Is online casino legal in South Africa? – Business Insider Africa

Understanding the Legal Landscape

The National Gambling Act of 2004 is the primary piece of legislation governing gambling in South Africa. Under this Act, online gambling is technically illegal. However, the Act does not explicitly mention online casinos, leading to confusion and debate on the subject.

In 2008, the government attempted to clarify the situation by introducing the National Gambling Amendment Act, which aimed to legalize online gambling. However, due to a lack of support and significant opposition, this amendment has yet to be fully enacted.

Casino games branded as numbers-style draw games

In South Africa, online casino gaming is not explicitly legal, leading operators to creatively adapt traditional casino games to fit within the existing sports betting regulations. Instead of featuring a 'spin-button' typically found in slot games, operators brand these games as numbers-style draw games.

This approach allows them to present the games as regulated international betting events, often licensed by the Great Britain Gambling Commission. As a result, South African online gaming platforms offer a range of casino games, including live casino, RNG table games, and slots, all rebranded and modified to meet regulatory requirements.

This unique adaptation has led to an online gaming market that closely resembles international gaming sites, despite the ongoing complexities and ambiguities surrounding the legal status of online casinos in the country.

The Phumelela Case

In 2020, a groundbreaking court case brought the issue of online gambling legality back into the spotlight. The Phumelela Gaming and Leisure Limited company filed a lawsuit against the Gauteng Gambling Board, arguing that online gambling should be regulated and taxed. Although the case was dismissed, it highlighted the need for clarity in the country's gambling laws.

Games and Software Must Still Be Tested!

Even though online casino gaming operates in a unique regulatory environment, operators face additional challenges when trying to get their modified games approved. Despite being regulated as bookmakers, South African online platforms essentially function as full-blown online casinos.

To launch new games or products, operators must undergo a thorough testing and approval process. This involves submitting their games and software to testing labs such as BMM and GLI, which in turn send reports to the gambling board.

The board may ask further questions before granting approval, a process that can take six months to a year. This extensive certification process applies not only to modified casino games but also to sports betting.

Complicating matters further, South Africa has a National Gaming Board overseeing gambling across the country, but each of its seven provinces also has its own regulator with significant autonomy. However, once a game is licensed in a province, it can be offered nationwide, despite the potential for confusion due to differing provincial regulations.

One regulator to rule them all

Operators seeking to introduce new gambling verticals in the country, such as slots, need to find just one regulator willing to permit these games under existing legislation.

The Western Cape province has been more progressive in its approach to online gambling, with the Western Cape Gambling and Racing Board (WCGRB) being more open to the idea of licensing and regulating online casinos.

However, other provinces have yet to follow suit, and the national government's stance remains unclear.

This board's ad hoc issuance of licenses, as opposed to other provinces' RFPs, makes them popular among online operators. Regulators are also incentivized by the license fee income generated. The current system, which may not have been the original intent of the legislators when online betting was first legalized in South Africa, has evolved into a working solution despite the outdated legislative structure. This is largely due to regulators being more progressive with the types of products allowed.

A complete overhaul is needed

The current gambling legislation in South Africa appears to be outdated and unclear, leading to confusion and creative workarounds by operators. There is a need for a more comprehensive and up-to-date legal framework that addresses the complexities of the online gambling landscape, ensuring player protection, fair competition, and effective regulation.

Updating the legislation could also provide additional economic benefits, such as increased tax revenue and job creation in the industry.

Outdated And Inadequate

The current gambling legislation in South Africa is considered outdated and inadequate, with no significant reforms since the early 2000s. Local regulators have attempted to adapt to modern gambling trends by allowing certain types of products that aren't explicitly listed in the regulation. This approach has helped licensed operators compete against illegal and grey market operations, but the legislation still needs a full reform.

In September 2022, the opposition party Democratic Alliance proposed a bill in the country's parliament to establish a national regulatory framework for online gambling, aiming to protect the public and counteract the erosion of the rule of law. Under the new rules, provincial authorities would still issue licenses but within a clearer national framework.

The rise of online casino gaming has made it difficult for politicians to ignore the need for updated legislation. However, the proposed bill, being from the opposition, faces challenges in gaining support from the government, especially with an election year approaching in 2024. The current outlook suggests that meaningful progress on the bill may not happen within the next three to five years but could gain momentum thereafter.

The Potential Benefits of Legalizing Online Casinos:

Economic Growth: Legalizing and regulating online casinos could lead to significant economic growth through increased tax revenues and job creation in the sector.

Player Protection: Regulation would ensure that players are protected from unscrupulous operators and provide a safer environment for responsible gambling.

Curbing Illegal Gambling: Legalization would reduce the demand for unregulated offshore online casinos, which currently attract South African players.

The Challenges of Legalizing Online Casinos:

Public Concerns: Legalizing online casinos could potentially lead to an increase in problem gambling, causing public concern.

Regulation: The establishment of a regulatory framework for online gambling would require time and resources, with the potential for further legal challenges.

International Pressure: International organizations such as the World Trade Organization (WTO) may pressure South Africa to maintain its current stance on online gambling.

To summarize and conclude

In conclusion, South Africa's online gambling industry operates in a complex and outdated legislative environment, with operators creatively adapting traditional casino games to fit within existing sports betting regulations. While local regulators have made efforts to adapt to modern gambling trends, the current legislation remains inadequate and long overdue for reform.

There is a growing need for a more comprehensive and up-to-date legal framework that addresses the complexities of the online gambling landscape, ensuring player protection, fair competition, and effective regulation. Updating the legislation could also provide additional economic benefits, such as increased tax revenue and job creation in the industry.

Recent attempts to introduce a national regulatory structure for online gambling have been made by the opposition party, Democratic Alliance. However, the bill faces challenges in gaining support from the government, particularly with the upcoming 2024 election year.

While meaningful progress on the bill may not happen within the next three to five years, there is potential for momentum to build thereafter, as the need for updated gambling legislation in South Africa becomes increasingly difficult to ignore.

Follow this link:

Is online casino legal in South Africa? - Business Insider Africa