Introducing the National Gambling Bill, 2003

1. Introducing the National Gambling Bill, 2003 Select Committee Cape Town 3 September 2003

2. Overview of presentation • Background to Bill • Objectives and principles of new Bill • Overview of the industry • Scheme of the Bill • Detailed overview of the Bill

3. Background • Why a new Bill? • Amendments proposed to Gambling Bill in 2000 and agreed at MinMec in 2001 • Drafting reformulations recommended for greater clarity • Several fundamental issues currently in regulation better supported by legislation • It is desirable to consolidate the law

4. New provisions introduced • Bill reenacts existing provisions and introduces new ones • Outlaws certain activities and all unlicensed gambling activities • Introduces prohibitions, requirements and standards to address problem gambling • Introduces a system of registration of gambling machines to deal with illegal gambling • Clarifies single national electronic monitoring system • Introduces a system of national licenses • Establishes norms and standards for provinces • Establishes the National Gambling Policy Council

5. Objectives of changes • To clarify concurrent national/provincial jurisdiction • To give effect to co-operative governance • To provide for economic unity • To ensure tighter control over gambling, especially illegal gambling • To recognize the potentially negative socio-economic impact of gambling and the public policy objectives and to put in place mechanisms to deal with this

6. Consultation • Extensive consultation with provinces, as main issues related to clarification of jurisdiction – Bill reflects agreement with provinces and PLAs • Bill published for comment, but only 3 weeks (18 August) given for comment due to Parliamentary requirements - comments still accepted up to 29 August (effectively 5 weeks) • Workshop held with industry and public interest groups • Comments incorporated and Bill circulated to interested parties to prepare for public hearings due to short publication period

7. Overview of the Gambling Industry Background • Gambling was legalised in 1994 on the basis that it was not possible to outlaw gambling and that it be better controlled if it was regulated; • In this context, four public policy objectives were identified: • BEE • Employment creation • Creation of new fixed investment and infrastructure • Generation of revenue

8. Overview of the Gambling Industry Size of the industry • The gambling industry, including the National Lottery, currently generates about R6.8billion in gross revenue every year; • Total revenue for government from gambling (excl lotteries) is just under R500 million per annum; • Most popular forms of gambling: • Casinos (70% of GGR), Horseracing (17% of GGR), National Lottery (13% of GGR), Bingo (less than 1% of GGR), LPMs?

9. Overview of the Gambling Industry Meeting the public policy objectives • BEE: 43% equity holding by empowerment companies; however, difficulties arising from financial arrangements • Employment: estimated 50,000 direct and indirect jobs • Gauteng (13,500), Eastern Cape (7000), Freestate (2000), North West (1000) • Revenue Generation: R492 million (March 2002) gross revenue Gauteng (58%), Eastern Cape (12%), Western Cape (12%), KZN (10%), remaining provinces account for 8% of revenue • Infrastructure: R11.7 billion in investment

10. Overview of the Gambling Industry Problem gambling • No of problem gamblers as a proportion of regular gamblers is about 50% higher than in developed countries • Incidence of problem gambling 1% of population with easy access to gambling activity Canada (1.6%), Australia (2.3%), New Zealand (1.3%), UK (0.8%) • Need for proper control, especially over illegal gambling, protection of minors and monitoring of social impact

11. Overview of the Gambling Industry Legal framework and administration • Concurrent jurisdiction has resulted in contestation and legal challenge • Duplication of functions, hampering economic activities occurring on a national level

12. Scheme of the Bill National legislation Provincial Legislation Structures Structures DTI Policy Council NGB 9 PLA’s Functions Functions Policy making Policy Advice Develop legislation Licensing ito prov. law Propose NNS Promulgate regulations Review proposals for NNS & Regulations National licensing ito national law subject to NGA review Review National Licensing Monitoring of machines via CEMS Policy ma Dispute resolution Maintain CEMS Council Secretariat Inspection & enforcement of all National & Provincial law in provinces Monitor NNS National registries Disclosure & reporting Consultation Maintenance of data registries required by national law

13. Questions and clarification

14. Detailed overview of National Gambling Bill, 2003

15. Chapter 1: Interpretation and Application • Definitions • Application: does not apply to Lotteries

16. Chapter 2: National Gambling Policy Part A: Gambling Activities • Defines • gambling activity generally; • bests and wagers; • gambling games; • pay-outs and opportunities to play further

17. Chapter 2: National Gambling Policy Part B: Prohibited gambling, restricted activities and status of gambling debts • Prohibits illegal gambling; all unlicensed gambling activities except for informal bets; unlicensed dealing in machines or gambling devices; use of unlicensed premises; unauthorised interactive gambling; gambling by minors; credit for gambling; • Provides for voluntary exclusion and imposes requirements

18. Chapter 2: National Gambling Policy Part B: Prohibited gambling, restricted activities and status of gambling debts • Places restrictions on advertising • Provides for enforceability of debts through legal gambling activity (unenforceability of debts by minors and excluded persons)

19. Chapter 2: National Gambling Policy Part C: Gambling Premises • Standards for gambling premises • Introduces new provisions to address concerns related to the overstimulation of gambling (proximity to schools, having a cash machine on the premises, notices) • Sites for LPMs (currently in regulation)

20. Chapter 2: National Gambling Policy Part D: Registration and certification of machines and devices • Requires registration and identification of gambling machines or devices • Provides for national register of machines and devices and their registration • Provides for transfer of ownership or possession • Requires testing agents to be licensed • Calibration and certification of machines and devices • Regulations for LPMs • Requirement for LPMs to be linked to CEMS

21. Chapter 2: National Gambling Policy Part E: Licensing of persons employed in gambling industry • Requires all employees to be registered

22. Chapter 3: Jurisdiction and Licensing Part A: Jurisdiction • Outlines jurisdiction and responsibilities of PLAs and NGB • Clarifies oversight function of NGB • Requires PLAs to keep and share information • Provides for conflicts in concurrent jurisdiction • Provides for Ministerial powers to make regulations iro norms and standards

23. Chapter 3: Jurisdiction and Licensing Part B: National Licenses • Authority of national licenses • Applications for a national license • Authority to issue a national license • National license procedures • Review of refusal to issue national license • Review of proposal to issue national license • Suspension and revocation of national license

24. Chapter 3: Jurisdiction and Licensing Part C: Provincial Licenses • National norms and standards • Maximum number of casinos licenses (by regulation, with transitional measures) • Limitation of rights of a license • Amusement games and machines

25. Chapter 3: Jurisdiction and Licensing Part D: Licensing Norms and Standards • License criteria, categories and conditions • Disqualification for employment licenses • Disqualification and restrictions for other licenses • Disqualification after license issued • Acquisition of interest by disqualified person

26. Chapter 3: Jurisdiction and Licensing Part E: Additional Norms and Standards • Economic and social development issues to be considered and conditions to be attached • BEE, overstimulation of gambling to be considered in license renewal annually; consistency with Liquor Bill • Competition issues to be considered • State interests • License requirements, acquisitions and transfers

27. Chapter 3: Jurisdiction and Licensing Part F: License Investigations, decisions, transfer and surrender • External probity reports • Decisions • License transfers • Surrender of license

28. Chapter 4: National Structures Part A: National Gambling Policy Council • Establishment, functions and meetings Part B: National Gambling Board • Continuation, objects and functions, provincial relations, composition of Board, conflicting interests, resignation and removal from office, meetings of the Board, Committees, Remuneration of Board and staff, finances and accountability

29. Chapter 5: Enforcement and Offences • National Inspectorate • Functions and powers of inspectors • Breach of confidence • Hindering administration of Act • Self-incrimination • Failure to comply • Offences and breaches of license condition • Penalties • Serving documents • Proof of facts

30. Chapter 6: General Provisions • Regulations • Repeal of laws and transitional arrangements

31. Schedule 1: Transitional Provisions • Definitions • General preservation of rights • State interests • National Gambling Board • National Licenses • Development of interactive gambling policy and legislation • Transitional maximum no of casinos • Excluded persons

32. Questions and clarification