South Africa to Crack Down on Illegal Online Gambling

South Africa´s National Gambling Policy aims to penalise ISPs and banks along with players who engage in online poker and other forms of illegal gambling.

If you want to gamble online in South Africa, you had better stick to licensed operators providing a sports betting service and steer clear of every other online gambling vertical. That´s the message in the Department of Trade and Industry´s (DTI) new “National Gambling Policy 2016” – a policy paper proposing draconian measures to prevent illegal online gambling.

With the exception of regulated sports betting, all online gambling activity in South Africa is illegal. The DTI plan to keep it that way – announcing in the policy proposals that “no new forms of gambling will be allowed at this point”. The proposals also aim to penalise ISPs and banks for allowing players to access unregulated online gambling sites and for processing online gambling transactions.

No New Forms of Gambling

The National Gambling Policy is actually quite an interesting read. It provides a recent history of gambling legislation in South Africa, and highlights some of the problems associated with gambling and the regulation of gambling. While stating the DTI believes it is important to protect the regulated industry, the policy document also acknowledges that the resources do not exist to police it properly.

Therefore, before considering the expansion of gambling, the DTI wants to have the infrastructure in place to monitor gambling activity, create a National Gambling Regulator and provide measures to help those who have a gambling problem. Rather than eliminating all hope for a future liberalisation of the online gambling market, the DTI is saying, “We just want to get it right”.

Fines to be Imposed on ISPs and Banks

The new measures plan to prevent access to unregulated online gambling sites by giving the new National Gambling Regulator the power to fine Internet Service Providers for allowing players to access the sites. Banks and other financial institutions will also be fined for allowing deposits to any unregulated site, or for crediting winnings to a player´s bank account or credit card.

The fines, as well as the confiscated winnings, will automatically be paid into an “Unlawful Winnings Trust” – the proceeds from the Trust being used to support the work of the National Responsible Gaming program to help those suffering from a gambling problem. The current requirement of a High Court order to confiscate players´ winnings will also be removed.

Independent Tribunal to Enforce New Measures

Due to the lack of resources to police the regulated gambling industry, the DTI is proposing the establishment of an independent tribunal to prioritise enforcement of illegal gambling penalties. The tribunal would resolve the issue of burdening the police and courts with “illegal gambling offences” and be paid for by fines on illegal operators and levies on domestic regulated operators.

The tribunal and National Gambling Regulator would work together to advise ISPs and banks of sites that are providing illegal online gambling. The failure of the ISPs and banks to act on the information provided to them would make them “criminally liable” for their customers´ gambling activities. If enforced, this will have a massive impact for online poker players in South Africa.

South Africa – No Longer a Grey Market

If the National Gambling Policy 2016 is adopted by the legislature (and there is little reason to think that it won´t be), it will mark the end of online poker in South Africa. Currently most major online poker sites provide a service to online poker players in South Africa, but it is hard to see how many of them will be able to continue meeting the needs of online gamblers if they wish to maintain their operating licenses in other regulated jurisdictions.

Several sites have already pulled out from grey markets in other African countries. In 2014, PokerStars and Full Tilt Poker removed their real money poker product from an extensive list of countries that included Egypt, Kenya, Mozambique, Nigeria, Rwanda, Senegal, Sudan, Tanzania and Zimbabwe – even play money games were withdrawn from some jurisdictions. It remains to be seen how the world´s leading online poker site reacts to this latest development.