Chairperson, hon members of this House, compatriots, people of South Africa, we bring to this House the unanimously adopted report of the Gambling Review Commission. May I add that we have been seized for more than two years with issues around the gambling industry, ever since interactive gambling reached our committee in June 2009 and on which we reported as early as June 2010. Since then, and following on the GRC report, the Portfolio Committee on Trade and Industry and the Subcommittee on Gambling has grappled with the complexity, the concurrent powers of the provinces, the wide reach of gambling, legal and illegal, and the socioeconomic impact on our people, our communities and our country.
Of course, there are also the unintended consequences of gambling, including Internet and on-line gambling. Many of the inequities in the horse-racing industry, arising from the principal Act, are now challenging all of us. This kind of environment is challenging and, certainly, regulating and trying to develop robust and realistic regulatory frameworks and regulation is not easy.
Indeed, as stated in the report, the socioeconomic impact and issues must be addressed and all gambling operations - all of them, including the Internet and on-line gambling operations - must contribute to the socioeconomic development of our country.
Yes, it is important that issues of effective redistribution of funds through agencies such as the Distributive Agencies in the national lotteries are in line with the country's priorities and are not pet projects. Good health is important - I will be the first to say so, having just spent a couple of days in hospital - and encouraging sport across the racial profile can benefit all of us. Certainly, the development of and the critical role that arts and culture can play in any nation, especially one with such a rich diversity woven into one national tapestry, South Africa, is very important.
Though the National Lotteries Act intended that specific sectors, especially the vulnerable, would benefit, the reality is that this has been abused. The committee did try to address this in its recommendations. We believe that the time has come to expand the sector specifics and focus on the deserving and the vulnerable in other areas.
The National Lotteries Act needs to be radically amended and, certainly, it is hoped that given the highly co-operative engagements with the Department of Trade and Industry on gambling, the principal Acts of both the National Gambling Act and the National Lotteries Act will be radically amended soon.
I want to add that the chairperson of the subcommittee led so ably that I thought I should perhaps step down as chairperson of the portfolio committee. Harmonious relations prevailed throughout. May I most sincerely thank him? Thank you very much, hon Ndaba Gcwabaza, and all members of the subcommittee, who actually did the work. What we did was simply to deliberate on that final report, which was the cleanest final report from a subcommittee I have ever seen in this Parliament. [Interjections.] I wish to thank Commissioner Ludin and her team of commissioners for the sound South African review and the report.
Hon member, before you ascend to the podium, I would like to inform members that this is the hon member's maiden speech and the tradition is to pay attention. [Applause.]
Mr Chairman, thank you very much. While I know that maiden speeches have become fairly routine occurrences here, I must begin by saying what an absolute honour it is for me to speak in this House today.
Ndiyavuya ukuba lapha namhlanje. [I am happy to be here today.]
As a university student, I would often come here and sit in the gallery in the afternoons after my classes and watch as some of the greatest debates of our democracy played out in this Chamber. Now, as a member of this House, friends and family often ask me why on earth I would want to go into something as dirty and nasty as politics. It is a cynicism that I am sure many of us are familiar with. It is born of decades of disappointment, nourished by divisive politics and perpetuated by too many broken promises.
I believe in another, much better kind of politics, one which adheres to our country's founding democratic principles, one which takes seriously the oath of office that all of us swore - to defend and uphold the Constitution - one that believes that this country is ours to make or to break and that those things that bind us together are far greater than those things or, indeed, those people who seek to drive us apart. I have seen believers in this kind of politics on both sides of the House.
In the remaining two years of our term, let us exemplify that tradition. This is the most important democratic institution in our country and our words and actions here should serve as an example to those we represent. May we have many more defining historic debates in this House and, whatever our differences, may we always remember what we have in common - a deep love for the country we serve.
I turn to the specific topic at hand. The committee I serve on had very few points of disagreement in the drafting of our report. All of us recognise that the proliferation of gambling without appropriately strict regulation poses serious socioeconomic risks to all South Africans and especially poor South Africans. We all agreed on the principle of destination gambling, but we also heard evidence that online gambling is very popular and common in South Africa. It makes no economic sense whatsoever to continue to ban it. The only effect of such a policy is to send more jobs and more money out of South Africa and receive no tax income from the industry. It is therefore cause for cautious celebration that the committee recommended the unbanning of on-line gambling, subject to very careful and firm regulation to protect the consumers of gambling, which the industry calls "punters".
We also agreed, as the hon Fubbs has said, on some wide-ranging reforms to the way in which the National Lottery is run. The National Lotto is an organisation that should work for the poor. Its abuse for politics is exactly the kind of conduct that erodes public faith. We recommended the establishment of an entirely separate and independent grant-making body, removing all grant-making powers from the ambit of the board. We have recommended much more rigorous accountability for the spending of lotto grants, to avoid fiascos like the World Festival of Youth from ever occurring again. We have recommended that all major lotto winners undergo mandatory financial counselling to assist with managing their newfound fortunes.
Members of the committee will know that my biggest concern was around consumer protection, ensuring that punters can make a fully informed decision knowing all the risks and costs involved. If we can get the legislation right, South Africa will be a world leader in gambling consumer protection, with the odds of winning - which members must know are incredibly small - prominently displayed on all slot machines and requiring all gambling advertising to carry similar warnings.
In my constituency of greater Philippi here in Cape Town, there are several dozen limited pay-out machines, or LPMs. They are essentially more compact but far more socially damaging versions of traditional slots. They are located mainly in taverns, shebeens and nightclubs, and they are the most destructive and most harmful form of all gambling to the poor because of their ease of access, seemingly cheap cost and alluring prize money. Many poor South Africans gamble away their weekly wages at LPMs. LPMs are like a training school for gambling addiction and the law does not adequately protect punters from the dangerous social side effects of LPMs. Their current location inside residential areas also contradicts the policy consensus towards destination gambling. I, for one, do not want a single additional LPM in my constituency and would gladly see them all removed. We should all therefore welcome the recommendation by the committee to stop the further roll-out of LPMs, pending review of the policy regarding their location.
There are many other praiseworthy recommendations in the report, which we have now submitted to the Department of Trade and Industry. My hope, hon Minister Davies, is that the department soon sends draft legislation to this House that we can debate, amend and then pass to give effect to our recommendations and protect South Africa's punters. [Applause.]
Mr Chairman, our committee, especially our chairman, worked very hard. That we are meeting and debating the report at this time of the night is the way we worked all the time. I joined this committee at a time when they must have turbocharged it to get results. I think the Minister did some heavy breathing and the chairlady listened obediently!
We heard very well-informed and helpful presentations from all sectors. I was impressed with the talents and abilities of South Africans. The DTI staff members were most helpful. Our parliamentary committee staff members were efficient, and we benefited from the research and excellent report of the Gambling Review Commission.
I don't often quote Zwelinzima Vavi, but he once said that gambling was the poor subsidising the lucky. The view maintained by us is that gambling, like alcohol and nicotine, is not good for the nation's health. However, our dear citizens still want to practise these things. So, we need to regulate it and control it, rather than drive it underground. However, we must remind you that gambling at shebeens, card games, umlabalaba on street corners and fahfee remain illegal.
The chairlady of the portfolio committee mentioned the question of national and provincial responsibilities and the aspect of concurrence. The National Gambling Policy Council - at the level of MECs and the Minister - is where there can be liaison and co-ordination. It seldom meets and when it does, it does not quorate.
Animal racing also received our attention, bearing in mind that horse racing is well established and well managed and is part of gambling. Pigeon owners race their birds. In Australia and the United Kingdom, dog racing is well controlled and very popular. In South Africa, we do not yet recognise harness racing or bush racing, or what we sometimes call thebelela.
Among the fiercest defenders of property rights in South Africa are farmers and taxi owners. Often large numbers of dogs hunt across private farmland in KwaZulu-Natal and it is commonly known as "taxi hunting". This produces conflict. There are large stakes placed on the dog that will hunt down the buck. Legal dog racing will enable black people, in particular, to become active owners and operators in this industry and to race their dogs legally instead of illegally hunting with them. [Interjections.]
Harness racing and bush racing can also be legalised and regulated, which would enable authentic black involvement rather than fronting. We considered all the concerns from the Society for the Prevention of Cruelty to Animals. In any sport involving animals, it is vital that there is no cruelty and that animal health and safety is supervised by qualified people. [Time expired.]
Mr Chairman, the tabling of this report offers opportunity for broad debate. It is good that we have recognised the need to open up possibilities for Internet gambling, but that comes with the need to regulate the industry. Of necessity this would mean taking another step towards the further regulation of the Internet and the freedom that takes place there. I think that as we do so we also need to commit ourselves not to take this opportunity to overregulate the Internet on account of this specific problem in a manner in which we don't want the Internet to be regulated. We shouldn't make such regulation a back door to a type of regulation that does not fit the specific nature of cyberspace.
The second consideration is that there is consensus that gambling has negative aspects that damage the poorest of the poor. That begs the question: Why is government involved in such an activity? Why do we run a National Lottery? All sorts of explanations are given for such absurdity. One of them is that we can raise money for things we would not otherwise have money for. That was the case when the money from the National Lottery was utilised for purposes that were not covered by the Budget.
However, as we recommend that the purposes for which grants can be made be extended to any of the purposes and objectives of government, we find ourselves in the contradiction of effectively having the same base of purposes covered by the national Budget. In that case we could very well take the money, place it in the National Revenue Fund and disburse it towards government priorities, like any other source of revenue. However, all these show the need for seriously reconsidering why government should be in the business of gambling and producing the same type of addiction that we are trying to address on the other hand. The third point is the consideration of how we look at this. I will never gamble. It is not in my matrix. I don't like it, but who am I - and who are any of us - to tell other folk who want to gamble that they shouldn't. We must regulate gambling to ensure consumer protection, not prohibit it. [Time expired.]
Chair, the ACDP shares the view that the committee expressed, namely that the socioeconomic impacts of legalised gambling were previously inadequately represented and appeared to be biased in favour of the gambling industry. We note the report of the Gambling Review Commission and the portfolio committee's recommendations regarding the amending of gambling and lottery legislation.
While noting that illegal gambling, particularly in provinces that lack the will or the capacity to take effective action, is a major and growing concern, we also note that there continues to be no evidence to suggest that what is referred to as "problem gambling" has worsened significantly.
It is encouraging to see that South Africa is ahead of the UK, Europe and Asia in addressing problem gambling and that the National Responsible Gambling Programme, with a 24-hour toll-free hotline, has trained counsellors who refer people for help. This is the only organisation worldwide that is jointly managed by the public sector and industry. It is also partnered with the University of Cape Town's department of psychiatry to include structured diagnostic interviews and the first fellowship in pathological gambling in Africa. The ACDP will follow the much-needed legislative developments.
Chairperson, hon Ministers and Deputy Ministers, hon members, since gambling was legalised through the National Gambling Act of 1996 and the national Lotteries Act of 1997, the gambling industry has grown significantly. Gambling and national lotteries together employ just over 59 000 workers and generate a little over R18,1 billion.
There have been challenges in the distribution of lottery funds for good causes. Firstly the distribution agencies have not been accountable to the National Lotteries Board on the adjudication and granting of funds to the applicants. Secondly, due to the ad hoc nature of the distribution agencies there have been huge backlogs in processing and approving applications. Thirdly, issues relating to conflict of interest have not been exhaustively clarified beyond simple recusal. Added to these have been the cumbersome application forms and the required audited financial statements, which advantaged well established, capacitated organisations but disadvantaged small, rural nongovernmemtal organisations and community-based organisations seeking to service vulnerable and historically disadvantaged communities.
There are also illegal lotteries that are carried out in the name of promotions and marketing competitions. We think the National Lotteries Board should be enabled to enforce legislation on these forms of illegal gambling to protect the public and ensure that the state collects taxes.
Having considered these challenges, the Portfolio Committee on Trade and Industry proposes the following: Firstly, a full-time grant-making body should be established. It should be accountable to the National Lotteries Board and its function should be to adjudicate and distribute funds to deserving organisations, to verify the existence of projects and/or services that these organisations purport to be carrying out and to ensure that these projects and services reach the intended beneficiaries and communities in a manner that brings about a better life.
Secondly, the cumbersome application forms and stringent requirements for financial statements often demanded even from new organisations should be simplified and not requested from new CBOs and NGOs. In addition, small and vulnerable organisations that do not have audited financial statements readily available should be assisted to provide monthly financial reports to ensure accountability.
A multiyear grant system should be introduced to make the funded organisations more sustainable and able to plan ahead. To prevent a repeat of the suspension of the operations of the national lotteries should there in the future again be a legal challenge in granting the licence to the operator, the Minister of Trade and Industry must be mandated to extend the licence for a reasonable period.
Gambling, the activities of which are overseen by the National Gambling Board and Provincial Gambling Regulatory Authorities is a concurrent competence. However, there have been challenges in ensuring co-operative governance, co-ordination and consultation on regulating gambling activities; licensing the operators and manufacturers of gambling machines; and in implementing uniform national norms and standards among provinces.
To address these challenges, it is recommended that there be a memorandum of understanding between the NGB and the PGRAs to regulate their relationship and ensure uniformity in implementing national and provincial legislation. In addition, there should be national norms and standards to set minimum standards for licensing conditions, limitations on forms of gambling activities and to ensure accountability and transparency in the implementation of national policy.
It has been acknowledged that the National Gambling Policy Council has not been effectively carrying out its mandate of promoting co-operative governance, co-ordination and co-ordinating national gambling policy implementation.
Hear, hear!
In order to improve the functioning of the NGPC, regulations must be made to enable the NGPC to carry out its functions based on co-operative governance principles.
During the public hearings on the report of the Gambling Review Commission, it came out that gambling machines, software and equipment were being imported, notwithstanding the existing capacity for local manufacture. In line with the objectives of the Industrial Policy Action Plan 2, Ipap2, and government's priority of creating jobs, local manufacturing of these gaming tools must be encouraged and supported. This must also assist in combating the importation of illegal gambling machines and equipment.
Of great concern, though, is that the testing laboratories for the gambling machines, software and equipment are owned by private foreign companies and the SA Bureau of Standards is not involved in testing and verifying the gambling equipment. It is recommended that the capacity of the SABS to verify the test reports done by such testing laboratories be reinstated.
Online gambling is a relatively new and illegal form of gambling in South Africa, yet it is taking place. It is done through the Internet, mobile phones and the telephone. Online gamblers who have been surveyed internationally report that the advantages of gambling online are gambling at home, 24-hour availability and convenience, privacy and anonymity. Therein lie the dangers of unregulated on-line gambling. The challenges that result from online gambling are that it attracts under-age gambling, it is easier to spend more money and it is more addictive. Online gambling is also a health hazard as it is reported to cause disrupted sleep and disrupted eating patterns. Of even bigger concern is that online gambling is associated with criminal activities, such as money laundering and the financing of terrorist activities.
If online gambling is left illegal, we shall never know the extent to which it is taking place in our country in terms of scale, nor what the local and international market is. We will also not be able to detect illicit activities under the cover of online gambling.
The Portfolio Committee on Trade and Industry proposes that the legalisation of online gambling be a national government competence and provinces receive a share of revenue on a formula basis determined by National Treasury; that the gambling activities that are allowed online be restricted and specified; that a limited number of licences be issued by the NGB; and that the licensees be registered and compelled to establish physical offices and be prepared to have information regarding their activities readily available for scrutiny by the relevant authorities.
We must increase and sharpen our skills in cyberpolicing and in prosecuting cybercrimes. We submit that while the principal legislation on lotteries and gambling in general must be amended to address the identified challenges, a new and standalone piece of legislation is proposed for online gambling. [Applause.]
Chairperson and hon members, let me welcome the detailed and comprehensive report before the House today. It was prepared and adopted by the portfolio committee and published in the Announcements, Tabling and Committee Reports. I believe a lot of very important work has gone into this and I want to welcome that very much.
Let me give a little bit of background to the exercise that we have been involved in. When this administration took office, we were bombarded with a proliferation of ad hoc proposals to expand gambling activities or introduce new gambling activities. They included proposals to increase the number of casinos in South Africa, to roll out and expand the operation of limited pay-out machines, to allow electronic bingo machines to operate in bingo halls, to introduce greyhound racing and to allow poker tournaments.
At the same time, there was a major change in technology - which has already been referred to. It meant that you could play online any gambling game available in a casino. There are also forms of online gambling, such as person-to-person betting, that allow divisions of different matches and different parts of matches to be the subject of betting between individuals or are mediated through an operator. All of this was taking place in the context of what the Gambling Review Committee told us on page 40 of their excellent report was a growth of 250% in the gross gambling product over a decade. Now, I did the maths. This comes to a growth rate of nearly 10% per annum in an economy that was growing at less than 4%.
Also, there has been a lot of research indicating that forms of gambling accessible to low-income people is being taken up to a considerable extent by low-income people in this country, who participate to a very considerable extent in accessible forms of gambling.
In this context, it seemed to us that what was needed was a new framework. This framework would have to tell us where the new activities would fit in; how they would relate to existing activities in such a way that the existing activities delivered to us - infrastructure in the form of hotels, conference centres and so on - would be sustainable; that the roll-out would not have a negative impact on low-income people; and how the new forms and technologies that would be around could best be regulated if, indeed, we decided that we should allow those activities to take place.
So, we commissioned the Report of the Gambling Review Commission. The Gambling Review Commission prepared its report. It was briefly discussed in the Gambling Policy Council and then we indicated that we would bring it to Parliament. The first part of the parliamentary process will be completed today when, hopefully, we adopt the report of the portfolio committee.
Of course, gambling is a concurrent function and provinces have powers and rights in terms of the regulation of the gambling industry and have provincial gambling boards. Therefore it is important that the process in Parliament will only be completed when the NCOP has done a similar exercise. At that point, I think, we will have what we hope will be a comprehensive and coherent view of Parliament, which we can then take back to engage with the various proposals in detail.
That being the case, I will not comment in detail on the proposals today. I do just want to make a few observations. First, I think it is significant that the portfolio committee has recommended that the interactive gambling legislation, which was put on hold by Parliament, should in fact be revived and that there should be a consideration of legalising on-line gambling in certain forms, subject to certain conditions, as outlined by the hon Gcwabaza, who spoke just before me. I think that is a highly significant recommendation and, certainly, if that becomes the consensus of both Houses of Parliament, we will, as the department, engage energetically in that process and look very closely at those recommendations. I think it is a particular matter of concern, as highlighted, that we should defend minors against exposure to this form of activity.
Another issue that we should consider if we permit this activity in our country is how we are going to ensure that there is a quid pro quo in terms of investment in other infrastructure. The casinos, as I've already said, are required to invest in hotels, conference centres and whatever. The on- line industry will be competing with them. How do we make sure that what we ask from the on-line industry is going to be equivalent, in some sense, to what we are asking from the casino industry?
I also welcome very much the observations that have been made about the need to review and amend the Lotteries Act. This is something we consider as being necessary. We already began a process in 2009 to try to address, through regulation, some important reforms, both to ensure that beneficiaries and broader groups of beneficiaries could receive funds without bureaucratic processes limiting their access but also to make sure that the distribution of funds is directed and focused on the needs of the poor. We have been working on this as a government and as a department. It's on our legislative programme, but I think we look forward to engaging with the particular recommendations coming from here.
The public hearings in the portfolio committee revealed the worryingly slow pace of transformation and allegations of abusive employees which, in our view, require urgent and immediate attention.
I want to conclude by thanking the committee and, particularly, the subcommittee led by the hon Gcwabaza, for their hard work. Let me say that, like the hon Oriani-Ambrosini, I personally do not enjoy gambling but I believe that gambling should be a form of activity that can be undertaken by those who have disposable income and are prepared to lose their stake. It should not become an activity that is promoted as something that will solve the problems of the poor. It never will, because the only consistent winners in gambling games are the operators of gambling activities themselves. If that were not the case, we wouldn't have so many of them scrambling for licences and so on.
Let me thank the portfolio committee and I hope the House adopts the report. [Applause.]
Debate concluded.
Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.