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South Africa: Online gambling still illegal, Minister of Trade and Industry warning

24 Oct 2011

CAPE TOWN, South Africa -- (PRESS RELEASE) -- Online gambling remains illegal in South Africa and banks could question those South Africans that netted winnings from internet gambling sites, the Minister of Trade and Industry Rob Davies warned today.

Speaking on the sidelines of the International Association of Gaming Regulators' annual conference at the Cape Town International Convention Centre, Davies said South Africans should not jump the gun on internet gambling simply because the Gambling Review Commission had proposed that the department allow for the licensing of online gambling operators.

The commission was set up by Davies in 2009 and released its findings earlier this year.

"If you're a South African and you participate in online gambling and you win, your winnings are the proceeds of an illegal activity," he said, adding that banks under the Financial Intelligence Centre Act (Fica) could question those that net winnings from online gambling operations.

Davies also pointed to last year's ruling by the Northern Gauteng High Court that made it illegal for online gambling sites to offer their services in South Africa, even though their servers were hosted outside of the country.

"Unless or until we take a decision that we run a license (allowing online gambling) and in what form and what way - I think it will be a subject of a massive debate if we do indeed decide to go this route. I think everyone needs to know that they must not engage in this activity," he stressed.

He said the department had received a series of proposals from local companies to allow for licensing of internet gambling, adding that this did not stop South African companies that developed gambling software, as long as the software was destined for other gambling jurisdictions.

There was, however, concern that online gambling could be used to launder money, but Davies said this was something that Fica was looking at presently.

Regulations had been developed by the department on online gambling, but Parliament had held these back, said Davies, who declined to make any comment on the review while it was before Parliament.

Parliament is now expected to soon hold public hearings on the Gambling Review Commission's report, which would include online gambling.

The commission had also recommended that further research be done to investigate the various forms of street and informal gambling in South Africa.

Davies said the gambling industry had been growing at probably about double the country's gross domestic product (GDP), but he pointed out that South Africa needed to strike a careful balance between the jobs that are created and the effect it will have on the public.

This was particularly important, he said, when operators' major market was the more vulnerable lower-income consumers.

Though participation in gambling had slacked off since what he termed was the initial "big splurge" when the Lotto started, the country's gross gambling product per capita remained high - higher than many developing countries, said Davies, who added that the percent of problem gambling in South Africa was higher than in gambling jurisdictions in Europe.

"Among ordinary people, gambling is promoted as a life-changing possibility, including the Lotto ... when in fact anyone that goes in with that presumption is going to be sadly disappointed.

"If you want to play these games, you must be prepared to take the entertainment value. If that's entertainment, and you must be prepared to lose, because the only consistent winnings are [for] the people who run the operations," he said.
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