If the amendment bill adopted by the cabinet of the country last week is finally approved to become a law, on December 11, 2006, both online and cellphone gambling will become legal for the first time ever in South Africa. The gambling industry in South Africa has been hampered by the length of time that it has taken the government to adapt appropriate laws that will finally permit Internet Gaming in the country.
Foreign gaming operators, particularly those based in the U.K., have been waiting for the legalization of Online Gaming in South Africa for a long time. If the legalization takes place, they will be able to enter the domestic market of the country. Meanwhile, the provincial governments of South Africa have been missing out on an alternative source of tax profits. The draft of the bill states that there should be a licensing system for both the gaming players and the online gaming sites. According to Industry Deputy Director General Astrid Ludin, the way the gaming profits will be taxed is still to be discussed.
Astrid Ludin added that the main challenge in making the proposed legislation was to find an alternative way to effectively restrict gaming on the Internet and prevent money laundering. Additional resources would have to be found for the proposed law that will be regulated by the National Gambling Board. The Department must also consider how gambling would affect the economy and there would be a restriction imposed so that under-aged clients would not be able to access the sites. In addition, Ludin said that a proposed measure on how to limit the area of online gambling should also be considered, making it illegal for advertisers to market their products on online gaming sites.
Online gaming was prohibited by the National Gambling Act of 2004 because the South African Government considered that a considerable amount of time was needed to study this form of gambling, which has gained a massive following all over the world. The National Gambling Act of 2004 gave a 2 year time-frame to Trade and Industry Minister, Mandisi Mpahlwa, to make the necessary regulations needed to effectively regulate online gambling, which will be handled in the terms proposed in the Gambling Amendment Bill.
The much-awaited regulations for online gaming have stemmed from a report made by the National Gambling Board committee, as well as the recommendations made by the National Gambling Policy committee, comprised of Secretary Mpahlwa and the provincial officials that will handle the gambling activities. The research was conducted on how other countries, like Britain, the US and Australia handle online gambling. Unlike the United States, which has just recently decided to prohibit online gaming with the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in order to prevent money laundering and funding cash to terrorism, South African officials have decided to allow online gaming with a restricted framework.
The Gambling issue is an on-going competition between the National and Provincial Governments in terms of the constitution, so the provinces in South Africa are closely involved in making the regulations. According to the estimates by the foreign market research companies, the worldwide gambling industry, which was valued at $8.2 billion a year in 2004, will reach $25 billion by the year 2010. Online Poker is one of the major sources of income when it comes to online gaming.
December 18, 2006