Africa market focus: South Africa
In the third of this four-part focus on Africa's emerging gambling hubs, EGR Compliance in partnership with international law firm Dentons solicitors delves into the regulatory patchwork that is South Africa
The political history of South Africa is a long and chequered one, punctuated by amazing highs and extremely dark lows. Following its emergence from decades of apartheid, South Africa’s government has become one of the most permissive in the African region. However that freedom after so long in the shadow of opression has not been without issues, as the administrations which followed Nelson Mandela into government have found.
Gambling regulation in the Cape of Good Hope is just that, good hopes with a potential for broad benefits to the country’s economy but as with the political tumult, South Africa’s gambling legislation has become a patchwork of different groups seeking differing objectives legalising different things in its many provinces.
In the third of this four-part focus on Africa’s emerging gambling hubs, EGR Compliance, in partnership with international law firm Dentons solicitors, aims to bring some clarity to the continent’s regulatory enigmas.
[box title=”South Africa in numbers” box_color=”#EC6408″ title_color=”#333333″]Population: 59.3 million
GDP per capita: $7,180
Internet penetration: 56.3%
President: Cyril Ramaphosa
Principal regulatory body: South Africa National Gambling Board (national level), individual provinces at lower level
[/box] [box title=”Which verticals are legal?” box_color=”#EC6408″ title_color=”#333333″]First of all, it is important to note that the mandate to regulate gambling is conferred upon both national and provincial governments. Therefore, both national and provincial legislation affects gambling regulatory framework.
In this market focus we have covered the regulations of Gauteng province as it is the most populated province in SA.
National legislation establishes “National Gambling Policy” providing for a general descriptive framework of allowed gambling activities that are defined and crystallised on a provincial level. This framework includes:
1) Placing or accepting bets or wagering;
2) Placing or accepting totalisator bets;
3) Making available to play gambling games (+ bingo and amusement games);
4) Limited pay-out machines.
In turn, Gauteng legislation crystallises allowed gambling activities into the following verticals:
1) casino;
2) sports betting;
3) totalisator;
4) slot and limited payout machines;
5) bingo.
[/box] [box title=”What types of licences are available to operators?” box_color=”#EC6408″ title_color=”#333333″]As to the particular licences, there are three licences that are issued in accordance with national legislation:
1) employment licence;
2) manufacturer licence;
3) testing agent licence.
In turn, Gauteng laws provide for the 11 types of licences:
1) casino licence;
2) sports betting licence;
3) slot machines licence;
4) additional slot machines licence;
5) limited pay-out machines licence;
6) manufacturer licence;
7) totalisator licence;
8) bingo licence;
9) race track licence;
10) amusement machine licence;
11) route operator licence.
Gauteng regulator is also allowed to issue “special licences”; such licences could be issued to anyone, on any conditions and for any period of time with respect to all licences except for casino and gaming machines/route operator licences.
Lotteries are not considered as a type of gambling and are regulated by a separate act.
[/box] [box title=”What about online licensing?” box_color=”#EC6408″ title_color=”#333333″]As the country with one of the most developed and complex legislation in Africa, South Africa employed its unique approach to online gaming.
First of all, it should be noted that national legislation (that was enacted in 2004 and subsequently amended) establishes two important points setting the stage for the online gambling framework: 1) there is a direct prohibition of unauthorised “interactive gaming” (this is the South African term for online gaming; this term includes all verticals above except for sports betting, totalisator and amusement machines) and 2) National Gambling Act includes provisions regarding further regulation of online gambling; these provisions provide that national regulator should establish the designated committee bestowed with the mandate to prepare a legal framework of online gambling, which should have been enacted and put into force.
Such legal framework was prepared and even passed through SA parliament in 2008. However, 12 years later, this amendment act has not been proclaimed by the president of South Africa and therefore has not entered into force.
In other words, the current status of online gambling is that some verticals are valid for online (such as sports betting), but there are no specific provisions regarding online offerings whatsoever and online form of other verticals (casino, slot machines etc.) is banned.
This ban was enforced later (in 2010) with the decision of North Gauteng High Court in the Casino Enterprises (Pty) Ltd (Swaziland) v Gauteng Gambling Board and others case stating that an interactive gaming ban is in force and that it is prohibited to advertise “interactive” offerings within South Africa even if such offerings are originated from another country (this decision was also confirmed by the Supreme Court of Appeal).
[/box] [box title=”Gambling tax” box_color=”#EC6408″ title_color=”#333333″]Gambling tax
Applicable rates of the gambling tax vary depending on the particular licence, namely:
[/box] [box title=”Who regulates gambling in South Africa?” box_color=”#EC6408″ title_color=”#333333″]National level: National Gambling Board.
Provincial level (Gauteng): Gauteng Gambling Board.
Alias: NGB for national level and GGB for provincial level.
Website: NGB (https://www.ngb.org.za/) and GGB (https://www.ggb.org.za/)
[/box] [box title=”How long do licences run for? What are the costs of applying?” box_color=”#EC6408″ title_color=”#333333″]Term
All national licences are valid from the date of issuance until 31 March of the following year.
No provincial licences have the date of expiration.
Licence fee
National licences
Employment licence
Application fee (one-off payment): €200
Renewal fee (annually): €100
Manufacturer licence
Application fee (one-off payment): €6,000
Renewal fee: €4,000
Testing agent licence
Application fee (one-off payment): €5,000
Renewal fee (annually): €3,000
Provincial (Gauteng) licences
Casino licence
Application fee (one-off payment): €95,000
Annual fee (annually): €10,000 + €200 for each slot machine + €350 for each gambling table) + €8 for each bingo seat (all payments are annual or for the respective part of the year ending on 31 March).
Bingo licence
Application fee (one-off payment): €20 for each bingo seat (maximum fee is €9,000);
Annual fee (all payments are annual or for the respective part of the year ending on 31 March): €10 for each bingo seat.
Limited pay-out machines licence
Application fee (one-off payment): €20 per machine (minimum fee: €5,000, maximum fee: €19,000) + €2,000 (additional machine);
Licence fee (annually or for the part of the year ending on 31 March):€9,000 + €90 for each registered machine
+ €2,600 (additional machine) + €90 for each registered machine;
Slot machines licence
Application fee (one-off payment): €1,000
Licence fee (annually or for the part of the year ending on 31 March): €1,000 + €90 for each registered slot machine.
Manufacturer licence
Application fee (one-off payment):
Manufacture licence: €10,000;
Maintenance or supplier licence: €5,000
Licence fee (annually or for the part of the year ending on 31 March):
Manufacture licence: €5,000;
Maintenance or supplier licence: €600.
Totalisator licence
Application fee (one-off payment): €10,000;
Special totalisator licence (one-off payment): €20;
Licence fee (annually or for the part of the year ending on 31 August): €10,000 +€100 per site outlet;
Sports betting licence
Application fee (one-off payment): €1,000;
Licence fee (annually or for the part of the year ending on 31 August): €1,000.
Race track licence
Application fee (one-off payment): €10,000;
Special licence to hold race track: €20;
Licence fee (annually or for the part of the year ending on 31 August): €5,000;
Route operator licence
Application fee (one-off payment): €11 per one slot machine but no less than €2,700 and no more than €11,000;
Licence fee (annually or for the part of the year ending on 31 August): €5,000 + €50 per one slot machine;
Amusement machine licence
Application fee (one-off payment): €500;
Licence fee (annually or for the part of the year ending on 31 August): €50.
PLUS
Contributions to Sport Development Fund
Totalisators
5% of GGR in respect of event or contingency other than horseracing (payable in 21 days from such event);
Sports betting
1% of weekly GGR (payable weekly).
+
Contributions to the holder of the totalisator licence
Sports betting
for bets on the horseracing there is a betting transaction tax: 6% of weekly GGR (payable weekly).
+
Contributions to the GGB (Gauteng Gambling Board)
Sports betting
0.5% of weekly GGR (payable weekly).
[/box] [box title=”What restrictions are placed on operator marketing to players?” box_color=”#EC6408″ title_color=”#333333″]Gauteng laws establish various restrictions regarding gambling advertising, inter alia:
only the licencee is entitled to advertise gambling;
any gambling advertisement must include a statement, warning against the dangers of addictive and compulsive gambling;
any advertising of gambling should comply with the principles of responsible gambling (e.g. contain number of the National Responsible Gaming Programme, information that no underage persons are permitted to participate in gambling);
it is also prohibited to:
advertise any “interactive games” until it would be regulated;
place on the internet links or advertise material inviting or encouraging members of the public to access the gambling internet site or take any other action that may reasonably be regarded as directed at the members of the public inviting them to gamble on such an internet site;
place on the internet links directed at the members of the public inviting or encouraging them to enter the gambling internet site or takes other action that may reasonably be regarded as inviting another person to gamble under false information or documentation;
advertise any gambling activity if such gambling operator is licensed in terms of foreign legislation and not in terms of the laws of South Africa or province.
In addition to provincial legislation, national law establishes certain requirements for the placement of advertising of gambling with regard to where it can not be placed:
in media primarily directed at persons under the age of 18 years;
at venues where the majority of the audience may reasonably be expected to be under the age of 18 years; or on outdoor displays directed at schools, youth centres or university campuses.
The South African gambling framework seems well developed if you would forget about the hole of a size of online gambling in the regulations. This market is also affected by African-specific turbulence around the fate of online and still considering its approach to it. Probably, when the time is right, South Africa will be one of the many countries deciding to regulate online offerings within its borders.
Aside from standard issues with online gambling, South African regulations are variable, complex and well-written; this leads to this market becoming home to more and more major gambling operators.
[/box] [box title=” Local expert view – What do you think of the market?” box_color=”#EC6408″ title_color=”#333333″]Cognisant of the quality of regulations, active regulators and economic outlook of South Africa, it would be fair to say that as soon as this market resolves the online issue it could gravitate further attention from the international gambling community to the country and whole continent.
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Ilya Machavariani is a gambling and gaming lawyer for Europe, Russia and the CIS, heading the Russian and CIS gambling practice group at Dentons. He has extensive experience advising on gambling issues and advises clients on operating in the Russian Federation and the CIS on the full range of regulations relating to the activities of gambling operators, as well as drafting the necessary contracts and internal documents. He also handles licensing processes for gambling operators that are entering new markets throughout the world.
Ivan Kurochkin being an associate at CIS gambling practice group at Dentons has broad experience on gambling issues, especially in regulatory matters. His work involves advising clients doing business in the Russian Federation on various activities of gambling operators (including bookmakers), focusing on issues related to compliance with gaming licence requirements, applicable AML requirements, and issues relating to advertising of gambling operators.
Picture Credit:iStock/Oleksii Liskonih