South Africa Makes Tough Decisions on Internet Gambling

South Africa’s Department of Trade and Industry has caused quite a stir in the country by publishing its new policy paper, entitled National Gambling Policy 2016, where it proposes ways to prevent illegal online gambling. According to the proposal, all forms of online gambling, except for regulated sports betting, will be illegal. The DTI stresses this point by saying that “no new forms of gambling will be allowed at this point”, also dampening any hopes of seeing an expansion of internet gambling in South Africa in the near future.

In laws similar to the US’s draconian The Unlawful Internet Gambling Enforcement Act, the proposed South African law will penalize banks for processing online gambling transactions and Internet Service Providers for allowing players to access unlicensed online gambling sites.

Reading through the National Gambling Policy 2016, it is not all doomsayer text. The message coming out of the proposal, if one reads between the lines, is that the DTI needs to make sure that it has enough manpower to police a regulated online gambling industry, and it wants to create the right type of infrastructure before it can consider any further progress.

Read more about South African gambling law

What can ISP’s expect if the new paper is adopted? For one, the DTI will have the power to heap fines on service providers who allow players to access what they term “illegal” sites. A similar fine framework could be put in place to deter banks and other financial institutions to serve as channels for players’ money to these sites. Nor will they be allowed to credit winnings from these gambling sites to credit cards or bank accounts. The government intends to use the money from these fines to set up a trust which will service problem gambling programs in South Africa. More worrying is the fact that the DTI will have the power to confiscate winnings. Until now the government required a High Court order to do so.

A new tribunal will be set up to educate ISPs and banks regarding their role in the new legal framework, and it will also serve to provide support to the police and courts who are currently laden with other security issues.

It remains to be seen what online gambling operators will do about the proposal, should it be adopted. Some will probably pull from the market, as it won’t be considered a “grey area” any more, although, as in the case of the United States, players and operators will continue to find ways to play and serve.