BUSINESS

A look at South Africa and Gambling Regulation

TAGs: kairo international group, Piggs Peak, South Africa Online Gambling

south african gambling piggs peakLooking at South Africa and Australia, there is a plethora of characteristics that both share. Above all else each has an undying love for sport and with that comes a healthy appetite to enjoy one pastime that has long been associated with worldwide sport – wagering on the outcome.

As emerging gambling markets go, there might not be many that match up to Africa. We’re all well aware of the impact Asia is having and will continue to have on the global stage. Waiting in the wings is one of the largest landmasses on the planet and the healthiest of these economies lies at the foot of the continent.

South Africa’s gambling industry suffers from the same mist that covers the summit of Table Mountain on a changeable day. Despite the fact that global gaming revenue doubled to R15billion (the government took R4bn in tax revenue) from 2009 to 2010 the government has only made tentative moves to regulate the market.

Like the situation Down Under, it has meant the regulation being metered out by provinces – Western Cape at the forefront. European-facing firms have been peeking in for some time and Ladbrokes were the latest to sign a joint venture, with Kairo International Group. At the time the firm’s marketing manager Anil Kotze said that the online sports betting market alone would be worth R800bn by 2012.

Themba Marashi, chief compliance officer at South Africa’s National Gambling Board (NGB) explained that regulation would take place for a variety of reasons. She said: “Generate tax revenues, protection of problem gamblers and improving player security are some of the reasons the country may decide on regulating gambling.”

The 2008 Interactive Gambling Act set out many of the plans but Marashi did reiterate that in relation to licenses: “What has been articulated in the present act and draft regulations will be revised and a revised number articulated.”

From our research we found a Department of Trade and Industry presentation in the summer of 2009 identified that licenses would run for five years in total. Application fees would be set at R500,000 and a proposed gambling levy of 6% to be collected by the NGB.

Why wait up until now to regulate a practice that’s been going on for some time? To understand, it’s worth looking at the past two decades and the relationship the gambling industry has had with one of the country’s best-loved sports: cricket.

The reluctance to regulate has much to do with a scandal at the outset of the current century. Prior to 2000, Hansie Cronje was a poster child for cricket in post-apartheid South Africa. In his time as captain they lost only 11 tests. In addition to being South Africa’s most successful captain he is the third winningest captain ever in terms of percentage (73.60%) behind Ricky Ponting and Clive Lloyd. South Africans don’t remember the late captain for this.

Fans will cast memories back to 11 October of that year when the former captain was banned from playing and coaching for life after being found guilty by the King Commission of attempting to fix matches. Cronje admitted receiving thousands of dollars to influence matches and it included an infamous test during which he was persuaded to declare in order to make a game of it.

Although the National Gambling Board insists “The reluctance to regulate it has nothing to do with such matter. It was that the country was not ready,” it’s hard not to think that a high profile match fixing case didn’t have an effect.

In terms of the online gaming industry, the country saw a high-profile case conclude just this year. Piggs Peak was operating from Swaziland and servicing South African customers before its ban and it’s a conclusion that could put off potential applicants that plan to be based elsewhere. It goes a long way to explain the Ladbrokes tie-up and looks like the model firms will start to take in this market.

As for when regulation might take place, Marashi deduced that “no time scale” has yet been determined and the government will have the last say on anything. South Africa is one of the most economically developed countries on the continent and would be a sensible starting point for iGaming firms. That’s if the government let them in.

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