Tuesday, October 17, 2006

In contrast to the United States government's criminalisation of online
gambling, the South African government is legalising the industry in an
attempt to regulate and control it. Online gambling - said to be worth
millions -- is currently illegal in South Africa, but the Department of
Trade and Industry has given a draft amendment Bill (which will allow for
the licensing of online casinos in South Africa) to the Cabinet for
approval. The draft Bill will be available for public viewing by the end of
October, said Brian Muthwa, director of legislative drafting for the
department. He said that hopefully the new law will be passed by the end of
the first quarter of 2007. The draft Bill is based on a report conducted by
the National Gambling Board (NGB), which stated that there is a need to
license and regulate online gambling in South Africa. Control systems to
identify problem gambling, money laundering or any other criminal activities
will be provided for in the regulations.
"Because there is no effective legislation existing, it was decided to
outlaw internet or interactive gambling until effective regulation had been
put in place," said Astrid Ludin, deputy director general of the consumer
and corporate regulation division in the department. "We do not believe
outlawing will stop [interactive] gambling, therefore it is better to
regulate it," said Ludin. Online gambling makes up about 5% of the global
gambling industry and is estimated to be valued at $22,7-billion, according
to Christiansen Capital Advisers, a US-based service that provides gambling
and entertainment industry analysis. Brick-and-mortar casinos in South
Africa paid R2,1-billion in gaming taxes and VAT in 2005, of which the
government received 37%.

So why wouldn't the South African government want to legalise online
gambling if it means obtaining taxes from such a wealthy and growing sector
of the gambling industry.

Chief executive officer of the NGB, Thibedi Majake, agreed, saying the
legalisation of online gambling would mean a new revenue source for the
government in the form of taxes and levies.

The South African law against online gambling prohibits "any natural or
juristic person from offering or engaging in interactive gambling unless
authorised by the Act or any other law in force within the Republic".

"Our interpretation of the Act is that any person who is gambling online
through [internet casinos] is contravening the Act and should be dealt with
accordingly," said Ludin.

But legal or not, a thriving online gambling industry already exists in
South Africa and they're not exactly hiding. It's almost impossible to miss
the flashy pop-up casino advertisements that occupy so much space on local
sites like the Mail & Guardian Online, News24, iol and Ananzi.

Piggs Peak Casino, Silversands Casino and African Palace, three popular
online gambling websites that cater for South Africans, spent over R10-
million on online advertising in 2005/06.

Silversands Casino spent R5-million to advertise their internet games
online, according to Rina Erasmus, a consultant for Nielson Media Research.

Piggs Peak spent R4,9-million, while African Palace spent R800 000,
according to Nielson Media Research.

The marketing director of African Palace, who wished to remain anonymous,
said African Palace had spent about R3,6-million on online advertising.

He said the online gambling industry in South Africa is growing rapidly.
"It's only set to get bigger. It will grow tenfold in the next five years
... there wouldn't be a company spending millions on advertising if it
wasn't worth it," he said.

The three internet casinos (which operate from other countries like
Swaziland, Cyprus and The Netherlands, and over which South African law has
no control) were reluctant to tell the M&G online the number of members they
had because it would give confidential information to their competitors.

Despite the amount of money they manage to spend on advertising, Piggs Peak
and Silversands insisted that the industry was small.

"Online gambling is not a huge industry in South Africa because people have
limited access to the internet and worldwide, land casinos are always more
popular," said Wendy Graaf, marketing manager for Piggs Peak (which has been
an online casino for eight years).

Although she wouldn't say how many gambling members belonged to Piggs Peak
internet casino, she said it wasn't even a fraction of a million.

Marsha du Preez, marketing manager of Silversands, also said Silversands did
not have thousands of members in South Africa. "It's more like hundreds."

Although a South African online gambler is "contravening the Act" by using
internet casinos like Piggs Peak, Silversands or African Palace, nothing is
being done to arrest online gamblers because it is impossible to arrest
gamblers in the privacy of their own homes, said Majake.

Peter Collins, executive director of the National Responsible Gambling
Programme in South Africa, said that even if "people are gambling with
offshore companies the police won't raid their houses at 3am and try to stop
them".

He also said that the new US Bill, which wiped out $7-billion from a
$12-billion industry, would not stop online gambling in America.

"Making online gambling illegal in the US will do exactly what prohibition
has done in cases of prostitution ... it would go on underground, it would
be controlled by organised crime instead of a regulated body."

It's also illegal in South Africa to advertise internet casinos "above the
line", which means on television, radio and in print. Online advertising is
legal because there are no geographical jurisdictions on the internet.

But once online gambling is legalised, so will the advertising. The manner
and form of interactive-gambling advertising will be prescribed "to protect
society against the over-stimulation of gambling", said Muthwa.

The legalisation of internet casinos may have negative consequences, said Du
Preez. "If it is legalised then any Joe Soap could open up a casino and
sometimes that's not always such a good thing," she said.

Newly licensed South African internet casinos will mean trouble for Piggs
Peak, Silversands and African Palace.

Majake said new South African online casinos will take their cue from the
brick-and-mortar casinos where there is "a culture of integrity".

Graaf said it would be costly to move operations from Swaziland to South
Africa, so whether or not online gambling is legalised in South Africa, it
makes no difference to Piggs Peak.

But while online casinos that offer games such as blackjack, poker, roulette
and online slots might only be legalised this year, online sports betting
has been legal for two years.

In fact, the situation for an online sports better in South Africa is the
exact opposite to that of an online poker player. It's illegal for South
Africans to place sports bets on overseas websites.

Hilton Hasson, website manager of Betting World (a South African-based
sports betting website), said that bookmakers pay R100-million in tax a year
to the South African government.

Hasson said that they would also benefit if interactive gambling was
legalised because other international betting websites offer poker, which
they plan to offer once it is legalised.

My day at the casino
The soft sound of a piano lingers somewhere in the background, there's the
subdued murmur of the hopeful crowds drowned out by the butterflies in my
stomach as a voice says: "No more bets please". Then it's the whirl of the
roulette wheel and all I can hear are my prayers for success. and the
printer in the office.

Once you log onto Piggs Pig internet casino, an online gambling forum based
in Swaziland, your computer screen is turned into a virtual Vegas.

The screen becomes a sea of bright colours, flashy displays, and lame
African music which makes your fingers twitch, and gives you that same
pleasurable guilty feeling as when you drive into Sun City or Monte Casino.

It takes about seven minutes to download the casino to your computer, which
is free. Once you've done that, you can either open an account -- using a
credit card, internet transfer or bank deposit -- or you can "practice play"
(with fake money).

It sounds like a casino, it virtually looks like a casino and it's just as
difficult to drag yourself away from the virtual poker table or the Triple
Magic slot machine. It doesn't make annoying Nintendo-like noises if you
lose and it makes uplifting noises when you win. You can even hear money
dropping when you win on the slot machine.

There's only one tiny but enormous difference; there's a clock.

Unlike in brick-and-mortar casinos where clocks are nowhere to be seen, on
the top right of your screen is your computer clock. But I swear the clock
ticks faster because when I started playing roulette it was 10am and after
five minutes of testing it out my boss asked me if two hours wasn't enough
time to get the information I needed.

You can also choose which gambling chips you want to use on table games,
whether it's R1 or R100.

But the very best, if not disturbing part of online gambling, is that no-one
can hear you scream, swear and curse, unless you're gambling from the
office.

Internet gambling has made it possible to distract yourself wherever you are
as long as you have an internet connection and a computer. You can be at
home, at work, at the airport, in a café or in a park and you'll still have
access to a 17-inch casino.