Remote or online gambling in SA is finally set to be legalised. For those that aren’t aware, The Remote Gaming Bill; championed by shadow trade minister Geordin Hill-Lewis, is likely to reach and be passed by Parliament in the coming months. Until now, South Africans had only been able to gamble in brick and mortar establishments, or use online sportsbooks. Under the terms of the 2004 National Gambling Act all “interactive” online games like Poker, bingo and casino were completely outlawed. As a result, the local industry struggled to grow, and foreign online gambling jurisdictions boomed.
While a few establishments do offer online gambling to South Africans they exist in a precarious position. South African customers face the constant worry that the sites may be shut down, with their funds, and some banks will not process deposits to those sites. However estimates suggest that tens of thousands of South Africans have active gambling accounts; with the RTG (RealTime Gaming) network attracting the bulk of them .
South Africa’s current gambling market is by no means a poor one; according to PwC the sector generated almost R2 billion of taxes on R16.5 billion of revenues last year. However, the current law allows for only 40 casinos to be licensed within South Africa; and 37 are already operational. The market showed just 0.6% growth last year, which is perhaps why industry lobbyists and legislators are looking to new ways to raise tax revenue from gambling. Creating future growth, the report suggests, is dependent on operators investing in current properties and expanding their facilities.
Under the Remote Gaming Bill, the responsibility for licensing new online casinos will be split between states and the National Gaming Board. Currently bookmaking licences are administered on a provincial level, with state governments handling applications for online licences. Under the new system, the NGB will take a bigger role, with provinces inputting “advice”. Hopefully this will lead to the development of a strong, centralised regulator; which can effectively perform its duties to protect players and prevent crime.
Land based casinos are now being presented with a lucrative opportunity to expand their brand online. Take the example of the UK’s gaming market; where the biggest online operators (William Hill, Paddy Power and Coral) all had thriving chains of high street bookmakers before opening online sites. Although high street operators are at no particular price advantage (software and games tend to be licenced from large development firms); but the trust factor and existing customer base can prove a real competitive advantage in a developing market.
Given that the remote gaming market is incredibly globalised, South African casinos might well seek to profit from building up a customer base overseas. Some countries are experimenting with a Point of Consumption (PoC) tax on gambling products, meaning operators pay tax on revenue in the jurisdiction it comes from. However, most countries tax sites in the jurisdiction they are based, and South Africa’s low gambling taxes might allow home operators to offer more competitive odds.
We may soon witness the birth of a new, huge and fiercely competitive online gaming market in South Africa. Much remains to be discovered as to how the government will licence, tax and oversee online casinos; but with some careful design the new industry should prove a boon to both operators and their customers.
This article was originally published here.