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Online Gaming News in South Africa

By: Shirley Spicer, Wednesday February 2nd 2011
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The financial transactions are the arteries of online gaming. South Africa has taken the route of stopping the flow there. South African banks have started informing their customers that the use of credit cards to buy lottery tickets overseas or to gamble online is illegal. The banks in turn have been instructed accordingly by the Financial Surveillance Department of the Reserve Bank of South Africa. The provisions of Exchange Control circulars state, "Residents may not participate in lotteries organized abroad or participate in any online gambling activities, as such participation contravenes the Lotteries Act 57/1997 and the National Gambling Act 7/2004 as amended by the National Gambling Amendment Act 10/2008." Banks and issuers of all American Express, Diners Club, MasterCard and Visa credit cards will stop accepting debits incurred by South African residents in respect of the payment for the purchase of foreign lottery tickets or online gambling activities. The banking advisories warned the clients that their accounts will be monitored for such transactions.

The South African Reserve Bank has been forced to implement the existing laws primarily because the government has been dithering on the stand it should take on online gambling. In 2009 the Parliamentary Portfolio Committee on Trade and Industry decided that the gambling sector in should be reviewed. Therefore a Gambling Review Commission was established to look at gambling in all its forms. The Commission has completed its work and submitted a report to the Minister for Trade and Industry. As per reports the minister is to consult with provincial ministers and there is no clarity as to when this will happen. Like the Reserve Bank, the courts too are offering judgments based on the existing laws. The North Gauteng High Court ruled in August 2010 that online gambling would be illegal even if the servers were located outside South Africa.

Meanwhile the industry keeps reminding the government that the delay is costing millions in tax and license revenues. Opportunity losses are also arising from the generation of income and employment from support services. The National Gambling Board numbers show that the local gambling market in total was worth 215.8 billion rands in wagers in the year to March 2010. From this the government earned 1.6 billion rands. ITWeb estimates that globally online gambling amounts to 7% of all gambling. Hence it concludes that the South African government could generate 110 million rands in taxes from wagering of 15 billion rands a year.

Legal experts have opined that South Africa would have to wait for at least another two years before legalized and regulated online gambling becomes a reality. Even if the Commission's report is released this March, there is much to be done. Debates within the government, the bureaucratic process of regulatory drafting, enacting the laws and putting a regime in place are time consuming tasks as has been the experience elsewhere in the world.

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