Minister of Trade and Industry Mandisi Mpahlwa on Second Reading Debate of the National Gambling Amendment Bill, National Assembly

Madam Speaker
Deputy Speaker
Cabinet Ministers
Deputy Ministers
Chairperson and Members of the Portfolio Committee on Trade and Industry
Honourable Members of Parliament

I am honoured to table the second reading of the National Gambling Amendment Bill. This amendment provides legislation for the regulation of interactive gambling. It seeks to, amongst others, protect society from the negative effects of gambling; protect minors and other vulnerable persons from exposure to gambling and to prevent gambling from being a source of crime and a channel for money laundering.

Having recognised certain shortcomings in our law, this Bill addresses the socio-economic implications of an unregulated interactive gambling industry by establishing an effective and efficient regulatory framework in line with government's broad policy framework for the regulation of all forms of gambling.

The draft Bill was approved by Cabinet in December 2006 and published for comment on 18 December 2006. Written comments were received from stakeholders and public consultations took place over an extended period of time.

In summary, the Amendment Bill deals with player protection, problem gambling, advertising, money laundering, enforcement and compliance, licensing and other matters such as taxation, provision of games, and so on.

Madam Speaker, allow me to elaborate on each of these aspects

Firstly, in respect of player protection, the Bill provides for everyone engaged in interactive gambling to be registered with a licensed interactive gambling provider. Strict verification procedures that are compliant with the Financial Intelligence Centre Act (Fica) will need to be complied with. Statutory requirements such as attaining a sworn statement from the player that they are 18 years or older, will ensure that minors do not have access to interactive gambling.

In addition, players must nominate an account, held with an authorised financial institution and this account will be the only account through which transfers of monies will be carried out. The Bill will make any gambling activity provided by an unlicensed provider unlawful and will prohibit South African players from engaging in interactive gambling activities with unlicensed providers.

Secondly, one of the key problems associated with interactive gambling is its accessibility and availability around the clock. This Bill therefore obliges the interactive provider, through licensing conditions and regulations, to ensure that there is an electronic system for the monitoring and reporting of registered players. Players will be required to set limits on accounts. The principle of 'know your customer' will apply and providers will be required to audit playing patterns and behaviour. Players will be exposed to self diagnosis systems and notices on websites of service providers in respect of voluntary player exclusion and treatment of addictive gambling.

Thirdly, the Bill makes the advertising of interactive gambling unlawful, irrespective of whether such advertisers are based off-shore.

Fourthly, the Bill will be governed by Fica requirements as far as money laundering is concerned. One of the main provisions on money laundering is that gambling equipment, which includes the server and other key records of players' transactions, be located in South Africa. Also, registration of players, verification of player identity and only allowing players from selected countries that comply with Financial Action Task Force (FATF) or designated organisations to engage in interactive gambling licensed in the Republic, will apply. Other control measures include the establishment of player accounts, the verification of nominated accounts, regulating the method of payment to the provider such as electronic methods of payment only and a requirement that a provider must not convert any funds in a player account into any other form of value. The interactive provider has an obligation to report suspicious and illegal activities. The provision of control systems will therefore be prescribed to ensure compliance.

Madam Speaker interactive gambling is borderless. Therefore the fifth area we deal with is our view that the enforcement and administration of this Bill should be discharged at a national level. In support of this principle, the National Gambling Board will ensure compliance with the National Gambling Act and conditions of licence. The Board will supervise and enforce compliance by licensees with Fica requirements and conduct inspections in respect of interactive gambling websites and premises where interactive gambling equipment and software are located. The Board is empowered to revoke or suspend interactive gambling licenses for non-compliance and as part of cooperative governance may delegate some of its enforcement and compliance powers to the Provincial Licensing Authorities.

In regard to the sixth key issue addressed by the Bill, licensing in general, the Bill provides for the licensing of interactive gambling and that these licences be issued as national licences due to the borderless nature of this activity. The interactive gambling licences include operator licences, employee licences for key employees, management staff and directors or shareholders. There are also licensing or testing and certification requirements for interactive gambling software, equipment, manufacturers, suppliers, and maintenance providers of interactive gambling equipment.

Finally, honourable members, the Bill provides for the imposition of taxation which will be catered for in a separate money Bill. The Department of Trade and Industry (DTI) is currently in consultation with National Treasury on the procedure for the imposition of such a tax. It is our view that taxation will be optimised to create a level playing field and at the same time be used to curb any proliferation of gambling.

Madam Speaker, as we all know, constant developments in technology have a direct impact on conventional methods of product and service offerings. Thus to allow for flexibility in the ever changing environment of information and communication technology, many of the provisions in this regard will be provided for in the regulations.

In conclusion, I would like to thank the Portfolio Committee on Trade and Industry for their guidance, support and important contributions. The Committee has done a sterling job by further strengthening the provisions of the Bill especially in the areas of advertising, tightening provisions on player registration, money laundering and establishment of foreign company presence in South Africa, amongst others.

I also extend my gratitude to other government departments, key stakeholders in the industry, our provincial counterparts, and members of the public for their inputs into these amendments. Their commitment to ensuring that this Amendment Bill is appropriate and consistent with government's broad policy framework for the regulation of all forms of gambling has been extremely helpful.

Madam Speaker, I commend this Bill to the House.

Issued by: Department of Trade and Industry
17 September 2007