Blow To Online Gambling (South Africa)

jerryg

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Blow to online gambling

By Kim Helfrich
November 29, 2006

JOHANNESBURG Operators offering online gambling and those who indulge in it face fines of up to R10 million and/or 10 years in prison following a landmark ruling in the Pretoria High Court.

At present the court ruling was applicable only to casino-style gambling, said Gauteng Gambling Board legal manager Edward Lalumbe.

We have not ruled out the possibility of going after other operators, including those offering access to Lotto in other countries.

South Africa does not issue licences for online casinos, and it was this that finally brought the provincial gambling authority along with the National Gambling Board and the Minister of Trade and Industry to court.

It was maintained that Swaziland-registered Piggs Peak Casino could not offer online gambling to punters in SA.

This is because SA does not have the necessary legislation to issue online gambling licences.

A gambling operator offering online gambling needs to have a licence issued for this purpose in SA, and even though the owners of the Swaziland casino have an Internet licence, it is valid only for that country.

The courts decision confirms that Internet operators offering online gambling to South Africans, and players/punters taking part, are doing so illegally.

Internet service providers, financial service providers, TV stations and the print media were named in court as facilitating online gambling, also deemed illegal by the decision.

Our overall motivation for taking the matter to court was it was facilitating illegal activity, Lalumbe said, adding law-enforcement agencies including the Asset Forfeiture Unit and financial institutions had been consulted prior to the decision to go to court.

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winbig

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Hmmm, Internet License.....

Maybe that's what the USA should do....give out Internet licenses to casinos/poker rooms that want to allow play from customers in the USA...


Then they could get their licensing and royalty fees and be happy about it, since that bill is only over the money in the first place :D

I could almost guarantee that it'd get rid of the rogues for players in the USA ;)
 

Chatmaster

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This is a really bad report as it implies that the NGB took the casinos to court whilst it was exactly the opposite,... sigh I think this reporter made a few phone calls for his version... Here is a better and more accurate version of what happened.
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jetset

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Chatmaster is right - the casino owners in neighbouring independent country Swaziland actually tried to take the provincial and national government and Gambling Board to court to offer its online gambling to South Africans.

This is not as cheeky as it may sound, bearing in mind that the national government is currently considering the regulation of online gambling following an extensive commission of enquiry into the industry. And it is likely that the commission's recommendation that online gambling be regulated will be accepted.

However, that has not yet come about, and the traditional gambling laws of the country still apply, effectively making internet gambling illegal as it has no license.

Most observers are hoping the national government will move quickly on this (regulatory acceptance) as this sort of issue adds to the general confusion.
 

Chatmaster

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I thought this would be a good time to share some personal opinions about this incident and online gambling in general. I know this would most probably get different responses and arguments from different people and in a way this is my objective as I might be wrong about my personal opinion, but I can't help but to ask myself so often when I hear bad judgements like was the case in the US with passing the Internet gambling law. Who does the internet belong to? Does it belong to a country? My reply to this is no. It belongs to everyone, and that is the way it should be.

My first reaction when I heard about the ruling was anger, why did Casino Enterprises do this, why did they stir this pot? But after a good night's sleep and allot of thinking, these are my thoughts on the subject.

I see what Casino Enterprises is trying to do as pioneering. They are trying to get people with little understanding of what the internet is to understand how it works. We all know how difficult it is for governments and our learned friends in the judicial systems across the globe to understand the inner workings of the internet.

I see the internet as an independant transport system. A system that allows you to cross borders and connect to individuals and companies globally. Casino Enterprises are running a licensed landbased casino in Swaziland which is in the South African Rand currency area.

What the judicial system doesn't understand is that when a user is playing on his computer the actual gambling is taking place at the place where the gambling server is located. If the gambling server is shut down, there is no means for the player (no matter where they are in the world to play or rather gamble) This means that the player are not gambling on his or her personal computer but actually playing at the place the gambling server is located. If the casino is licensed in that country then surely the gambling act is regarded as legal.

I am very sure that the same rule applies for any casino world wide, and that no matter what country you are in, even the US it will be difficult to prove that you are actually gambling illegally as the actual gambling act is taking place in the area where the casino is based.

The governments on the other hand has a major problem with money leaving the country without them raking some of it in. Some countries especially the US do not really care about the players and the wellbeing of the players. However I do not see this to be the case in SA. If Casino Enterprises can win this case, it will be pioneering a way for all online casinos to successfully take countries to court that oppose online gambling.

What do you guys think of my opinion in this regard?
 

bigbcasinos

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This is about the Judiciary exercising their opinion over a matter that is 3 years old. 3 Years ago there was no Government report into the regulation of online gambling.

I read the report and recommendations by the Department of Trade and Industry (DTI). In that report, they observe that they cannot stop people playing online and that regulation is in fact the right way to do things. They even make provision for South African's to play at online casinos that are not licensed in South Africa if I recall. (I wish I could see the version that has been forwarded to the President for signature)

Anyway, if (when) the new law is promulgated, then this case is probably going nowhere because, as I mentioned, I do recall seeing a clause or two that allowed a citizen to play at any online casino in any currency.

BUT

When it comes to advertising I see something a little different. I suspect they will try put a stop to the likes of 888 Casino advertising on M Web. They will try put a stop to Radio advertising that pertains to online poker at poker rooms that are not registered in South Africa.

As an affiliate I expect to receive a rule book that tell's me to issue certain warnings to players (eg Gambling is Addictive and no under 18's allowed). I also expect to be told that I should not carry certain casinos' advertisements on my South African facing websites.

I WONDER THOUGH...

South Africa is a party to GATS. The GATS was signed by South Africa on 15 April 1994 and ratified by Parliament on 6 April 1995. Now, if we are to allow foreigners to play at South African licensed casinos, surely we must allow Foreign Casinos to tout their wares to South Africans?
 

jetset

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Here's the latest

Just in from iafrica.com:


Thu, 30 Nov 2006
Casino operators have urged gamblers to be patient as they await a High Court ruling on internet gambling.

The Gauteng Gambling Board this week warned that online punting is illegal, but Casino Enterprises of Swaziland say they are trying to challenge this.

Casino Enterprises said the Pretoria High Court has not dismissed its application to provide online gambling to the residents of Gauteng.

According to sources at the consortium, the first application was set aside on Tuesday and a second will be submitted in the next two weeks.

The Gauteng Gambling Board is still adamant that online gambling in South Africa is illegal.
 

Chatmaster

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Just a followup on this story

In his 27 November judgment, Pretoria High Court judge Willie Hartzenberg said that, in his view, Casino Enterprises did not disclose a reason for approaching him for the order. In the result I shall set aside the declaration and allow the plaintiff time to file an amended declaration, Hartzenberg said in the judgment, of which ITWeb has a copy.

Despite Hartzenberg effectively setting aside the case, the parties involved have drawn diametrically opposite conclusions from the case. The National and Gauteng Gambling Boards view Hartzenberg's judgment as a victory and are threatening to prosecute online casinos, gamblers and advertisers alike, while Casino Enterprises believes its activities remain perfectly legal.
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Chatmaster

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Further Update

Online gambling closer to legalisation

Cabinet's approval last week of the Draft Gambling Amendment Bill brings legal online and cellphone gambling one step closer.

National Gambling Board CEO Thibedi Majake says his board will license online casinos once the Bill becomes law. Terrestrial casinos are licensed at the provincial level. Majake expects the draft law to pass Parliament early next year. However, he did not say when hearings would start for online or other electronic licences – or when these will be issued.
:D :D :D :D :D :D :D :D :D :D
 
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jerryg

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Don't bet on gambling ban

By Percy Zvomuya
December 11, 2006

A case in which online casino operators challenged a ban on internet gambling was thrown out of court last week. But experts question whether the judgement of the Pretoria High Court is enforceable.

It has also emerged that the National Gambling Board (NGB), one of the defendants, has submitted a report to the minister of trade and industry recommending the legalisation and taxation of internet gambling.

The case was brought before the courts by Casino Enterprises, which owns and operates Piggs Peak in Swaziland, where both hold internet and land-based casino licences issued by the Swazi government.

They argued that although the gambling is done on computers in Gauteng, it actually takes place in Swaziland. But the NGB, the Gauteng Gambling Board and Minister of Trade and Industry Mandisi Mpahlwa, who opposed, brought in an expert who countered that the gambling takes place in at least both Gauteng and Swaziland.

The court ruled in favour of the NGB and said that anyone who facilitates online gambling -- including internet service providers (ISPs), banks and media outlets that carry adverts -- is liable to a fine of up to R10million or imprisonment of up to 10 years.

The Internet Service Providers Association (Ispa) countered, saying that as far as Ispa is aware, there are no ISPs, either in South Africa or globally, that facilitate the provision of online gambling. The semantic quibbling continued when Ispa pointed out that what they and other ISPs worldwide do is merely facilitate internet connectivity for both applications providers and users.

The association also said there is no law that requires ISPs to block or otherwise restrict access to online gambling and that the Electronic Communications and Transactions Act says there is no general obligation on an ISP when providing internet access, hosting and other related services to monitor the data which it transmits or circumstances indicating an unlawful activity.

They argued that, although the Act creates the possibility of a complainant, for instance a government agency, compelling an ISP to remove unlawful content, the minister of communications has yet to recognise any industry representative bodies -- one of the requirements of the Act -- four years after it was passed. As such and until a court judgement or law states otherwise, there will not be any significant effect on ISPs, said the association.

Nedbank said it cannot monitor online banking transactions to the extent that online gambling can be categorised.

Nick Jacobs, general manager of Group Risk Services, explained that in most cases gamblers use credit cards or other forms of electronic payment, other than direct cash transfers, and it becomes even more difficult to home in on an online gambling account. He recommended that, given the recent ruling by the high court that online gambling is considered unlawful, Nedbank advise employees and clients alike to refrain from this activity.

Some analysts have expressed reservations about the ability of the South African Police Service to deal with this, but Jacques Booysen of the Gauteng Gambling Board said there are skilled and resourced personnel within the South African law enforcement agencies. Should this not be sufficient, the services will be sourced from the private sector.

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jerryg

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Cellphone betting a ringtone away

By Linda Ensor
December 11, 2006

CAPE TOWN Online and cellphone gaming will become legal for the first time in SA if a draft amendment bill adopted by the cabinet last week is finally passed into law.

The South African gambling industry has been frustrated by the length of time it has taken government to come up with regulations to legalise internet gaming.

Foreign operators, particularly British operators, have been waiting for internet gaming to be legalised so that they can enter the domestic market, while provincial governments have been losing out on an additional source of tax revenue.

The draft bill proposes a licensing system for both the players and the online gaming websites.

The manner in which gaming proceeds would be taxed still had to be determined, trade and industry deputy director-general Astrid Ludin said yesterday.

She said a key challenge in drafting the proposed legislation was to find a way to effectively regulate anything on the internet and how to prevent money-laundering.

Additional resources would be required for the proposed regulations to be enforced by the National Gambling Board.

The department also had to look at the economic effect of interactive gambling and attempt to restrict access to a select audience, which would exclude young people.

A proposed way of limiting the scope of online gambling would be to make it illegal for advertisers to advertise on gambling sites, Ludin said.

Interactive gambling was outlawed by the National Gambling Act of 2004 because government considered that more time was needed to conduct research into this form of gaming, which has assumed massive proportions worldwide.

The act gave Trade and Industry Minister Mandisi Mpahlwa two years to draw up regulations to govern internet gambling, which will be regulated in terms of the proposed Gambling Amendment Bill.

The long-awaited regulations stem from a report compiled by a National Gambling Board committee and the recommendations of a national gambling policy committee consisting of Mpahlwa and the provincial MECs responsible for gambling.

Research was conducted on how other jurisdictions such as Britain, the US and Australia regulated online gambling.

Unlike the US, which decided to outlaw internet gambling to prevent money-laundering and funding terrorism, the South African government has decided to allow interactive gambling within a regulated framework. This is consistent with its general approach to gambling.

Gambling is a concurrent competence between national and provincial governments in terms of the constitution, so provinces were closely involved in framing the regulations.

The US law prevents credit-card companies from collecting payments for online bets, which effectively closed down a multibillion-dollar-a-year industry.

Estimates by foreign market-research companies suggest that the global gambling industry worth more than $8,2bn a year in 2004 would triple to $25bn a year by 2010.

Online poker in particular is a major source of online gaming revenue.

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jetset

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SOUTH AFRICAN ONLINE GAMBLING LATEST

"We believe we can much more effectively regulate this by having a clear licensing system in place"

In an interview in the South African press this weekend, deputy director-general of the Department of Trade and Industry, Astrid Ludin expanded on the news that the South African Cabinet has approved a regulatory instead of prohibitionist approach to online gambling.

By doing so, South Africa joins countries such as the UK, Italy, Spain and Belgium in taking a more progressive line on a popular pastime. South Africa's initiative is based on two years of in-depth international research by a specially appointed 9 man committee.

Ludin pointed out that the 2004 Gambling Act required government to introduce within two years effective legislation regarding Internet gambling, and that the approach the government has now adopted is that the activity should be regulated rather than prohibited.

Explaining the rationale behind the decision, she said that South African experience had shown that prohibition does not stop the activity from occurring. "It's not going to be a free-for-all," she said. "There is going to be player registration and basically licensing. So unless you're licensed as a player you're not entitled to gamble. And we are not permitting cellphone gambling. We're permitting only games that are played on the Internet."

Ludin expanded on her statement by pointing out that although the Internet could be accessed by some cellphones, many others did not have this capability, and gamblers would in any case be required to hold an account with funding restrictions with a licensed service provider. She said that the socio-economic impact of regulation had been assessed, and commented: "The sense is that there will not be a significant impact (by Internet gambling) because of restricted access to computers."

The deputy director-general added that the next step would be a public consultation process before the regulatory amendment was submitted to Parliament. "We're only publishing this for comment; it's not proceeding to Parliament at this stage," she said.

Ludin said that online gambling will be controlled by a systrem of registration through a licensed service provider who's server is registered. "That's where your enforcement would come through as well. You could track the transactions. The service provider must get proof of your identity," she said, adding that this would exclude underage gamblers.

Problem gamblers would be provided with a self-exclusion facility available to the person involved, or to his or her dependents, and gamblers in this category would not be permitted to open or hold accounts.

Registered players would be required to have an account with a licensed service provider, and this account would have to have limits, she revealed. Gambling on credit cards would not be permitted, and winnings would only be paid back to the player account. "You can't use your credit cards," she emphasised.

The account and registration system would also combat any money laundering attempts, she claimed, saying: "Through registration you can track transactions."

Asked to draw comparisons with the United States, Ludin pointed out that the USA had much higher connectivity and argued that prohibition demanded more resources than regulation. "(But) let me just say that you need a lot more resources to prohibit this than you need to effectively regulate it," she said. "The US has the resources to prohibit, I don't think we do.

"We believe we can much more effectively regulate this by having a clear licensing system in place. That allows you to identify unregistered activity and clamp down on it. It also provides through the monitoring of the service providers to verify any unauthorised activities."
 

Chatmaster

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I really like the South African government's approach. I feel it is well thought through and the potential to become the role model for many countries. :thumbsup:
 

jerryg

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They have good initiatives to prevent underage gambling and account theft.

But I still am not seeing information on how they will be better than any other jurisdiction in terms of ensuring game fairness, as well as providing enforcement on top of regulation. Basically, I'm wanting to see something that will put some teeth into their bite. That's what all other jurisdictions are missing, and it would be nice if SA was the one to step up to the plate and actually do it right.
 

Chatmaster

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But I still am not seeing information on how they will be better than any other jurisdiction in terms of ensuring game fairness, as well as providing enforcement on top of regulation. Basically, I'm wanting to see something that will put some teeth into their bite. That's what all other jurisdictions are missing, and it would be nice if SA was the one to step up to the plate and actually do it right.

A very good reply jerryg

I would like to point out that although they havent released any information yet as far as the software requirements are concerned, the Report on the regulation of interactive gambling specifically pointed out they did thorough research in this regard. They specifically did research on eCOGRAs software requirements (Who better?) and then pointed out the following. It also specifically mentioned the following:

Regulation must put in place a process for such software testing, which testing would
be for the account of the operator.

Although I am still waiting for a copy of the bill (I requested this weeks ago from the NGB) I am sure they do address this in detail as their research was quite specific about software requirements.

They also specifically mentioned, Game rules, Prize entitlements, Aborted games, Inactive accounts, Self-limitation, Prior approval of control system, Testing process, Stringent output-based testing, Source code testing, Program for ongoing monitoring and Audits, inspections and investigations. The licensing of software providers was also clearly mentioned in the report. I think that due to the recommendations made in this report we can expect detailed legislation in this regard.
 
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