Online Gambling Developments in South AfricaBy: Fabian Rictor, Monday March 5th 2012
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The South African Parliament's trade and industry committee has been holding regular discussions on the advantages and disadvantages of legalization and regulation of online gambling in the country. The last public hearing was held on Friday March 2. Business Day reported on the proceedings. The main issues were the potential problem areas like the prevention of money laundering, underage gambling and illegal gambling operations.
The present laws ban online gambling on casinos and poker web sites. Betting on web sites located outside South Africa is also not allowed, as per a recent court judgment. However, a gambling review commission has recommended that online gambling be regulated and taxed. Therefore the trade and industry committee is seized of the matter and is looking into whether the recommendations be adopted, and if so the how.
Committee chairman Joan Fubbs and Democratic Alliance MP Geordin Hill-Lewis both pointed out that online gambling already existed in South Africa and ignoring it will allow the present unregulated market to flourish. Hill-Lewis further stated that prohibition is impossible and the country is not deriving any economic benefit from the online gambling activity.
Pieter Smit of the Financial Intelligence Centre spoke about the risk of money laundering inherent in online gambling. He explained that online gambling sites could be used to transfer funds from one person or location to another. Because such transactions are different from "face-to-face business" they would be difficult to trace. Smit said that if online gambling was to be allowed, at least online betting exchanges and online poker should remain out of bounds. And the online gambling operators would have to be subject to the regulatory measures promulgated by the Financial Intelligence Centre. Smit also cautioned that new technology would be needed to identify customers and also to identify and exclude unlicensed operators from the South African market.
The representatives of the National Gambling Board were not in favor of legalization of online gambling. But if it had to be done then they desired that the number of online gambling licenses should be restricted to manageable numbers and be strictly regulated. They suggested a validity of eight years for the licenses. They emphasized that protection would have to be provided to gamblers against fraudulent operators. The problem of underage and problem gamblers would also have to be addressed. Referring to the issue of blocking unlicensed operators, the Board representatives pointed that it would be expensive, if at all possible.
Experts from the Banking Association of South Africa clarified that it would be impossible for banks to differentiate between legal and illegal transactions related to online gambling. This was because illegal operators often used front companies to hide their real activities.
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