National Gambling Bill Amendment Bill: adoption

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
31 August 2007
NATIONAL GAMBLING BILL AMENDMENT BILL: ADOPTION

Chairperson: Mr B Martin (ANC)

Documents handed out
Proposed Amendments for consideration by the Portfolio Committee
Definitions from Companies, Financial Intelligence Centre and Prevention of Organised Crime Acts
National Gambling Amendment Bill [B31-2007]
Department of Trade and Industry (DTI) response to submissions on Gambling Amendment Bill
National Gambling Act, 2004

Audio recording of meeting

SUMMARY
The Department took the Committee through the proposed amendments to the National Gambling Amendment Bill. These stemmed from the public submissions that they had received on the Bill.

MINUTES
The Acting Director General: DTI, Mr Fungai Sibanda, summarised the public submissions received as falling into the categories of policy, technical and consequential amendments.

Mr Johan Strydom, Chief Director: Legislation: DTI, emphasised that the proposed amendments were not to be considered in isolation but at all times were to be reviewed against the provisions of the Principal Act In addition to the proposed amendments document he noted the extracts from the Companies and Financial Intelligence Centre Acts dealing with definitions of “external company” and “money laundering”.

A decision to amend the Principal Act having been taken, Mr Strydom emphasised that it was not within the powers or competence of the Committee to question the advisability or otherwise of gambling per se. As such it was appreciated that the submissions and ensuing proposed amendments fell into three categories being policy or substantive, legal or technical and consequential. Of all of these, the most important was the provision for giving the National Gambling Board the right to licence Interactive Gambling whereas up until now, licensing had been a provincial function and responsibility.

Prof B Turok (ANC) intervened and requested that attention first be accorded to the very title of the Amending Bill. He elaborated that if the title was correctly set out then everything else and objections and recommendations would automatically fall into perspective. Mr Strydom agreed.

Long Title
Mr Strydom indicated that the long title is “To amend the National Gambling Act, 2004, so as to change certain definitions: to provide for regulations of interactive gambling; to provide for the registration of players and opening player accounts; to provide for the conditions applicable to interactive gambling licences; to provide for the further protection of minors and other vulnerable persons from the negative effects of gambling; and to provide for the remittance of winnings to foreign nationals; and to provide for matters relating thereto.”

In the light of the submissions, this would be changed to read as follows: “To amend the National Gambling Act, 2004, so as to change certain definitions: to provide for regulations AND CONTROL of interactive gambling SO AS TO PROTECT SOCIETY AGAINST OVER-STIMULATION OF THE DEMAND FOR GAMBLING; to provide for the registration of players and opening player accounts; to provide for the conditions applicable to interactive gambling licences; to provide for the further protection of minors and other vulnerable persons from the negative effects of gambling; and to provide for the remittance of winnings to foreign nationals PREVENT GAMBLING BEING A SOURCE OF, OR ASSOCIATED WITH CRIME OR DISORDER, OR USED TO SUPPORT CRIME, DISORDER OR MONEY LAUNDERING; and to provide for matters relating thereto.”

Prof Turok was of the opinion that the qualification of “stimulation” by the adverb “over” was mere semantics and he felt that stimulation without qualification was sufficient. Many members of the Committee and the public at large were not in favour of, if not downright opposed to, gambling and that this must be taken into account. Additionally, unless the long title was clear in its intention there would be ambiguity for he was of the opinion that many members of the public did not in fact read Amendments with sufficient attention to fully understand what the proposals might be. They latched onto one or two words, or phrases and then engendered a misconception about the contents of the proposed amendment. Another reference troubling him was that to crime.

Mr Strydom referred Prof Turok, and the Committee, to the fact that Clause 2 in the Bill inserting Section 2A into the Act had used the term “over-stimulation” in subclause (h), possibly as a consequent of the fact that the Principal Act permitted advertising and promotion and the intention was not to increase an already existing vested right.

Mr Sibanda, the Acting DG of DTI, then agreed that Prof Turok’s point was well taken and undertook to look into it but felt that the adverb “over” could be withdrawn. He cautioned that service providers of gambling were already the holders of rights to stimulate gambling and that what was intended was the non-over stimulation of Interactive Gambling. On Prof Turok’s concern about the reference to crime, the purpose of the Amendment Bill was to ensure that there was no perception that gambling was associated with crime and/or money laundering. 

Prof Turok viewed the proposal in Section 2A(i) was to ensure that gambling was not associated with crime, and also was not to be associated with or as a source of money laundering.

Mr Sibanda accepted the viewpoint.

Ms C Dudley (ACDP) wondered whether “source” or “conduit” would not be better than “associated”.

The Chair felt that “associated” was adequate but he had difficulties with “disorder” in Section 2A(i).

Prof Turok expressed the view that in the South African context, “disorder” brought forward images of riot police and crowds and violence.

Mr Sibanda suggested that “anti social” could be substituted for “disorder” but undertook to have this looked into further.

Mr Strydom replied that note had been taken of the opinions and that there had been an attempt at reconciling sentiments expressed in the public submissions.

Clause 1
He reverted to going through the Proposed Amendments to the Bill. There were consequential changes to the definitions of “interactive gambling licence” and “interactive provider”.
 
Prof Turok was of the view that only gambling not specified as illegal, should be allowed; and he wanted this reinforced, in fact he wanted the Principal Act reinforced on this issue.

Mr Strydom referred to Section 4 of the Principal Act and said that this was already provided for. He added that if the Committee should agree, the definition in the principal Act remained as such, if not it fell away. He asked whether Prof Turok was suggesting that this attitude be highlighted.

Prof Turok was of the opinion that if it was as specified in the Principal Act then he felt that it should be highlighted. Laws were public documents available to the general public and to be interpreted by them and were not the preserve for interpretation by magistrates and judges. He wanted it conveyed clearly that all gambling, other than that specifically allowed, was illegal.

Clause 11
Mr Strydom stated that these changes were intended to address the potential problem of minors participating in Interactive Gambling. He stated that the intention was to take paragraphs (b) and (c) and consolidate them and that accounts should be amplified to be described as “from whom/player specific”. He added that as currently viewed there were two restrictions on minors participating in Interactive Gambling. Firstly it required a credit card and in terms of the Financial Intelligence Centre Act (FICA) regulations, holders of credit cards had to comply with the FICA requirements. Secondly, one had to have access to a computer and the Internet. While he conceded that access to the Internet was progressively becoming easier and wider he was equally of the opinion that access to credit cards was restricted in terms of FICA regulations. He conceded that a possible loophole for Interactive Gambling by minors was where the parents or guardians provided that minor with the parents / guardians’ credit card together with access to the internet and allowed the minor to gamble in the name of the parent / guardian or a minor illegally gambled through the parent / guardians credit card/computer. However, he was of the opinion that it was currently difficult for minors to access Interactive Gambling, but conceded that there could be loopholes.

Mr Maake (ANC) raised a question about a minor who was accustomed to Interactive Gambling in his homeland but in the Republic of South Africa was precluded by reason of his age from Interactive Gambling and wished to know how this could be reconciled.

Prof Turok pointed out that whereas some people found working the Internet difficult, there were youngsters who were good at computers, for example, hackers. Likewise, there were those whose parents permitted freely, or were abused into permitting, Interactive Gambling access to a minor. He wondered how the law could provide for such eventualities.

Ms Dudley wanted a firm statement as to who was ultimately responsible or accountable. She was of the view that currently there was no disincentive or deterrent and this was needed, especially for the provider of Interactive Gambling.

Ms Ntuli (ANC) reiterated such concerns.

Mr Strydom repeated that even if a minor, from a jurisdiction where a minor was legally permitted to participate in Interactive Gambling, was visiting the RSA and wished to participate in Interactive Gambling, such gambling was illegal through South African service providers. However, this visiting minor would still be able to legally gamble in his home jurisdiction through the Internet. He repeated that this visiting minor would not be permitted to participate in Interactive Gambling with a South African service provider, in terms of South African legislation.

Addressing Prof Turok’s concern, he stated that the Principal Act and the proposed amendment both envisaged an Interactive Gambling participant having to provide identification, such as through an ID, and IDs currently disclosed age through date of birth. In the area of crime and policy, reference should be made to the Principal Act and this provided that the interactive service provider would be committing a statutory crime if there were insufficient investigation of the Interactive Gambling participants. The onus was on the service provider to refer questionable cases to the National Gambling Board, or face a monetary fine up to R10 million.

Mr Maake wanted clarification on a minor coming from a jurisdiction where it was legal to gamble at age fourteen, but illegal in South Africa’s jurisdiction. He felt that playing between or from country to country might be a problem.

Mr Themba Marasha (Acting CEO, NGB) was concerned about players outside of the RSA gaining access to the South African service providers and not complying with South African legislation.

Mr Strydom referred such concerns to the proposed change to Clause 11 where it added a new subsection (2). National Treasury had raised such concerns by way of a letter and the following qualification had been now added: “must not convert …into any other form of value”. He was of the opinion that the provisions of FICA and its regulations precluded any participant turning money into any other value. He illustrated it by saying that if in terms of FICA, a player had identified a FNB account as the designated account, any winnings had to go to this account or the winnings became, as currently with unclaimed credit or winnings in land-based gambling, liable to be turned over to the Board. It could not be converted into some other value and so be open to money laundering activities.

Pro Turok asked who would be monitoring this.

Mr Marasha (NGB) replied that the National Gambling Board would be monitoring this and in the event of unclaimed credit arising, this would be paid over to the National Gambling Board.

Ms Dudley then wanted to know how the combination of the two sub-clauses in Clause 11 addressed the concerns of the hearing.

Mr Strydom said the two had been combined to ensure that nothing had been left out, and it was intended to strengthen the Bill. The statement on each player had to be in the prescribed manner.

Ms Dudley wished to know whether there was specific addressing of the issue or merely a combination of clauses.

Mr Marasha explained that an attempt had been made to take everything into account and strengthen the provisions and that the service providers were required to report any suspicious activity.

Clause 15
Mr Strydom stated that in the Principal Act there was already provision for advertising and promotion of gambling and that accordingly any provision in the Bill was for Interactive Gambling alone. For some years now, land-based gambling service providers had had the right to advertise and promote gambling. If Parliament, which was sovereign, now wished to retract such rights, then it was for Parliament to provide for this while bearing in mind the constitutional issues involved. Neither he, nor any of the State Law Advisers were authorised to pre-empt Parliament. Advertising was not the crux of the matter. What was the crux was that in future there would be no promotion or advertising of Interactive Gambling.

Prof Turok raised the question of the difference between “must” and “shall”.

Mr Strydom said that up until now “shall” had always been used.

Ms Suraya Williams, Principal State Law Advisor, replied that the movement towards simplification of statutes and the removal of legalese, was responsible for the replacement of “shall” by “must”.

Ms Dudley stated that she recognised that the Committee, as a Committee, could not ban advertising but felt that the feelings of those who had made submissions and of herself, should be recognised by Parliament.

Ms Williams replied that the strong statements against gambling had been noted but that service providers already had rights in terms of the Gambling Act and these could not be taken away summarily. However, she undertook to raise such concerns with other stakeholders and look afresh at the Interactive Gambling.

Ms Dudley felt that the consequences of advertising in creating a desire or interest where none existed previously, were well known and clear.

Mr Strydom again referred her to the Principal Gambling Act.

The DTI representative pointed out that in terms of Sections 81 and 83 of the Principal Act, the penalties for contravention of the Gambling Act were as much as R10 million.

Clause 20
Mr Strydom noted the change in this clause provided that the certificates of suitability covered not only the service providers but the service providers to the service providers (such as the providers of the cards, credit cards from the banks or the access cards to the software of the interactive gambling providers).

Clause 22
Mr Strydom said that a variety of powers were granted to the National Gambling Board in terms of the Bill and that care had to be taken in reviewing them that such powers did not fall foul of the Constitution. He felt that Ms Williams could better pronounce on constitutionality but he warned that all the powers accorded the Minister in terms of the Bill were not in a vacuum and that consideration had to be given to the constitutional aspects thereof.

Clause 22 amended Section 37 of the Act and provided for a National Interactive Gambling licence which was “above” the licences awarded in terms of the provincial legislation to the land-based casinos in the provinces. In this change to Clause 22 was a reference to the criteria to be taken into account which had to be carefully considered and set out. Once more he referred to Ms Williams.

Ms Williams noted the provisions in the Constitution for conflict of laws (provincially and interdepartmentally) and added that the Minister would have to prescribe at a National level. She was of the opinion that this was analogous to the issue of liquor licences where there were differences provincially and even at the third tier of government, municipally. She felt that such differences had to be prevented with Interactive Gambling.

Dr Rabie (DA) asked if the Minister could over-rule, or over-turn, his advisers.

Mr Strydom replied that the Minister did not exist in isolation and any decision made had to be in line with broad policy.

Mr Strydom noted that changes to Clauses 31 and 32 were in response to submissions.

New Clause: Tax on interactive gambling
Mr Strydom explained that this was the money bill aspect and would be treated accordingly as worded.

The Chair asked the Department officials to look at their concerns and have answers available when they reconvened on 5 September when they would be going through the Bill with a fine toothcomb.

Mr Maake was concerned about advertising and Mr Strydom referred to the advertising rights already in existence in terms of the Principal Act and assured him that there would be no extensions of this.

Mr Marasha added that there were many concerns about this Bill and what was being attempted was a balancing of existing interests and fears. This was neither easy nor likely to leave everyone satisfied.

Meeting concluded.