South Africa to Seize Winnings from Illegal Online Poker

South AfricaThe South African government has released further plans to prevent illegal online gambling that include measures to confiscate winnings from online poker.

Back in April, the South African Department of Trade & Industry (DTI) released plans to crack down on illegal gambling. These included imposing fines on Internet Service Providers (ISPs) that allowed gamblers to access unregulated gambling websites, and penalising banks and other financial institutions that processed prohibited gambling-related transactions.

The plans also included a proposal that winnings from unregulated gambling sites would be confiscated and used to fund an Unlawful Winnings Trust for supporting a national responsible gambling program. The obstacle to the plan was that the National Gambling Regulator would have to apply to the High Court for an order to confiscate players´ winnings on each occasion.

Government Plans to Remove Confiscation Obstacle

Now the government is planning to remove the obstacle to confiscating players´ winnings with an amendment to the National Gambling Act 2004. The amendment removes the necessity for the gambling regulator to apply for a High Court order and instead stipulates that all winnings from illegal gambling sites will automatically be forfeited to the state.

In order to recover their winnings, players will have to prove to the regulator that they were not engaged in illegal gambling, are not below the legal age to gamble and not on an excluded persons list. Announcing the proposal, the DTI Minister Rob Davies told reporters:

If you go online, we may not be able to stop you when you play the game, but when you win, we get you.

The amendments are open for public comment until November 15. Once the consultation period has expired, the amendment will be debated at government level. If passed, the automatic confiscation of players´ winning would likely be enforced from the beginning of next year subject to the approval of South African President, Jacob Zuma.

How the Amendment will be Enforced

In the past, many measures to curb illegal online gambling in South Africa have failed due to a lack of resources. In order to ensure that players “illegal” winnings are confiscated, the National Gambling Regulator will compile a list of online gambling websites illegally serving residents of South Africa and circulate the list among the country´s financial institutions.

Banks and financial institutions will be compelled to block payments to their customers from any operator featured on the list and send the confiscated funds to the regulator´s office. Any financial institution that fails to comply with the procedures in place to prevent illegal online gambling will be considered “criminally liable” for their customers´ illegal gambling activities.

The implementation of the system will make it very difficult for online gamblers to play at unregulated sites. At present, the only forms of legal online gambling in South Africa are state-licensed sports betting sites and some online bingo operators – everything else is illegal, including online poker. Whether or not this measure forces the withdrawal of companies operating illegally in South Africa remains to be seen.

Why Doesn´t South Africa Regulate All Forms of Online Gambling?

In a word – politics. The DTI has the power to license online gambling sites under the 2008 National Gambling Act but refuses to do so for fear of an explosion of gambling addiction. There is an acknowledged gambling problem in South Africa, but advocates for regulation (including the National Assembly´s Trade and Industry Oversight Committee) say that the tax revenues by regulated gambling could be used to help individuals combat their addictions.

Nationwide regulation might also be interpreted as stripping away the autonomy of South African provinces. South Africa has nine provinces that operate in a similar way to the individual states of the USA. Critics of the current proposals have questioned why the DTI can introduce powers to confiscate players´ winnings from illegal gambling, but not implement measures to regulate online gambling. The DTI has not yet answered the question.