Presentation to the Portfolio Committee on Trade and Industry

1. Presentation tothe Portfolio Committee on Trade and Industry 16 November 2011

2. Agenda • The NLB structure • Funding Process • The recommendations of the NGC located in the NLB Structure • The NLB responses

3. NLB Structure OTHER LOTTERIES REGULATION DISTRIBUTION NGOs CBOs Applications Operates the National Lottery and National Sports Pools under Licence NLB Central Applications Office Payments GIDANI NLDTF Weekly transfer 5% 28% 0% 45% 22% DA Art & Culture DA Charities DA Sport DA RDP DA Misc

4. Application Process Applications Advertised Call for Applications Central Applications Office NGOs CBOs Forms Grant Agreement Payment NLDTF NLB DA Art & Culture DA Charities DA Sport

5. Recommendation 1: Operational Model OTHER LOTTERIES REGULATION DISTRIBUTION NGOs CBOs Applications Operates the National Lottery and National Sports Pools under Licence NLB Central Applications Office 1 Payments GIDANI NLDTF Weekly transfer 5% 28% 0% 45% 22% DA Art & Culture DA Charities DA Sport DA RDP DA Misc

6. Recommendation 2: Enforcement 2 OTHER LOTTERIES REGULATION DISTRIBUTION NGOs CBOs Applications Operates the National Lottery and National Sports Pools under Licence NLB Central Applications Office 1 Payments GIDANI NLDTF Weekly transfer 5% 28% 0% 45% 22% DA Art & Culture DA Charities DA Sport DA RDP DA Misc

7. Recommendation 3: Governance 2 OTHER LOTTERIES REGULATION DISTRIBUTION NGOs CBOs Applications Operates the National Lottery and National Sports Pools under Licence NLB Central Applications Office 1 Payments GIDANI NLDTF Weekly transfer 5% 28% 0% 45% 22% DA Art & Culture DA Charities DA Sport DA RDP DA Misc 3

8. Recommendation 4: Problem Gambling 2 OTHER LOTTERIES REGULATION DISTRIBUTION NGOs CBOs Applications Operates the National Lottery and National Sports Pools under Licence NLB Central Applications Office 1 Payments GIDANI NLDTF Weekly transfer 5% 28% 0% 45% 22% 4 DA Art & Culture DA Charities DA Sport DA RDP DA Misc 3

9. Recommendation 5: Capacity 2 OTHER LOTTERIES REGULATION DISTRIBUTION NGOs CBOs Applications Operates the National Lottery and National Sports Pools under Licence NLB Central Applications Office 5 1 Payments GIDANI NLDTF Weekly transfer 5% 28% 0% 45% 22% 4 DA Art & Culture DA Charities DA Sport DA RDP DA Misc 3

10. Recommendation 6: Single Regulator 2 OTHER LOTTERIES REGULATION DISTRIBUTION NGOs CBOs Applications 6 Operates the National Lottery and National Sports Pools under Licence NLB Central Applications Office 5 1 Payments GIDANI NLDTF Weekly transfer 5% 28% 0% 45% 22% 4 DA Art & Culture DA Charities DA Sport DA RDP DA Misc 3

11. 1. Lottery Operational Model • NLB agrees that the current revenue maximization model should remain for at least one more licence term • The Act needs to be changed to address • Political office bearer ambiguity • Approval of games ( should lie with the Board and not the Minister) • Interim Licensing arrangements in the event of Revocation or legal action

12. 2. Enforcement of Other Lotteries • NLB agrees that the lack of enforcement provisions in the Act prevents effective policing of illegal lotteries • Locus standi and search and seizure powers needs to be included in amendment • The concurrent existence of National Sports pools and provincial Sports Pools because of “any other law” in the Lotteries Act should be corrected • Definitions of lotteries in the Act should include SMS competitions

13. 3. Governance of Distributing Agencies • NLB agrees that the lack of accountability and responsibility in the appointment of Agencies is untenable • The current approach of the NLB through the approved procedure manual needs to be enforceable by law • NLB agrees that if Agencies are to be separate from the trustees of the NLDTF, they should become schedule 3A entities

14. 4. Problem Gambling and the NRGP • We agree that the current “Play Responsibly” program is purely preventive and does not include counselling and remedial treatment • The Lottery conducts its own research and the latest (2010) survey by Unisa BMR indicates problem gambling in the Lottery to be “insignificant” • The NLDTF funds many remedial and rehabilitations programs of NGOs such as NICRO and National Council on Problem Gambling • The NRGP is a monopoly, there is not enough competition for the provision of similar services

15. 5. Separating NLB from NLDTF • We agree that the current governance structure is untenable • We agree that the Distributing Agencies should be accountable • We challenge the assumption that “capacity problems” will be fixed on separation • The problems with the effective distribution is not the location of the grant-making process but in the funding model. • Separating the NLDTF from the NLB without changing the funding model merely moves the problem to a different location

16. Capacity Issues

17. Challenges with current (application based) funding Model • Low Impact • Inflexible • Absence of Targeted approach • High Risk • Reactive • Unresponsive to National Priorities • Inequitable

18. 6. Combining the NGB & NLB into a single regulator • In 1995 and 1996, The ad hoc Parliamentary portfolio committee broadly accepted the conclusions and recommendations of the Wiehahn Commission on the creation of two types of operations: a clear distinction between the casino’s and payout machines and ancillary activities on the one hand, and lotteries and sports pools on the other • This meant that in respect of casinos, racing, gambling and wagering, both national and provincial legislatures could enact legislation to regulate those activities but only Parliament could make legislation (and have oversight over) lotteries and sports pools. • We believe that the different approach in regulating and policing these two sectors, as well as the constitutional distinction between them, makes an amalgamation of the relevant authorities undesirable and that the intricate knowledge required in each sector (built up in the past 14 or 15 years) is bound to become obfuscated by a lack of specialisation.

19. Consultations The NLB held consultative workshops in all provinces as well as a National Indaba • Attended by 18000 beneficiary organizations in provinces • Attended by 1500 beneficiary organizations at National Indaba • Robust Discussion on Current Model • Consensus on proposed flexible model • Consensus on funding Policy • Consensus on simplification of process and requirements • Consensus on elimination of dependency • Consensus on elimination of Fraud and Misrepresentation • The FPA “research” supports proposed interventions

20. Questions…?