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A Review by the Gambling Commission

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A Review by the Gambling Commission Review of the South African gambling industry and its regulation A report prepared by the Gambling Review Commission Professor Sphiwe Nzimande Dr. Stephen Louw Mr Clement Mannya Ms Adheera Bodasing Ms Astrid Ludin Final Report submitted to the Minister of Trade and Industry September 2010 Table of Contents Glossary of Terms 6 Executive summary 8 Chapter 1: Introduction and context 26 1.1 Introduction 26 1.2 The evolution of gambling and gambling policy in South Africa since 1994 26 1.2.1 Introduction 26 1.2.2 The Wiehahn report 27 1.2.3 Balancing competing policy and regulatory objectives 30 1.2.4 The evolution of gambling post-Wiehahn: 1996 -2002 31 1.2.5 The first review of gambling policy 33 1.2.6 Conclusion 34 1.3 The Gambling Review Commission 34 1.4 The Parliamentary Process 36 1.5 Approach of the Commission 37 Chapter 2: Overview of South African gambling industry 39 2.1 Introduction and quick overview of the industry 39 2.2 Economic trends: general overview 39 2.2.1 GGR for Casino’s, LPMs, Betting and Bingo: 2001-2009 40 2.2.2 Gambling taxes: Casino’s, LPMs, Betting and Bingo 42 2.3 The Casino industry 45 2.3.1 Ownership 45 2.3.2 Casino GGR and tax contributions 46 2.3.3 Size and growth of the casino industry 48 2.3.4 Employment in the casino industry 50 2.3.5 Casino non-gaming revenues 51 2.3.6 Capital expenditure and social infrastructure spend 51 2.3.7 Casinos and CSI 52 2.3.8 Casinos and B-BBEE 52 2.3.9 Conclusion 53 2.4 Bingo 53 2.4.1 The bingo industry 53 2.4.2 Bingo revenues 54 2.4.3 Electronic bingo terminals 55 2.4.4 Black Economic Empowerment 56 2.4.5 Conclusion 56 2.5 Limited Payout Machines (LPMs) 57 2.5.1 Rollout of LPMs 57 2.5.2 Key industry players 58 2.5.3 Economic performance of LPMs 61 2.5.4 Employment creation 62 2.5.5 Viability of LPM industry 62 2.5.6 Corporate social investment 63 2.5.7 Conclusion 63 2.6 Betting: 2001-2009 64 2.6.1 Horseracing and betting 66 2.6.2 Horseracing and employment 66 2.6.3 Horseracing and Community Social Investment 67 2.6.4 Horseracing and B-BBEE 67 2.6.5 Bookmakers and B-BBEE 67 2.6.6 Conclusion 67 2.7 The National Lottery 68 2.7.1 A revenue maximisation mandate 68 2.7.2 Lottery products 68 2.7.3 Economic performance to date 69 2.7.4 Conclusion 72 Chapter 3: The social impact of gambling 73 3.1 Introduction 73 3.2 Who gambles 73 3.2.1 The National Prevalence Studies 74 3.2.2 What is the level of gambling participation in South Africa 74 3.2.3 What games do South African gamblers play 75 3.2.4 Participation by population group 75 3.2.5 Participation in gambling by class/economic status 76 3.2.6 Participation in gambling by gender 78 3.2.7 Participation by age 78 3.2.8 Where do people gamble: Formal and informal venues 79 3.3 Perspectives on problem gambling 79 3.3.1 Defining problem gambling 79 3.3.2 Problem gambling: South African trends 82 3.3.3 South African in perspective: International comparisons 83 3.3.4 Problem gambling and race 84 3.3.5 Problem gambling and type of dwelling 85 3.3.6 Problem gambling and the poor 86 3.3.7 Comorbidity and problem gambling 86 3.3.8 Summary 87 3.4 Underage Gambling 88 3.4.1 Prevalence of gambling among the youth of the country 88 3.4.2 Conclusions 89 3.5 Regulatory measures 90 3.5.1 Introduction 90 3.5.2 Minors 90 2 3.5.3 Excluded persons 90 3.5.4 Credit 92 3.5.5 Advertising 92 3.5.6 Standards for gambling premises 95 3.5.7 International practice and lessons 95 3.6 Research, education, prevention and treatment 100 3.6.1 Regulators 100 3.6.2 Civil society and private organizations 100 3.6.3 Gambling operators 101 3.7 Conclusions 103 Chapter 4: Adequacy and effectiveness of current regulatory framework 105 4.1 Introduction 105 4.2 The implications of concurrent jurisdiction in gambling regulation 105 4.3 Concurrent jurisdiction and the exercise of co-operative governance 107 4.3.1 The National Gambling Policy Council 108 4.3.2 Conclusion 110 4.4 The regulatory framework 110 4.4.1 The National Lotteries Board 110 4.4.2 The National Gambling Board 114 4.4.3 Provincial gambling regulatory authorities (PGRAs) 118 Chapter 5: The impact of gambling policy 129 5.1 Introduction 129 5.2 Taking stock of gambling policy to date 129 5.2.1 Protection of society from the over-stimulation of latent gambling 129 5.2.2 Strict control and supervision of industry 132 5.2.3 Uniformity and harmonization of policy at all levels of government 132 5.2.4 Revenue generation 133 5.2.5 Economic empowerment of the historically disadvantaged 133 5.2.6 Job creation 133 5.2.7 Conclusion 134 5.3 The managed rollout of licensed gambling activities 134 5.3.1 Casinos 134 5.3.2 Limited Payout Machines 135 5.3.4 Bingo 137 5.3.5 Betting 137 5.3.6 Lottery 138 5.4 Minimising the negative social impact of gambling 138 5.4.1 Expanding research, education and treatment 138 5.4.2 Implementing regulatory measures to protect the vulnerable 139 5.5 Improving uniformity and accountability in the regulatory framework 140 Chapter 6: New forms of gambling 142 6.1. Introduction 142 6.2. Criteria for assessment 142 6.2.1 Demand 143 6.2.2 Proliferation 143 6.2.3 Protection 143 6.2.4 Geographical location 143 6.2.5 Economic viability 143 6.2.6 Economic impact. 143 6.2.7 Competition 144 6.2.8 Enforcement 144 6.2.9 Revenue 144 3 6.2.10 Animal welfare (where relevant) 144 6.3 Greyhound racing 144 6.3.1 Background 144 6.3.2 The contemporary activity 145 6.3.3 Arguments for legalisation in SA 146 6.3.4 The global greyhound industry 147 6.3.5 Analysis and conclusion 149 6.3.6 Recommendation 150 6.4 Bush racing 151 6.4.1 Introduction 151 6.4.2 International precedent 152 6.4.3 Analysis and conclusion 152 6.4.4 Recommendation 153 6.5 Fahfee 154 6.5.1 Introduction 154 6.5.2 History 154 6.5.3 The contemporary game 155 6.5.4 Analysis and conclusion 156 6.5.5 Recommendation 157 6.6. Bingo and electronic bingo terminals 158 6.6.1 Introduction – the game of bingo 158 6.6.2 What are Electronic Bingo Terminals (EBT’s) 158 6.6.3 The evolution of bingo and EBT’s internationally 159 6.6.4 Analysis and conclusion 161 6.6.5 Recommendation 162 6.7 Poker 162 6.7.1 Introduction 162 6.7.2 Defining the game 163 6.7.3 Poker in South Africa at present 163 6.7.4 Online poker 163 6.7.5 Analysis and conclusion 164 6.8 Betting exchanges 166 6.8.1 Introduction 166 6.8.2 Person-to-Person Betting 166 6.8.3 What is a betting exchange? 167 6.8.4 Betting exchanges and the existing regulatory framework 167 6.8.5 International precedents 169 6.8.6 Comments from the Western Cape Bookmakers Association 170 6.8.7 Analysis and conclusion 171 6.8.8 Recommendation 173 6.9 Virtual racing 174 6.9.1 Introduction 174 6.9.2 Analysis and conclusion 174 6.10 Online gambling 174 6.10.1 What is Interactive Gambling? 174 6.10.2 The dangers of the current approach 176 6.10.3 International precedents 177 6.10.4 Shortcomings of the existing legislation 179 6.10.5 Analysis and conclusion 180 6.10.6 Recommendations 182 References 185 4 5 Glossary of Terms ATM Automatic Teller Machine ACT Australian Capital Territory BEE Black Economic Empowerment B-BBEE Broad-Based Black Economic Empowerment CASA Casino Association of South Africa CEMS Central Electronic Monitoring System CEO Chief Executive Officer CPSI Canadian Problem Gambling Index CSI Corporate Social Investment DA Distributing Agency DSG Destination Style Gambling DTI Department of Trade and Industry EBT Electronic Bingo Terminal FICA Financial Intelligence Center Act GA Gamblers Anonymous GDP Gross Domestic Product GGR Gross Gaming Revenue GPI Grand Parade Investments GRC Gambling Review Commission HCI Hosken Consolidated Investments JSE Johannesburg Securities Exchange LPM Limited Payout Machine NGB National Gambling Board NLB National Lotteries Board NLDTF National Lotteries Distribution Trust Fund NPS National Prevalence Study NRGP National Responsible Gambling Programme MEC Minister of Executive Council MPM Medium Payout Machine PDI Previously Disadvantaged Individual PGRA Provincial Gambling Regulatory Authority PGSI Problem Gambling Severity Index RDP Reconstruction and Development Programme RIGT Responsibility in Gambling Trust 6 SACTWU South African Clothing and Textiles Workers Union SAPS South African Police Service SARGT South Africa Responsible Gambling Trust SOGS South Oaks Gambling Screen USA United States of America VAT Value Added Tax VBT Video Bingo Terminal 7 Executive summary Introduction Since the legalization of gambling in South Africa in 1996, the gambling industry has grown and evolved substantially. Technological advancements on existing forms of gambling and new forms of gambling have emerged and have created challenges for regulators and policy makers.
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