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AN ANALYSIS of the GAMBLING REGULATORY FRAMEWORK in SOUTH AFRICA by SEGOANE

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AN ANALYSIS of the GAMBLING REGULATORY FRAMEWORK in SOUTH AFRICA by SEGOANE TOWARDS THE REGULATION OF INTERACTIVE GAMBLING: AN ANALYSIS OF THE GAMBLING REGULATORY FRAMEWORK IN SOUTH AFRICA by SEGOANE LAWRENCE MONNYE submitted in accordance with the requirements for the degree of DOCTOR OF LAWS at the UNIVERSITY OF SOUTH AFRICA SUPERVISOR: PROF S LÖTTER MARCH 2016 i DECLARATION I, Segoane Lawrence Monnye, hereby declare: • that “Towards the regulation of interactive gambling: an analysis of the gambling regulatory framework in South Africa” is my own work and that all the sources that I have used or quoted have been indicated and acknowledged by means of complete references; • That in pursuit of scholarly work, I have published less than a quarter of this work under my credentials in the UNLV Gambling Law Journal; • Further, that I have not previously submitted this work, or part of it, for examination at this or any other higher education institution. Signature: Date of submission: February 2016 ii ACKNOWLEDGMENTS Grateful acknowledgments and thanks are due to Professor Sunette Lötter for her guidance and supervision of this thesis. I will be forever indebted to UNISA for funding my studies through the Academic Qualification Improvement Programme, enabling me to take a leave of absence from work to complete this thesis. Additional thanks are also due to my family for their unqualified emotional support throughout my studies. iii ABSTRACT With the exception of horse racing, any form of gambling was criminalised in South Africa until the dawn of constitutional democracy in 1994. In the same year, the Lotteries and Gambling Board Act, 1993, came into force decriminalising, amongst others, casinos and gambling games within the Republic. This Act has since been repealed and gambling is governed by the National Gambling Act, 2004, as well as by provincial gambling laws. Interactive / online gambling is illegal pending authorisation by a national legislation. Such legislation, the National Gambling Amendment Act, 2008, seeking to regulate interactive gambling awaits proclamation of the date of its commencement by the President. The National Gambling Policy, 2016, dashes any hope of regulation of interactive gambling, however, as it seeks to embargo the introduction of (new) forms of gambling, including but not limited to interactive gambling. The scourge of problem gambling and the protection of traditional forms of gambling, that is, casinos, are the main reasons for advocating for the continued prohibition of interactive gambling. Problem gambling is not unique to interactive gambling, but affects all modes of gambling. South Africa is among countries with a high rate of problem gambling. It is feared that interactive gambling will exacerbate the scourge of problem gambling as gamblers with access to the internet will now have unlimited gambling opportunities around the clock. On the other hand, interactive gambling offers practical solutions to the implementation of harm minimisation strategies to deal with problem gambling such as limitations on gambling deposits, losses and time. Prohibition of interactive gambling is difficult to enforce and deprives the country of an opportunity to control, through licensing, this mode of gambling and possible benefit from taxation and licensing fees. It further exposes gamblers – who despite prohibition choose this mode of gambling – to unregulated and illegal gambling websites. This thesis attempts to provide safeguards for regulation of interactive gambling and to embrace the benefits of the technological development that makes interactive gambling a reality. The United Kingdom (UK) is a prime example of a iv country that has successfully legalised and licensed interactive gambling in its jurisdiction. v KEY TERMS Interactive gambling; online gambling; remote gambling; land-based gambling; problem gambling; gambling disorder; gambler; gambling provider; gambling licence; harm-minimisation. vi TABLE OF CONTENTS Page I. ABBREVIATIONS xii II. UPDATE xiii 1. INTRODUCTION TO THE GAMBLING SECTOR IN SOUTH AFRICA 1.1 Introduction 1 1.2 Definition of key terms 6 1.2.1 Gambling 6 1.2.2 Interactive gambling 8 1.3 Gambling activities in terms of the National Gambling Act 9 1.3.1 Casinos 9 1.3.2 Bingo 10 1.3.3 Limited pay-out machine 11 1.3.4 Horse racing 12 1.4 Gambling activities falling outside the National Gambling Act 13 1.4.1 Dog racing 13 1.4.2 Fahfee 14 1.4.3 Interactive gambling 15 1.5 Research problem 15 1.6 Influence of foreign jurisdiction 17 1.7 Purpose 19 1.8 Hypothesis 20 1.9 Research framework 21 1.9.1 Scope of chapter 2: Historical regulation of gambling legislation 22 1.9.2 Scope of chapter 3: Exposition of South Africa’s law on gambling 22 1.9.3 Scope of chapter 4: Addressing challenges facing interactive 23 gambling in pursuit of its regulation in South Africa 1.9.4 Scope of chapter 5: Discussion of proposed regulatory framework 24 for interactive gambling vii 1.9.5 Scope of chapter 6: Comparative studies in the regulation of 24 interactive gambling 1.9.6 Scope of chapter 7: Summary of the research findings and 25 recommendations 2. HISTORICAL REGULATION OF GAMBLING IN SA 2.1 Introduction 26 2.2 Legal regulation of gambling during the colonial era (1806-1910) 32 2.2.1 Gambling regulations in the Cape Colony 33 2.2.2 Gambling regulations in the Natal Colony 35 2.2.3 Gambling regulations in the Boer Republics 36 2.2.3.1 Orange Free State Republic 37 2.2.3.2 Transvaal Republic 38 2.3 Legal regulation of gambling during the Union Government 38 2.4 Legal regulation of gambling during the apartheid era 39 2.5 Post-apartheid regulation of gambling: Lotteries and Gambling 44 Board Act 2.6 Legal framework for gambling and consequently interactive 48 gambling 2.7 Legal status of the National Gambling Amendment Act and its 49 impact on interactive gambling 2.8 Legality of non-implementation of the National Gambling 52 Amendment Act 2.9 Case law on the prohibition of interactive gambling 57 2.10 Constitutionality of the prohibition of interactive gambling 63 2.11 Conclusion 68 3. EXPOSITION OF SOUTH AFRICA’S LAW ON GAMBLING 3.1 Introduction 69 3.2 Policy approach to regulation of gambling 70 3.3 Lawful gambling activities 72 3.3.1 Uncertainty regarding lawfulness of electronic bingo terminals 73 3.4 Licences 76 3.4.1 Authority to issue licences 78 3.5 National Gambling Board and provincial licensing authorities 81 viii 3.6 National Gambling Policy Council 83 3.7 Norms and standards 85 3.8 Persons prohibited from gambling 88 3.8.1 Protection of minors from gambling 88 3.8.2 Excluded persons 89 3.9 Counselling and treatment services 90 3.10 Restriction on granting credit to gamblers and enforceability of 91 gambling debts 3.11 Advertising of gambling 92 3.12 Offences and penalties for contravening the Act 94 3.13 Unauthorised interactive gambling 96 3.14 Conclusion 96 4. ADDRESSING CHALLENGES FACING INTERACTIVE GAMBLING IN PURSUIT OF ITS REGULATION IN SOUTH AFRICA 4.1 Introduction 98 4.2 Prevalence of problem gambling and gambling disorder 102 4.3 Social harms associated with problem gambling and/or gambling 104 disorder 4.3.1 Domestic violence 105 4.3.2 Substance and drug abuse 108 4.3.3 Criminal behavior 110 4.4 Recognition accorded to problem gambling and gambling disorder 115 4.4.1 Gambling disorder as a defence against criminal charge: the case 115 of United States v Torniero 4.4.2 South Africa’s judicial approach to gambling disorder 118 4.5 Strategies for minimisation of problem gambling and gambling 122 disorder in an interactive gambling environment 4.5.1 Monitoring of gamblers’ gambling activities 123 4.5.2 Self-limit measures 124 4.5.3 Self-exclusion 128 4.5.4 Online counselling and treatment services 129 4.5.5 Regulatory uniformity 131 ix 4.5.6 Making gambling debts unenforceable 133 4.6 Conclusion 136 5. DISCUSSION OF PROPOSED REGULATORY FRAMEWORK FOR INTERACTIVE GAMBLING 5.1 Introduction 139 5.2 Licences 141 5.3 Registration 143 5.4 Underage gambling 145 5.5 Self-limit measures 147 5.6 Self-exclusion 149 5.7 Restriction on granting credit to gamblers 153 5.8 Advertising or promotion of interactive gambling 155 5.8.1 Sponsorship logo 158 5.9 Complementary legislation for interactive gambling: Interactive 160 Gambling Tax Bill 5.9.1 Taxation of gambling winnings 164 5.10 Conclusion 168 6. COMPARATIVE STUDIES ON THE REGULATION OF INTERACTIVE GAMBLING 6.1 Introduction 171 6.2 The USA’s approach to interactive gambling 172 6.2.1 State of Nevada regulatory framework for interactive gambling 178 6.2.2 Concluding remarks on the USA’s approach to gambling and 180 interactive gambling 6.3 The European Union’s approach to gambling and interactive 181 gambling 6.3.1 The European Union’s shift towards the harmonization of 187 interactive gambling regulation 6.3.2 The UK’s approach to interactive gambling 189 6.3.2.1 UK’s Gambling Act 190 6.3.2.2 UK’s Gambling (Licensing and Advertising) Act 192 6.3.2.3 UK’s Licensing Conditions and Codes of Practice 194 6.3.2.4 Concluding remarks on the UK’s approach to interactive gambling 198 x 6.4 Australia’s approach to interactive gambling 199 6.4.1 Australia’s Interactive Gambling Act 199 6.4.2 Outcomes of the review of Interactive Gambling Act 202 6.4.3 Concluding remarks on Australia’s approach to interactive 205 gambling 6.5 Canada’s ambivalence towards interactive gambling 206 6.5.1 The approach of Canada’s Criminal Code to interactive gambling 207 6.5.1.1 Kahnawake’s Regulation Concerning Interactive Gaming 209 6.5.2 Concluding remarks on Canada’s approach 211 6.6 Taxation of gambling 211 6.6.1.
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