact assessment must conducted from time to time Policy or legislative intervention is needed to pronounce on a better model to implement the responsible gambling interventions PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

15. Lotteries Act dealing with licensed operator compliance issues, distribution of funds and competitions The review of the Lotteries Act in on the Parliamentary Program and will look at inter alia: –Responsibilities of the Minister, Board and agencies –Efficiency in distribution of funds –Accountability of distributing agencies –Size of the Board –Composition of the distribution agencies –Enhanced conflict of interest measures –Proactive intervention funding Currently the NLB is implementing the revised organisational structure and beefing up the administrative office PERPECTIVE ON THE ISSUES FROM SUBMISSIONS

16. the dti will embark on a process to look at the GRC recommendations in conjunction with the submissions and the report of the Portfolio Committee A timetable will be presented to the Portfolio Committee for this process Most issues canvassed in the submission will require a policy consideration, which will follow the appropriate process CONCLUSION

17. THANK YOU