1. Interactive Gambling Regulations PRESENTATION TO PC ON TRADE AND INDUSTRY

2. 2 Delegation Zodwa Ntuli: Deputy Director General - Consumer & Corporate Regulatory Division (CCRD), the dti Tel 012 394 1537 Nomfundo Maseti: Chief Director Policy and Legislation Tel 012 394 1810 Mpho Mosing: Director Regulated Industries Tel: 012 394 1504 Themba Marasha: Chief Operations Officer, National Gambling Board (NGB) Tel: 012 394 3800 Nkoatse Mashamaite: Deputy Director Regulated Industries

3. 3 Purpose The purpose of this presentation is to request the Select Committee to note and provide input on the proposed regulations for the implementation of interactive gambling

4. 4 Introduction The National Gambling Act of 2004 (“the Act”) regulates various forms of gambling activities in order to: - protect the public against adverse effects of gambling - limit, control and monitor possible proliferation of gambling and illicit gambling activities - enforce responsible gambling operations by requiring operators to contribute to social development initiatives, SMME (Small Medium and Micro Enterprises) development &access to business, and facilitate empowerment of HDIs (Historically Disadvantaged Individuals) & B-BBEE (Broad-based Black Economic Empowerment) - contribute to infrastructure development in rural communities e.g. limited pay out machines The Interactive Gambling legislation contributes to the advancement and achievement of the above socio-economic benefits

5. 5 Introduction Section 11 of the Act makes interactive gambling unlawful in South Africa However, this Act required the Minister of Trade and Industry to introduce into Parliament, within two years of the effective date, legislation for the regulation of interactive gambling (IG) As a result, the introduction of the National Gambling Amendment Act of 2008 authorizes the operation of interactive gambling The National Gambling Amendment Act of 2008 empowers the Minister to prescribe regulation for Interactive Gambling. Regulations were drafted and published for public comments, the closing date was 7 May 2009

6. 6 Intro cont. Bodies and stakeholders consulted before the Regulations were introduced to Parliament included: –The National Gambling Board –Provincial licensing Authorities –National Treasury –South Africa Reserve Bank –South Africa Revenue Services –Industry role players (e.g. Casino Association of South Africa) –National Responsible Gambling Programme –Problem Gamblers anonymous Feedback sessions with stakeholders to provide clarification will be held in July 2009

7. 7 Purpose of the Act Provide for the regulation of interactive gambling (IG) so as to : –protect society against the over-stimulation of demand for gambling; –provide for registration and verification of players; –protect minors and other vulnerable persons from the negative effects of gambling; –ensure compliance with Financial Intelligence Centre Act (FICA) & other relevant legislation; and –prevent gambling from being associated with crime, money laundering, or financing of terrorist and related activities

8. 8 Scheme of the Regulations Interactive Gambling is internet-based gambling which can be accessed through computer, mobile phones etc. The current form of electronic betting and wagering is not regarded as a form of electronic communication for the purposes of these regulations Scheme of the regulations include: - Provision of IG games - Player protection - Advertising - Licensing - Compliance and enforcement - Problem gambling - Money Laundering - Taxation

9. 9 Provision of IG Games & Player protection The games of IG must meet technical specifications and standards approved by the Board Player will interact with or against the house / operator Games approved by the Board will not include person to person Player registration with operator will require - statement under oath that player is 18 yrs - State in which the player resides allows IG - full details of the player in terms of FICA - bank stamp to confirm that the player is the account holder

10. 10 Player protection Establishment of player account for transfer of monies - player will establish a “nominated account” limited to credit card &/ cheque account - operator will create a “player account” to hold monies for bets that will be linked to nominated account - No cash transactions and only one nominated account will be allowed - The maximum amount allowed in the player account R20 000 - A player is allowed to set a monetary limit prior to play - Increase of monetary limit set will take effect after 7 days of request The registration condition will be displayed at all times on website

11. 11 Notice on website of IG provider must depict: - voluntary player exclusion information – 1 year - link to National Responsible Gambling Programme and responsible gambling hotline - self-diagnosis test - treatment of addictive gambling Operators must audit playing patterns and behaviour Operator must in his employ have trained personnel to advise on problem gambling and policy on Responsible Gambling To address proliferation of gambling only 10 IG licenses will be issues Responsible Gambling

12. 12 Licensing IG licences to be issued as national licences due to the borderless nature of IG Types of licences envisaged:  Operator for 5 years renewable annually  key personnel e.g. at management level to hold licences  Manufacturer, software supplier and maintenance provider  any other category or activity that the Minister may deem expedient

13. 13 Licensing Licensing requirements & conditions:  SMME development  player protection  empowerment of HDIs & BBBEE  Accounting systems – keep records of betting & winnings  Appointment of Auditors for annual report  Contribution to accredited National Responsible Gambling Program etc Licensing/testing and certification of: –IG equipment including software and servers

14. 14 Money laundering Registration of players and verification of player identity Minister will publish with FIC a list of countries prohibited from IG due to non-compliance with Financial Action Task Force (FATF) Transfer of funds is limited to one nominated account so as to trace origin Probity check by NGB of Operators Monitoring of Compliance with FICA requirements by NGB Operator’s responsibility to keep records of bets and winnings Funds not to be converted into any form of value especially cash. External companies must have a physical presence in SA. E.g. records of transactions to be located in SA. Regulating the method of payment to the provider, e.g. credit card as a method of payment. Obligation on IG provider to report suspicious and illegal activities Provision for control systems to be prescribed and approved by NGB

15. 15 Compliance and enforcement NGB is responsible to: -license IG operators, manufactures, suppliers and maintenance providers effectively and in a transparent manner - ensure compliance with licence conditions issues - supervise and enforce compliance by licencees with FICA etc. - conduct inspections i.r.o IG websites and premises where IG equipment and software is located - monitor advertising by licensed operators that adverts are not misleading & not directed to minors Revoke or suspend IG licences for non-compliance NGB may delegate some of its enforcement and compliance powers to the Provincial Gambling Boards Ensure disputes are resolved by conducting hearings Refer offences to prosecuting authority Ensure integrity of the industry by elimination illegal IG operations

16. 16 ADVERTISING Advertising will be limited to licensed operators An IG operator must ensure that any advert includes a clear message on underage gambling Internet cafes /similar agencies may not display IG websites on their homepage(s) No endorsement by personalities that suggest gambling contribute to their success No spam e-mails, even by 3rd parties, to punters The Board to deal with complaints by reviewing the advert. If the complaint is valid, the advert must be stopped or changed

17. 17 Conclusion Fees & Taxation on IG: Fees for IG - application fees – R500 000  investigation fee – R350 000  license fees - R200 000  annual renewal fee – R300 000  Fee on alteration of license – R75 000  administration charge e.g. change of name/address – R10 000 Manufacturer, Supplier or Maintenance provider fees  application fees – R250 000  license fees – R180 000 Taxation Money Bill under National Treasury - proposed levy is 6% - NGB will collect tax for National Treasury

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