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May 2016 REPORT on the DURATION of LICENCES ISSUED

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May 2016 REPORT ON THE DURATION OF LICENCES ISSUED IN TERMS OF THE EASTERN CAPE GAMBLING AND BETTING ACT 5 OF 1997 The ECGBB appointed consultants to perform the following activities and to prepare a detailed report that considers the appropriateness of issuing fixed term licences to licensees in terms of the Eastern Cape Gambling Act, 1997 (Act 5 of 1997 (EC)). 1. Consider the developmental impact of different categories of fixed term licences issued in terms of the Eastern Cape Gambling Act, 1997 by, inter alia, unpacking – Commitments by licensees to progressively invest in infrastructural development for the duration of the licence term; Long-term reinvestments without the benefit or option of re-licensing as a controlling instrument; Sustainability of existing infrastructure in the event where licences are not re-issued or extended; The determination and enforcement of additional conditions of licence with permanent licences. 2. Reflect on the benefits and disadvantages of fixed-term and permanent licences with accompanying recommendations; 3. Research and report on how the duration of gambling licenses have been considered in other developed and developing countries; 4. Research and report on policy considerations that informed the current gambling licence term dispensation in South Africa; and 5. Conduct interviews with existing licence holders and with the national gambling regulator. The expected outcome of this brief is to critique the functionality of licence terms as determined and issued by the ECGBB. The brief is furthermore to consider the effectiveness and efficiency of fixed term and indefinite licences to extract maximum value from licences issued by the Board. Methodology The approach and methodology adopted towards preparing this report included the following: Board Members: Adv N Mayosi (Chairperson); O Mtati (Deputy Chairperson); P White; M Vena; P Voges; RM Zwane (Chief Executive Officer) N Mtakati; A Ntsonkota; N Tom; P White; RM Zwane (Chief Executive Officer) Desktop Research During the desktop research, write-ups and articles published on the duration of gambling licences in other countries were studied. In consultation with the ECGBB management team, specific countries were identified to compare with the South African position regarding the duration of gambling licences. The identified countries were selected according to their comparability with the South African regulatory regime on gambling; or on socio-economic comparisons with South Africa in its role and status as a developmental state. The duration of casino licences was investigated and compared across the international spectrum together with a review of the regulatory bodies and the legislation relevant to casino licences. The number of casinos was also observed in addition to the level of exclusivity in terms of the issuing of licences. Where possible, an assessment of the regulatory environment was made in order to gauge whether investment in casinos was encouraged or discouraged in particular areas. All provincial gambling Acts in South Africa were considered in order to compare the extent to which the duration of gambling licences vary and to establish whether policy considerations informed such positions. The National Gambling Act was also considered so as to determine how it may inform the provincial approach to gambling licences; and the local economic impact of gambling was considered in the Eastern Cape, as well as across South Africa. The following sources and/or reports were considered to determine the policy framework that informed the duration of gambling licences in South Africa – 2002 Amendment Bill – ECGBB; 2015 Amendment Act – White Paper – ECGBB; National State Law Advisors policy forum – position papers; Presidential Review Committee of SOEs: Green Paper on the Role of State-Owned Entities in the Developmental State. Executive Summary 2012; Republic of South Africa: Constitution of the Republic of South Africa 1996, as amended - Act No 108 of 1996; Republic of South Africa-National Planning Commission: National Development Plan 2030, November 2011; Republic of South Africa-Department of Trade and Industry: Industrial Policy Action Plan IPAP-2014/15-2016/17, DTI 2014; Republic of South Africa Green Paper, op cit 2012; 2 National Development Plan: Chapter 13: Building a Capable and Developmental State; Eastern Cape Planning Commission (2014): Eastern Cape Vision 2030 Provincial Development Plan; and Department of Trade and Industry: National Gambling Policy, Invitation for the Public to Comment on the National Gambling Policy May, 2015. Questionnaire After completing the desktop research, detailed questionnaires were compiled to obtain information from the following institutions: National Gambling Board; Gauteng Gambling Board; Eastern Cape Gambling Board; KZN Gambling Board; Western Cape Gambling Board; Department of Economic Development, Environmental Affairs and Tourism; Chief State Law Advisor (Eastern Cape); Existing Eastern Cape licensees. Interviews Interviews/written engagements were conducted with the following respondents in compliance with activity 1.5 in the brief: Department of Economic Development, Environmental Affairs and Tourism; Management of the Eastern Cape Gambling Board; Management of the Gauteng Gambling Board; Management of the KZN Gambling Board; Chief State Law Advisor (Eastern Cape); Former manager and acting Chief Executive Officer of the Eastern Cape Gambling Board; Tsogo Sun; Sun International; Marshalls World of Sport; Bingo Association of South Africa; 3 Casino Association of South Africa; The desktop research, the outcomes of the interviews and the contents of written submissions were developed into the following report with key findings and corresponding recommendations. 4 Abbreviations used in this Report AGA American Gaming Association BASA Bingo Association of South Africa BEE Black Economic Empowerment CBD Central Business District CSI Corporate Social Investment DEDEAT Department, Economic Development, Environmental Affairs and Tourism ECGBB Eastern Cape Gambling and Betting Board ECPDP Eastern Cape Provincial Development Plan GDP Gross Domestic Product GGR Gross Gambling Revenue GRC Gambling Review Commission IPAP Industrial Policy Action Plan LPM Limited Pay-out machine NDP National Development Plan NGB National Gambling Board NGPC National Gambling Policy Council NRGP National Responsible Gambling Programme PDI Previously Disadvantaged Individual PLA Provincial Licensing Authority RFP Request for Proposal SADC Southern African Development Community SMME Small, Medium and Micro-sized Enterprises SOE State Owned Enterprise 5 Contents The Brief ...................................................................................................................................... 1 Methodology ............................................................................................................................... 1 Desktop Research ........................................................................................................................ 2 Questionnaire ............................................................................................................................... 3 Interviews ..................................................................................................................................... 3 Abbreviations used in this Report ............................................................................................. 5 Chapter 1: Gambling in the Eastern Cape................................................................................. 9 Socio-Economic Impact .................................................................................................................. 10 Eastern Cape Gambling and Betting Board .................................................................................... 13 Current Casino Licences ................................................................................................................ 14 Chapter 2: Gambling Industry in South Africa ....................................................................... 17 Overview ........................................................................................................................................ 17 2.1 Casino Industry .................................................................................................................... 20 Review of Legalisation across Provinces ........................................................................................ 22 Details of Casino Licences across Provinces ................................................................................. 26 2.2 Limited Payout Machines (LPM) Industry ............................................................................. 29 Details of LPM Operators and Licences across the Provinces ........................................................ 31 2.3 Sports betting (including Horseracing) Industry .................................................................... 32 2.4 Bingo Industry ...................................................................................................................... 35 Chapter 3: Gambling Licences – The position in other Countries ........................................ 37 Casino Industry Literature Review .................................................................................................. 37 United States of America ...........................................................................................................
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