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Online Gambling in South Africa

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Online Gambling in South Africa VOL 15 PART 3 Sizwe Lindelo Snail Online gambling in South Africa Comparative perspectives 1 Introduction to online gambling • Internet sport wagering and betting; • online lotteries and online bingo; and The increase in the number of Internet users • online tournaments and online sweep- and the growing confidence of customers in stakes. conducting online transactions have led to a greater number of people being willing The most visible form is that of Internet to engage in online gambling. The potential gambling sites (idem at 5-3), also known as reach of online casinos is tremendous, taking virtual online gaming (see J Forder & P Quirk into account the number of casinos that Electronic Commerce and the Law (2001) 333). exist. The constant growth of the industry These sites now feature interactive games and and the increased number of online casinos and casino-style gambling in the form of blackjack, gambling sites are factors to be considered poker, slot machines, and roulette (see N Rose (see M Eksteen ‘Internet gambling and the law’ ‘Internet gambling: domestic & international in R Buys (ed) Cyberlaw @ SA: The Law of the developments’ in Gambling and the Law vol Internet in South Africa (2000) 315). Obviously, 4 (23 November 1998), and walk customers the figures are greatly influenced by a number through a virtual tour of the site, complete of variables that are difficult to predict, the with graphics and background music. Before most important being the regulatory measures gambling, people are required by most sites undertaken by governments (see United States to complete registration forms and either to National Gambling Impact Study — Commission purchase virtual chips or to create an account Report (1999) 5-1 (hence ‘USNGIS’), accessible at with a set minimum amount. Payment is made <http://govinfo.library.unt.edu/ngisc/reports/5. by debit card, credit card, electronic funds pdf>). Global efforts by different states have transfer (EFT), or other recognized form of not been uniform, because of diverse factors. electronic payment (such as Bluebean, PayPal, Several states ban online gambling, while and Cybercash). others have moved in the opposite direction by allowing licensed gambling operations. Clearly, The second most popular form of online the politics of Internet gambling are evolving gambling is called Internet sport wagering almost as quickly as the medium itself, and with and betting (see USNGIS at 5-3; Forder & a similar lack of a common direction (ibid). Quirk op cit at 333). Wagering is on physical and specific sporting events such as a horse Nature of online gambling activities race or a football, tennis, rugby, or cricket game, and through an ‘online bookie’. Online Online gambling can be found in four forms: betting, however, has taken betting to new • Internet gambling sites (virtual online heights, because it potentially allows bets to gaming); be made interactively, in ‘real time’, and thus 114 ISSN 1021-7061 01847_JBL_Vol3_2008.indd 114 4/18/08 9:12:06 AM VOL 15 PART 3 allows players to change their bets as the Another growing concern expressed by game progresses. governments and citizens is the easy and accessible manner in which e-gambling is The third kind of online gambling consists of provided. It has created a new group of online lotteries and online bingo (see USNGIS pathological gamblers attracted by the easy at 5-4). These types of gambling sites are the access to e-gambling sites, the high-speed virtual equivalent of the physical bingo game instant gratification of e-gambling games, and lottery. They have proved very popular and their offer of a high level of privacy. in the United States of America, and new Left unregulated, the problem of pathological ones have been emerging by the day in other gambling will worsen (BP Horn, testimony countries. before the Subcommittee on Crime, Committee on the Judiciary, US Congress (4 February The fourth and last form of online gambling 1998), as referred to in USNGIS at 5-5). (which may actually fall into the wagering category) is online tournaments and online Although underage e-gambling and pathological sweepstakes (ibid). In this type of online gam- e-gambling are serious points of concern, it is bling, the web-site patrons usually compete clear that cyber crimes are on the increase against either the web host or other participants, and that different ways of promoting criminal much like playing a video game. These types activity are being developed by criminals across of sites usually charge an ‘entrance fee’, part of the globe. Before Internet gambling appeared, which is used for the prize to be won (CR it was fairly easy to catch offenders and enforce Janower ‘Gambling on the Internet’ 2 J. gambling legislation (Eksteen op cit at 316). Computer Mediated.Com, accessible at <http:// Online gambling has turned the situation upside jcmc.huji.ac.il/vol2/issue2/janower.html>). down, though, and created new possibilities for more specialized crime. One such possibility Important issues related to online gambling is that unscrupulous e-gamblers (because of the remoteness of the Internet service provider When dealing with these various forms of (ISP) or sometimes offshore) can easily alter, e-gambling, one must not ignore the socio- move, or even remove a site in minutes. This economic effect that this modern form of mobility enables dishonest operators to take gambling has on the general society of any an e-gambler’s credit card numbers and money nation, the inhabitants of which have access from ‘e-gambling deposit accounts’ and simply to the Internet. As the Internet can be used close down (see USNGIS at 5-5). anonymously, there is a danger that access to Internet gambling will be abused by Another crime risk that e-gamblers face is underage gamblers (see USNGIS at 5-4). In unauthorized and unlawful tampering with most cases the would-be gambler merely gambling software to manipulate games. has to fill out a registration form in order to play. Most sites rely on the correctness A further unlawful activity is the defrauding of the information given by the would-be of the e-gambler of his electronic identity gambler, without making other verification and concluding fraudulent transactions with checks such as ID number and telephonic acquired banking details. Until about ten years voice recognition to verify the intending ago, money laundering was a mere term to gambler’s identity (ibid). This state of affairs which no one paid much attention. However, has also led to the theft of credit cards and when the United Nations Convention against the theft of the use of credit cards where an Illicit Traffic in Narcotic Drugs and Psychotropic underage player unlawfully uses his or her Substances of 20 December 1988 (also known parent’s credit cards to create accounts for as the Vienna Convention) was enacted, it the use of an e-gambling site. became clear that money laundering was not ISSN 1021-7061 115 01847_JBL_Vol3_2008.indd 115 4/18/08 9:12:07 AM VOL 15 PART 3 only a daily problem for governments and worldwide. Unfortunately, because of different banks but was also extremely applicable to legal philosophies and socioeconomic factors, the gambling world (see J Siska ‘Combating the different e-gambling statutes adopted by money laundering in the gaming sector’ in various governments cannot be harmonized G Strejcek et al (ed) Games of Chance in the into a single piece of international e-gambling EU and in Austria (2002) 103). The Internet, legislation. It will always be difficult to institute with its anonymity, remote access, and data control measures that could be applied encryption, can provide a safe and easy vehicle universally. and environment for money laundering. All the money launderer has to do is to deposit money To understand issues relating to conflicting into an offshore account, gamble a little, make laws on cross-border gambling activities, it more money and/or lose a fraction of it, and is essential to classify the different legislative then cash out the remaining funds (see USNGIS modes (idem at 104). This classification does at 5-6). not apply to all aspects of e-gambling, for that exercise would require a separate essay. It is clear from the various issues discussed However, the relevant cross-border issues that above that e-gambling (online gambling) is an will be used as criteria could be the following: area requiring extensive regulatory measures, • whether online casinos are permitted to because the failure to institute effective offer online gambling in their countries of countermeasures could lead to a plethora of origin; and criminal activities. • whether there are any restrictions on the eligibility to gamble with regard to the e- Various regulatory models of online gambler’s nationality or residence (ibid). gambling Schriever suggests that when answering the In a global market without borders, as the above questions, one can develop a scheme Internet is said to be, it is difficult to ensure that consisting of five different models (ibid): national regulation is respected and enforced (see • liberal (completely liberal); E Schriever ‘Conflict and coordination between • restrictive (restrictive liberal); diverse regulatory environments’ in Cross- • liberal prohibitive; Border Gambling on the Internet — Challenging • prohibitive (totally prohibitive); and National and International Law Swiss Institute • protectionist (protectionist prohibitive) of Comparative Law (2004) 103). The divergent interests and philosophies of governments have These will be described in turn. led to a large variety of approaches by different judicial systems concerning bricks-and-mortar Liberal (completely liberal) casinos. Each country has a different sociological or philosophical perception of gambling (ibid). Liberal e-gaming systems are characterized by This fact appears from the different legislative the fact that they expressly authorize online texts that have been adopted worldwide with gambling and have no limitations (idem at 115).
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