1. MANUFACTURER PERSPECTIVE ON GAMBLING REVIEW COMMISSION REPORT
PUBLIC HEARINGS ON THE GAMBLING REVIEW COMMISSION REPORT
VENUE: V454, OLD ASSEMBLY WING, PARLIAMENT, CAPE TOWN
DATE: WEDNESDAY, 2 NOVEMBER 2011
TIME: 09:00 – 15:00
MANUFACTURER PERSPECTIVE ON GAMBLING REVIEW COMMISSION REPORT
Presented by: Pramodh Munbodh
Designation: Regulatory Compliance Manager
Company: Aristocrat Technologies Africa (Pty) Ltd
Date: 02 November 2011
Time: 09h50
Written Comments: V2.0 dated 15 September 2011

2. OBJECTIVE OF PRESENTATION
To describe who Aristocrat is and our position in the regulated gambling industry;
To applaud positive developments in national gambling legislation that have affected slot machine manufacturers positively;
To give a brief opinion of the Gambling Review Commission Report; and
To highlight parts of the report that affect manufacturers, the impact of the Commission’s findings and recommendations put forward by Aristocrat.

3. COMPANY PROFILE
Holder of National Manufacturer License (Section 37 – NGA).
Distributor and maintenance provider of electronic gambling machines and casino monitoring and control system products.
Subject to regulation by national and provincial gambling Acts, Rules and Regulations.
One of 8 major licensed slot machine manufacturers located in RSA.
Location in industry structure given in the next slide.

4. CURRENT INDUSTRY STRUCTURE
PROVINCIAL GAMBLING BOARD (x9)
Horseracing
Casino
NATIONAL GAMBLING BOARD
Manufacturers
National Regulator For Compulsory Specifications
Bingo
Accredited Test Laboratories
Bookmakers
Limited Payout Route Operators

5. NATIONAL GAMBLING LEGISLATION - APPLAUSE
National Licenses – manufacturer and key employee. Saves on time and money in getting the company and its key employees licensed.
Choice of licensed testing agents. Previous national gambling act (1996) only allowed compliance testing to be performed by SABS. Resulted in bottlenecks and severe delays in product entering the marketplace. Now, independent testing agents provide choice to manufacturers.

6. OVERVIEW OF GRC REPORT
The report gave a very informative overview of the current state of the regulated gambling industry.
The report presented views from both the public and industry licensed insiders.
While the majority of the report focused on gambling and its impact on South African society in general, the report should also have focused, in greater detail, on the onerous level of business regulation that licensed companies in the industry have to contend with.

7. GAMBLING LEGISLATION – CURRENT CHALLENGES
1. APPROVAL OF GAMBLING DEVICES AND EQUIPMENT
1.1 References
Sections Approval of gambling devices and equipment and Application of the FIC Act of the Commission Report.
Section 4.1 of written comments submitted by Aristocrat.

8. GAMBLING LEGISLATION – CURRENT CHALLENGES
1.2 GRC Observations and Recommendations
a) NRCS Certification sufficient for compliance of gambling equipment to national legislation. Despite this, certain provinces required further approval processes to be complied with.
b) A National Gambling Equipment Approval be introduced to alleviate the administrative trauma of having to apply to nine provincial gambling boards for approval of the same gambling equipment.

9. GAMBLING LEGISLATION – CURRENT CHALLENGES
1.3 Discussion
Aristocrat agrees with the observations and recommendations made by the Commission. It proposes that current 3-step process be reduced to 2 steps. The current and proposed models are as follows:

10. Product tested by testing agent. Product certified by NRCS
Current Model
Product tested by testing agent.
Step 1
Step 2
Product certified by NRCS
Step 3
Manufacturer prepares 9 applications to 9 provincial gambling boards for approval

11. Product tested by testing agent.
Proposed Model #1
Product tested by testing agent.
Step 1
Step 2
Manufacturer submits test report from test lab to any of the 9 provincial gambling boards for a national gambling equipment approval.
One approval letter!!!!!

12. Product tested by testing agent. Product certified by NRCS
Proposed Model #2
Product tested by testing agent.
Step 1
Step 2
Product certified by NRCS

13. Product tested by testing agent.
Proposed Model #3
Product tested by testing agent.
Step 1
Step 2
Product certified by NRCS, GLI, SIQ or any other certification body accredited to ISO/IEC to certify gambling equipment and which is independent of the test lab that did the testing.
PREFERRED MODEL!!!!!!

14. GAMBLING LEGISLATION – CURRENT CHALLENGES
1. 4 Recommendations
Clause 25(2) of the National Gambling Act to be amended to allow for multiple certification agencies, not just NRCS, as long as they are accredited to ISO/IEC 17020, General Criteria for the Operation of Various Types of Bodies Performing Inspection (Model #3).
If Model #1 chosen then Clause 25 of the National Gambling Act to be amended to allow for Introduction of National Gambling Equipment Approval for gambling equipment and devices used throughout the country. Can exist in parallel with provincial approval requirements.

15. GAMBLING LEGISLATION – CURRENT CHALLENGES
2. APPLICATION OF THE FIC ACT
2.1 References
Section Application of the FIC Act of the Commission Report.
Section 4.2 of written comments submitted by Aristocrat.

16. GAMBLING LEGISLATION – CURRENT CHALLENGES
2.2 GRC Observations and Recommendations a) Consideration should be given to amending the National Gambling Act to allow for an exemption to FICA compliance by holders of a manufacturer, supplier or maintenance provider licence

17. GAMBLING LEGISLATION – CURRENT CHALLENGES
2.3 Discussion
Research by FIC, NGB and Aristocrat yielded that FICA was not designed for companies of the type Aristocrat is. Likelihood of business encountering suspicious or terror financing transactions highly unlikely.
2.4 Recommendation
Section 37(2)(b) amended to reflect exemption from compliance to FICA by nationally licensed manufacturer.

18. GAMBLING LEGISLATION – CURRENT CHALLENGES
3. Improving Uniformity and Accountability in the Regulatory Framework
3.1 References
Section 5.5 of Commission report.
Section 4.4 of written comments submitted by Aristocrat.

19. GAMBLING LEGISLATION – CURRENT CHALLENGES
3.2 GRC Observations and Recommendations
Although South Africa is a well-regulated jurisdiction overall, there appears to be overlap and a degree of inefficiency in the regulatory framework.
The DTI, together with the South African Bureau of Standards, should be responsible for developing national norms and standards. These norms and standards should be comprehensively tested and there should be adequate consultation with all gambling regulators about these norms and standards.

20. GAMBLING LEGISLATION – CURRENT CHALLENGES
3.3 Discussion
Slot machine manufacturers have to apply to all nine provincial gambling boards for approval for its gambling equipment products and for transportation of equipment across the provinces.
Each province has differing turnaround times, procedures for application and different competencies on staff.
The impact is generally lengthy and onerous procedures to follow to bring new products to market, greatly affecting the viability of many manufacturer concerns.

21. GAMBLING LEGISLATION – CURRENT CHALLENGES
3.4 Recommendations
It is recommended that, where there are similar or same requirements between the different provinces in their provincial gambling legislation, those requirements be lifted out of their legislation and placed in a national gambling legislation or norms and standards document.
In the case of applications for gambling equipment approval and transportation approval, a single norm and standard for these elements, combined with having to lodge an application with just one gambling regulator as opposed to multiple ones, will definitely be a quantum leap forward in the standard of business regulation.

22. GAMBLING LEGISLATION – CURRENT CHALLENGES
4. B-BBEE in the Gambling Industry
4.1 References
Pages 17, 52, 67 and 135 of the Commission report.
Section 4.5 of the written comments submitted by Aristocrat.

23. GAMBLING LEGISLATION – CURRENT CHALLENGES
4.2 GRC Observations and Recommendations
Currently, there is an overarching target of level 2 compliance by Each province determines that pace and extent to which this objective is achieved and there appear to be different approaches between provinces.
Although it appears that the discussions around BBBEE have been protracted and that it has been difficult to reach agreement, it is recommended that a consistent approach should be proposed by the DTI for discussion with provinces and adoption once agreement has been achieved.

24. GAMBLING LEGISLATION – CURRENT CHALLENGES
4.3 Discussion
Though the comments quoted above were relevant to the operators functioning in the gambling industry, manufacturers like Aristocrat also received a letter requiring a B-BBEE level of 2 by 2015.
Lots of manufacturers will not be able to achieve Level 2 by due to their size and enterprise nature.

25. GAMBLING LEGISLATION – CURRENT CHALLENGES
4.4 Recommendation
An enterprise’s best ever B-BBEE level would be dependent on the size and nature of the organisation.
Instead of requiring a specific BEE level as proof of compliance, the enterprise should be left to grow their programmes to the best of their ability.
An “apply or explain’ approach is appropriate as opposed to a “comply or explain” approach which will result in mindless compliance and possible fronting for enterprises to elevate their BEE scorecards.

26. THE END