Interactive Gambling Regulations • • Presentation to the Portfolio Committee of Trade and Industry (Committee) on the Regulations for Interactive Gambling (IG Regulations) 12 August 2009
Delegation • Zodwa Ntuli: Deputy Director General Consumer and Corporate Regulatory Division (CCRD) Telephone: (012) 394 1537 • Mpho Mosing: Director Regulated Industries, CCRD Telephone: 012 394 1504 • Themba Marasha: Chief Operations Officer, National Gambling Board (NGB) Telephone: 012 394 3800 • Tlotliso Polaki: Secretary of the Board, NGB Telephone: 012 393 34800 2
Purpose • The purpose of the presentation is to: Address questions raised by Committee on the IG Regulations Outline substantial inputs received from stakeholders on the IG Regulations Present possible amendments to the regulations pursuant to Committee briefing and stakeholder consultations To afford the Committee an opportunity to provide inputs on the proposed amendments to the IG Regulations 3
Responses Question How are minors protected in the regulations from access to interactive gambling activity? Answer § protection of minors are amplified in the registration and banking requirements, and the issuing of username and password § for registration, a player will have to fill in an NGB Form 10 § the bank has to stamp the form confirming banking details and the identity of the bank account holder § the form with banking details and stamp will be submitted to operator by prospective player, including certified copy of the identity document and any form of proof of residential § operator upon receipt will verify with the banks the account number and identity § once verified the operator will issue username and password for access to games. § should it happen that a minor does access interactive games, money won will not be accessible as the funds should be paid to a nominated account held by an adult § Operator found transgressing face suspension or revocation of a license, and also face criminal sanctions 4
Responses Question Concurrency with provinces and NGB, where are these 10 licenses going to be located? Answer Due to the borderless nature of IG, licenses will be issued nationally by the National Gambling Board. The location of the operators will be spread across the Republic. This will be done through a licensing process to ensure an equitable spread. The spread of the licenses will take into account § the number and geographic spread of the existing license casinos § the period of validity of the interactive gambling licenses and collection of tax § BBBEE empowerment § Job creation and opportunity for new entrants in the industry § Competition and efficiency of operation within the gambling industry 5
Responses Questions Regulations must Exclude cell phones from interactive gambling Answer We recognize the concern about allowing cell phones however: § It will be impractical for the operator or NGB to trace the communication tool used § IG requires a player to have internet in order to interact § communication tools that can access the net are different and include mobile phone To exclude mobile phones regulations would have to define mobile phone, and given the technological developments this will certainly prove to be difficult especially considering different mobile phones such as blackberry & cell phones with 3 G cards Restricting the use of mobile phones will be an artificial restriction that will not achieve the intended purpose 6
Responses Question How do we ensure that this legislation acts as a catalyst in the poor communities? Answer The licensing process will determine location of operator to ensure equitable spread of benefits to provinces The Act empowers the Board to impose license conditions that will ensure commitment of the IG Operator to contribute to: § community development initiatives based on revenue generated and § programmes for treatment of problem gambling and addiction 7
Question Responses How is NGB dealing with illegal operators advertising in South Africa when the activity is still illegal Answer Court challenge § Action was taken against Piggs Pigg for offering interactive gambling in the Republic (Gauteng case) § The court of first instance held that the activity is illegal is the Republic and should not be offered to South Africans § Piggs Pigg is appealing the decision arguing that because the server in based in Swaziland the gambling activity is therefore offered in Swaziland § This continues to be a challenge but NGB will continue to act against these illegal operators Coordination with other government departments/agencies § Interventions with Department of Communication to prohibit broadcasting interactive gambling related activities § Explore Electronic Communication Act provisions for cyber inspectors - together with Gambling inspectors NGB may enhance monitoring and enforcement § Constant monitoring of the web is required and capacity and skill is currently being acquired so as to fully attend to this challenge. § Cost of violating the regulations must be high to deter non compliance – severe sanctions such as revocation 8
Comments Organisation/s Tsogo Sun, Mpumalanga Gambling Board, Playtech, Whitesmans, Bwin and Lurie Inc Tsogo Sun, Mpumalanga Gambling Board, Whitesmans, Bwin and Lurie Inc Regulations Comment the dti’s Response Regulation 2 (2) Specified games, systems and methods (Regulation disallows games by two or more people facilitated by a third party) Effect of regulation is to exclude Poker and Bingo which are very popular games in IG The regulation is intended to exclude any games that are not played against the house but against each other, such as poker tournaments Regulation 3 (1) (2): forms of electronic communication (Regulation prescribes that the interactive games may only be accessed via the internet of the operator. ) There is no reason why other modes of communication are excluded. Response by the Portfolio Committee Action The intention of the regulations is to exclude modes that do not connect to the internet. We concede that it may be impractical to detect what mode is used to connect to the net and thus restriction of any mode will just be an artificial restriction that is not enforceable. Technological developments will make it even more difficult. 9
Comments Organisation/s Tsogo Sun, Mpumalanga Gambling Board, Wagerworks, Whitesman, Bwin and Lurie Inc and Sun International Regulations Regulation 5: dispute resolution and complaints procedure (Must refer the matter to the board for resolution; the board may refer the matter for mediation) Comment the dti’s Response 5 (6) Board is better placed to deal with the complaints, complaints should start with CEO then be appealed to the board instead of referring for mediation. It is the boards responsibility to adjudicate, and make decisions. Response by the Portfolio Committee Action Board is best suited to look at the technical issues that might arise as the regulator and therefore the decision of the board will be final, and can be appealed with the normal judicial processes. 10
Comments Organisation/s Peermont, Tsogo Sun, Whitesman, Wagerworks, Piggs Peak, Oxipite, Phumelela Gaming, Playtech, Banking Association of South Africa, Bwin, Lurie Inc, Smartec, Betfair, Banking Association of South Africa, Peermont, Whitesman, Wagerworks, Piggs Peak, Oxipite and Phumelela Gaming Regulations Comment the dti’s Response Regulation 6 Nominated Account (Only a cheque or credit account must be nominated) Limiting required accounts to cheque and credit will exclude other accounts such as savings account, ewallets, neteller and paypal. -Must allow player one account per operator -Must allow player an option to change account This is meant to exclude particularly savings account , further paypals, e-wallats facilitate payments and are not accounts. Regulation 7: Limit on funds and time for participating (Notice to increase the limit in the nominated account is effective after 7 days) Seven days to effect increase is too long. A period of 48 hours would be reasonable. Response by the Portfolio Committee Action 7 days is normally regarded as reasonable cooling off days is meant to give a player the opportunity to assess the decision, perhaps 48 hrs would also suffice. 11
Comments Organisation/s Regulations Comment the dti’s Response All stakeholders Regulation 8: Maximum credit in player account (maximum is R 20 000) R 20, 000 set is too low, and will result in a non competitive market with other off shore operators who do not have limits. Ultimately the intention of player protection will be lost as players will opt to play with off shore operators. Propose that instead of restricting player limit on player account, a loss limit be set. This will address constant transfer of funds from player account to nominated account and reduce banking fees. Regulation 9 and 10: Player Identification and Registration (player must submit statement under oath, registration form with a bank stamp, ID copy Requiring the lodging of oath or affirmation as well as certified ID, form stamped by bank will discourage consumers from using regulated SA operators. Player’s nominated account is already FICA compliant, that should be enough Response by the Portfolio Committee Action Obligation should be on operator and player to ensure that player submits correct documentation and operator verifies with the bank the account, identity, name prior to registration. This will require stringent monitoring from the regulator and failure to comply by the operator will result to suspension or revocation of the license, and or criminal prosecution. 12
Comments Organisation/s Sun International, Whiteman Sun International, Tsogo Sun, Whitesman, Wagerworks Regulation 17 Advertising ( Interactive provider must be licensed to advertise and NGB must make determination upon a complaint on whether an advert contravenes the regulations) Regulation 18: Standards for the design, use and maintenance of websites (Must avail automatic reality check at hourly intervals) Comment 17 (6)(7)&(8) Should require adverts to be submitted to the board before as opposed to reacting afterwards. The issue will be best dealt with by ASA not NGB. Reality checks have been regarded as a nuisance with little effect on the behaviour of the problem gambler. the dti’s Response by the Portfolio Committee Action Submitting adverts before may not make good business sense. However, there should be set standards that all adverts must adhere to. NGB is best placed to deal with the matter. These encourage responsible gambling and give the player an opportunity to assess decision to continue play or not. 13
Comments Organisation/s Mpumalanga Gambling Board, Bwin, Lury Inc and Sun International Regulations Comment the dti’s Response Regulation 22 Amendments to approved internal control procedures 22(2): Must state a specified time frame as opposed to ‘a reasonable time’ 26 (1) the 10 licenses are too small for healthy competition, and should permit land based casinos to provide with their current licenses as they contributed to the socio economic infrastructure and employment creation. Action The regulation will be amended to qualify the clauses that refer to immediately. Specific timelines will be attached to provide certainty Regulation 26: maximum number of licenses (maximum number is 10) Response by the Portfolio Committee Only 10 licenses to prevent the over stimulation, demand proliferation. We believe 10 is a reasonable number, which can be assessed from time by Minister. 14
Comments Organisation/s All stakeholders and Parliament Regulations Regulation 37: duration and renewal of a license Comment Period of the license is too short for the anticipated investment and does not make sound business for potential investors. the dti’s Response by the Portfolio Committee Action The period of license will apply to temporary licences as the Act provides that temporary licenses should be issued with the intention of issuing the licence permanently upon of fulfilment of certain conditions. However, a permanent license will have a duration as it is still not intended to be an indefinite. 15
Comments Organisation/s Sun International, Bwin, Tsogo Sun, Peermont Regulations Regulation: 53( 1) (f): Employee registration (Provincial board empowered to determine a job position or individual to be a key employee position) Comment the dti’s Response How could a provincial board determine that a position of a National Board licensee is a key position? The National Gambling Board should make such a determination as they are the ones who issue an operator’s license. Response by the Portfolio Committee Action The regulation promotes co-operative governance to ensure effective monitoring and enforcement across the Republic. Thus, section 39 A (2) empowers the Provincial licensing authority to issue an interactive gambling employment licence to an employee or a member of management. 16
Thank you
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