Impact of National Gambling Amendment Bill on Casino Industry in South Africa
Presented to the Western Cape Provincial Parliament, the presentation outlines the significant economic contributions of licensed casino operators in South Africa. It addresses key issues such as the National Gambling Amendment Bill, the role of the National Responsible Gambling Programme, and the potential challenges related to the replacement of the National Gambling Board.
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PRESENTATION TO THE PORTFOLIO COMMITTEE ON FINANCE, WESTERN CAPE PROVINCIAL PARLIAMENT NATIONAL GAMBLING AMENDMENT BILL, 2018 Presented by Qhinaphi Sitsila General Manager Chamber, 6thFloor, 7 Wale Street, Cape Town 22 February 2019
ABOUT CASA CASA is a voluntary association which represents the interests of licensed casino operators in SA. 35 of the 39 operational casinos in SA. As at March 2018, our members had invested in excess of R53 billion in infrastructure leading to the development of world class entertainment destinations in RSA e.g. Sun City Resort, Sandton ICC & Cape Town ICC. Support in excess of 38 000 direct jobs, many of which give employment to people with no previous work experience. Excludes indirect jobs. In the FY 2017/18 alone, members contributed R143m in CSI. Last five years R739m. In the FY 2017/18 alone, members contributed R6.1 billion to the fiscus in tax revenue. Provincial Gambling Taxes/Levies (R1.9 billion), VAT (R2 billion), Corporate Tax (R1 billion) & Other Taxes (rates etc.)(R1.2 billion). SA Government had an effective 37% share (almost 40%) of the value-added to the economy by the casino sector of R16.4 billion in the FY2017/18 and as such it is the largest de facto beneficiary stakeholder in the casino industry. Members established the internationally acclaimed responsible gambling programme ( NRGP ). Funds approximately 64% of its budget. Further information www.casasa.org.za
1. the dti BRIEFING TO THE PROVINCIAL LEGISLATURE ON THE NATIONAL GAMBLING AMENDMENT BILL [B27B - 2018] Slide 5, third bullet point states that: Further, it must be emphasized that the NG Policy was subjected to a public consultation process, so policy positions were subjected to comments from stakeholders. The above assertion is a misstatement insofar as it relates to the extension of the scope of the National Central Electronic Monitoring System ( NCEMS ) to other modes of gambling other than the Limited Payout Machines ( LPMs ): The Draft National Gambling Policy gazetted for public/stakeholder comment on 15 May 2015 did not have this policy proposal. We only became aware of this policy proposal when the Final National Gambling Policy was gazetted on 01 April 2016. Para 4.2.7. The National Gambling Amendment Bill, 2016 gazetted for public/stakeholder comment on 01 April 2016 ALSO did not a provision on it. Thus, we could only engage on it when the National Gambling Amendment Bill, 2018 was gazetted for public/stakeholder comment.
2. REPLACEMENT OF THE NATIONAL GAMBLING BOARD ( NGB ) WITH THE NATIONAL GAMBLING REGULATOR ( NGR ) - (1 of 2) The NGR will be institutionally compromised in exercising its statutory evaluation and oversight functions in respect of provincial licensing authorities single individual in that it will be required to interrogate the actions of those authorities which are based on collective decision-making. ( PLAs ) if it is governed by a A governance structure which vests the governance of the NGR in the hands of a few individuals, rather than in a composite board, will leave the NGR vulnerable to changes in personnel. The difficulties with regard to the effective operation of the NGB should rather be addressed by ensuring that persons with the appropriate expertise are appointed to the board of the NGB and that it is adequately staffed and resourced.
REPLACEMENT OF THE NATIONAL GAMBLING BOARD ( NGB ) WITH THE NATIONAL GAMBLING REGULATOR ( NGR ) - (2 of 2) In motivating the NGR Structure, the dti states on Slide 16, sixth bullet point that: Board structures presented governance challenges. Other entities with similar governance structures (single head with no external Board) include the Public Protector, CIPC, NLC, NCT, NRCS, NCC, Competition Commission [our emphasis] etc. the dti regulators which had adopted the governance model of the We point out that the national regulators/institutions quoted above are not comparable to gambling regulators in that they do not have concurrent legislative competence with provincial regulators.
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (1 of 8) 3. The NCEMS was specifically established to provide a monitoring system for limited payout machines ( LPMs ) in circumstances in which LPM operators do not have the resources to establish their own electronic monitoring systems. The primary purpose of the NCEMS is for PLAs to monitor the payment of gambling levies and taxes. Casinos, in contrast, have their own electronic monitoring systems as required by provincial monitoring systems are linked to the PLAs, which have full access to the content of those systems. We thus submit that there is no need to develop a new electronic monitoring system for casinos which will no doubt involve considerable time and expense. As things currently stand, PLAs which, unlike the NGB, are responsible for monitoring the payment of gambling levies and taxes have ready access to all the relevant information of casinos. legislation. Casinos
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (2 of 8) CASA submits that the NCEMS should not be extended to casinos. Nevertheless, to the extent that it is concluded, contrary to our submissions, that the NGB or NGR should have access to casinos electronic monitoring systems, we point out that this could be achieved by the NGB or NGR simply linking-up to the monitoring systems of the various PLAs. In response to our submissions on the previous version of the Bill, the dti s response seeks to justify the extension of the scope of the NCEMS on various bases, namely: it refers to the NGB s obligation to monitor socio-economic patterns of gambling activity in terms of section 65(1)(d) of the Act and to conduct research on the socio-economic impact of gambling.
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (3 of 8) it contends that the NGR should have oversight over all gambling machines and not only those that account for roughly 10% of gross gambling revenue (i.e. LPMs). It is, for example, said that the NCEMS will enable the NGR to enhance its enforcement and regulatory oversight capabilities over the gambling industry at large dti contends that the NCEMS may be expanded to include numerous benefits , including accurate reporting of taxation to both provincial and national government, a centralised point of fully auditable information of which the [NCEMS] offers live feeds and assistance to the NGB and PLAs to ensure competent, efficient and reliable oversight
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (4 of 8) the NCEMS will contribute to a self-funding revenue stream for the NGR, to fund its new mandate through the imposition of a national monitoring fee ; and. the NCEMS will create synergy for the NGR and industry stakeholders to effectively track consumer behavior and identify consumer trends with regard to early warning signs of addictive and compulsive gambling and will allow the NGR to effectively report on financial crime.
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (5 of 8) CASA submits, with respect, that the above approach to this issue put forward in the dti s response is misguided for a number of reasons: The NGR does not require access to a NCEMS in order to monitor and research socio-economic aspects of gaming. There is no need for the NGR to put in place the NCEMS to exercise enforcement and regulatory oversight, particularly bearing in mind that the PLAs already have access to the content of casinos monitoring systems, and that dual regulation of the same issues at both a national and provincial level should be avoided, in the interests of efficiency and good regulatory practice. In relation to taxation, for example, the monitoring and payment of gambling levies and taxes is, as we have already pointed out, the responsibility of the PLAs. In addition, the monitoring of other forms of (national) taxation is the function of the South African Revenue Service, not the NGR. adequate legal mechanisms in place to combat financial crime, such as the mechanisms put in place pursuant to the Financial Intelligence Centre Act, 2001. Similarly, there are already
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (6 of 8) It is not understood in what manner the NCEMS would be used to identify trends with regard to early warning signs of addictive and compulsive gambling . This important issue is addressed through mechanisms such as the South African Responsible Gambling Foundation ( SARGF ) which is is globally recognised for its flagship programme, the National Responsible Gambling Programme ( NRGP ) and the excluded persons regime, and it is most unclear how the NCEMS might further this objective. Most importantly, we reiterate that CASA is gravely concerned that the substantial cost of the extension of the NCEMS is plainly not justified in circumstances in which casinos already have their own electronic monitoring systems to which PLAs have access. It is thus of concern that the dti s response indicates an intention for the monitoring fee to provide a self-funding revenue stream for the NGR to fund its new mandate . This suggests that the extension of the NCEMS to casinos and other gambling operators is a revenue-raising mechanism to fund the operations of the NGR. This is highly problematic; the extension of the NCEMS should be considered on its merits without regard to the revenue that such a system may generate for the NGR.
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (7 of 8) We also comment on the rest of Section 27 as follows: Section 27(1)(a) contemplates that the NCEMS must be capable of detecting and monitoring significant events , which are defined, in clause 1, as a condition which makes a game unplayable or affects the outcome of a gambling activity and is recorded in a gambling machine or device . The word condition is, in our submission, too broad and may lead to confusion. It would be preferable rather to use the phrase irregularity or defect . The deletion of the word that in section 27(1)(b) is problematic as it contemplates that the NCEMS must be capable of analysing and reporting on a wide range of data. significant events . This would significantly increase the cost of establishing and operating the NCEMS in circumstances where, in CASA s submission, that cost would not be justified. It is also at odds with dti s response, which states that the sole purpose of the NCEMS is to detect and monitor significant events of gambling machines . It would no longer be limited to
NATIONAL CENTRAL ELECTRONIC MONITORING SYSTEM (8 of 8) The insertion of the phrase who must acquire a national licence after the phrase any person in section 27(2) may lead to confusion and does not adequately provide a regime for the licensing of the NCEMS operator. We submit that: the quoted phrase should be inserted as a proviso at the end of section 27(2); and the Act should be amended to specify the process and requirements for the licensing of such an operator.
4. NGPC COUNCIL MEETING QUORUM CASA is respectfully of the view that it is undesirable, from a policy point of view, to legitimise the taking of decisions by the Council in circumstances where it fails to achieve a quorum. Without a proper quorum, it is simply not possible for the Council to meaningfully act as a forum for consultation between national and provincial government on issues. Given its highly dysfunctional nature, CASA respectfully submits that the Council should be disbanded and the provisions in the Act relating to the Council should be repealed. If, however, the Council is to continue functioning, we submit that, given its consultative and participative nature, it should be mandatory for a quorum to be achieved on every occasion on which decisions affecting the industry are to be made (which would seem to be the case in relation to all of the Council's decisions).
POWERS OF NATIONAL INSPECTORATE (1 of 2) 5. Section 76A(1)(e) envisages empowering inspectors appointed by the NGR to ensure compliance of gambling institutions with gambling laws . CASA has the following objections in respect of this provision: No clarity is given as to the manner in which the NGR is to go about ensuring compliance with gambling laws. principle of the rule of law as the NGR s powers are not sufficiently circumscribed. Section 76A(1)(e) would conflict with Section 30(1) of the Act, which provides that each PLA has exclusive jurisdiction within its province to, amongst others conduct inspections to ensure compliance with the National Gambling Act as well as applicable provincial law. This is contrary to the
POWERS OF NATIONAL INSPECTORATE (2 of 2) Section 76A(1)(e) would have the undesirable impact of subjecting licence holders to the jurisdiction of two different compliance enforcement authorities. This would not only expose licence holders to more than one disciplinary procedure in respect of the same conduct (as well as potentially different outcomes of the same enquiries based on differing interpretations and approaches by the respective authorities) but would also entail undue duplication of regulatory effort and cost. CASA submits that this dual regulation would be harmful to the objective of streamlining the manner in which gambling-related activities are regulated as well as the objective of promoting regulatory uniformity. Accordingly, we submit that section 76A(1)(e) should be deleted.
NATIONAL GAMBLING AMENDMENT BILL [B27B - 2018] COMMENTS / CLARITY / QUESTIONS
