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What is the legal definition of gambling?
Generally, across all nine gambling statutes (see section 2 below for a list) âgamblingâ is determined to be an activity which involves staking or betting anything of value on an (at the time of placing the bet) unknown outcome with the expectation of receiving something of value in return. The unknown outcome is generally defined as being a âcontingencyâ or contingent event, which is generally understood as âany event or occurrence of which the outcome is uncertain or unknown to any person until it happensâ. There is of course nuance and slight variation to this from province to province â since South Africa is a quasi-federal Republic where each of its nine provinces have a level of autonomy or concurrent competency – but an understanding of the concept of staking something for value on the unknown outcome of any event goes a long way to understanding the concept of gambling as defined in South Africa.
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What legislation applies to gambling? Please provide a summary of the legal/regulatory framework.
The National Gambling Act of 2004 is the national legislation outlining the broad definitions of legal gambling types, standards and policies. The 2004 Act made minor reform to the 1996 post-apartheid legislation following the legalisation of gambling in South Africa in 1995. The major feature of this statute was to prescribe that further provisions for interactive gambling should be finalised within two years of its promulgation. To this end, a special statutory committee was to be formed to advise the Minister of Trade and Industry of draft legislation within one year.
The author formed part of this committee and the duty of that committee was discharged at the end of 2005 with the publication of a comprehensive report. In 2008, a draft amendment to the national legislation, not featuring many of the committeeâs recommendations, was promulgated. The 2008 amendment was contingent on the further promulgation of regulations. To date, there are no such regulations, and the amendment is effectively redundant, leaving no effective national legislation on the topic of online gambling other than a general one-line ban on âinteractive gamblingâ, which is inapplicable to the provincial licensing regimes surrounding bookmaker licences and online betting that to all intents and purposes facilitate online or interactive gambling with national reach across provincial borders.
This dichotomy causes major confusion at every turn, even with local banks and media partners in South Africa that are on the one hand aware of the national âbanâ but do not fully comprehend the differences in the provincial approach and the legitimacy thereof in terms of the constitutional imperative granting concurrent competency to national and provincial governments respectively. This leads to challenges in areas like marketing and payment processing. Based on this apparent contradiction the, albeit lucrative, South African gambling market is a veritable minefield to navigate for potential entrants without the proper guidance and advice.
Each of the nine provinces have their own gambling statutes that all essentially hark back to the 1995 legalisation on gambling in South Africa. Prior to 1995, betting on horse racing was the only legal form of gambling allowed â save for the casinos in the âhomelandsâ, which were deemed independent territories within South African borders and therefore not forming part of the Republic legally.
The nine provincial statutes are:
- the Eastern Cape Gambling and Betting Act, 1997 (No 5 of1997);
- the Free State Gambling and Liquor Act, 2010 (No 6 of 2010)
- the Gauteng Gambling Act, 1995 (No 4 of 1995);
- the KwaZulu-Natal Gaming and Betting Act, 2010 (No 8 of 2010);
- the Limpopo Gambling Act, 2013 (No 3 of 2013);
- the Mpumalanga Gambling Act, 1995 (No 5 of 1995);
- the Northern Cape Gambling Act, 2008 (No 3 of 2008);
- the North West Gambling Act, 2001 (No 2 of 2001); and
- the Western Cape Gambling and Racing Act, 1996 (No 4 of 1996);
Whilst some of these statutes have been âoverhauledâ as recently as 2013, in essence the content of the statutes has remained the same, in terms of core concepts, since the late 1990s.
This leaves much of the adaptation of the respective statutes and their application to the discretion of the respective regulators and their interpretation of 20â30-year-old statutes in the light of present circumstances and technological innovations.
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Which body/ies regulate gambling?
In addition to the National Gambling Commission, each of the nine provinces in South Africa has its own regulator, namely:
- the Eastern Cape Gambling and Betting Board;
- the Free State Gambling, Liquor and Tourism Authority;
- the Gauteng Gambling Board;
- the Kwazulu-Natal Gambling and Betting Board;
- the Limpopo Gambling Board;
- the Mpumalanga Economic Regulator;
- the North West Gambling Board;
- the Northern Cape Gambling and Liquor Board; and
- the Western Cape Gambling and Racing Board.
Lotteries are separately regulated by the National Lotteries Commission.
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Are licences available? If so: a) What is the duration of a licence? b) What types of licences are available? c) Are there different types of licences for B2C and B2B operators? d) Do software suppliers need to be licensed?
Generally, licences are limited and subject to the issue of an RFA by the respective regulators. Online only bookmaker licences are available on demand in very few provinces but most notably in the Western Cape, which is the predominant âonline regulatorâ currently followed by Mpumalanga â which province differs in that licences are not available on demand.
Most land-based or terrestrial licence types are restricted and subject to tender process or RFA; currently, there are no significant tenders or RFAs out.
a. What is the duration of a licence?
Generally speaking gambling licences (and particularly the popular bookmaker licence type allowing online betting in its broadest form are issued indefinitely with the requirement of an annual renewal process. In extreme cases of dereliction or impropriety, licences may be suspended or revoked but this is unusual.
b. What types of licences are available?
Currently, only bookmaker licences are available on demand â allowing online betting products
c. Are there different types of licences for B2C and B2B operators?
Yes. If one only wishes to supply or distribute gambling equipment, devices or software to operators and not directly to consumer, all of the gambling statutes provide for a form of licence known as a manufacturer licence for such purpose.
d. Do software suppliers need to be licensed?
Yes. Software suppliers need to be licensed and their product needs to comply with national standards, independent testing by authorised test laboratories and various technical compliance processes carried out by the respective regulators.
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Are any types of gambling products prohibited?
This may be best addressed by stating what products are allowed to be offered.
In the context of the land based industry, traditional casino slot machines and table games are permitted subject to technical compliance and licensing processes.
However, in the bookmaker space including the online betting environment, the core mathematics or algorithms must be based on a fixed-odds betting model. Thus, although bookmakers with an online presence may present games that appear to be indistinguishable from casino games such as slot machines, blackjack or roulette â the model underpinning such offerings is a fixed-odds betting one.
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What is the headline application procedure? Please include any eligibility and other application requirements, including approximate application costs and any need to establish a local presence.
The application requirements for all licence types comprise an application form accompanied by very detailed and in-depth disclosure documents for all business entities and/or individuals involved in the ownership of the applicant through to the ultimate beneficial owner level, notwithstanding the layers or complexity of structure involved.
Disclosure thresholds are generally 5% of ownership or more but the regulators may elect to probe shareholders holding a lesser stake â in practice, this is rare.
The same individual disclosures are required of key management personnel.
The paperwork is more or less uniform across the provinces.
Applicants are expected to disclose detailed financial and tax information and to provide a business plan demonstrating sufficient planning and financial liquidity to execute upon the business associated with the licence type.
In addition, applicants are expected to comply with the statutory Broad-Based Black Economic Empowerment (BBBEE) regime determined by the BBBEE Act, No 53 of 2003. The fundamental objective of the Act is to advance economic transformation and enhance the economic participation of black people in the South African economy.
Accordingly, black ownership is a substantial and complex part of BBBEE (BEE) with varying requirements and levels expected to be achieved by the respective provincial regulators.
Regulators require that all new applicants submit BEE plans with their applications, which should set out the applicantâs transformation and enterprise development strategies as well as its strategy for introducing black ownership.
Gaming lawyers in this arena are generally versed with the requirements of BBBEE and â working with experts in the area â are able to assist in advising thereon.
- Application Timing
Timing varies from jurisdiction to jurisdiction, as the assessment and committee processes may vary slightly but generally one may expect to wait anywhere from 4â12 months for an outcome of an application.
For most licence types, one will be expected to advertise the licence application in both the Provincial Gazette concerned as well as local newspapers, allowing 21â30 days (depending on jurisdiction) for potential objections to be lodged.
- Application Fees
Fees vary depending on licence type and jurisdiction, and potential applicants would be best advised to obtain the current fee schedules of the regulators concerned. In planning oneâs fees, one should look beyond the fees payable to the regulator to those of the attorneys and consultants that an applicant will generally need to engage in applying for and maintaining a gambling licence.
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Do individuals within the business need to be personally licensed or authorised? If so, please provide headline requirements.
Individual licensing revolves around and is bound to entity licensing. Generally shareholders of any gaming licence applicants must complete substantial personal history disclosure documentation where they own, directly or indirectly, any shares in excess of 5%.
Furthermore, for non-shareholders that wish to be appointed or recognised as âkey employeesâ (decision makers) similar applications are required.
In general, personal licence applicants must be of adequate financial standing, of modest debt, free of a criminal past and having their tax affairs in order.
The applications associated with gambling licences usually run within the same timelines as those licences take to be granted. Key employee applications might take anywhere from 1 â 4 months to be processed and a dispensation exists for temporary key employee licences.
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Is advertising of gambling permitted and, if permitted, how is it regulated?
All advertising in South Africa is subject to the standards stipulated by the Advertising Standards Authority (ASA), a governmental agency.
In addition, certain regulators such as the Western Cape one stipulate requirements that no advertising may be published by their licensees unless prior approval has been obtained.
All advertising must be accompanied by prescribed responsible gambling warnings, in a fixed proportion to the advertising medium concerned.
The focus on restricting gambling advertising surrounds the prevention of under-age gambling and the over-stimulation of gambling.
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Are marketing affiliates permitted? If so, are they licensed or regulated?
Broadly speaking yes but with certain approval processes in terms of the contract between the affiliates and the licensed operator concerned.
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What are the penalties for offering, facilitating or marketing unlawful gambling, and can the gambler be penalised for participating in unlawful gambling?
All of the gambling statutes stipulate potential criminal conviction and sanction for breaches of their provisions, where via the criminal justice system offenders might receive substantial fines of up to ZAR10 million and face custodial sentences of incarceration of up to ten years.
Where regulators generally lack teeth is that their enforcement is usually dependent on the co-operation of the over-stretched South African Police Service together with the National Prosecuting Authority. Gambling regulators are often frustrated in obtaining this co-operation from the police and prosecuting authorities, both in minor instances and in more complex cross-border infringements that might require international co-operation and liaison such as in cases of illegal online gambling.
Via exchange control and banking legislation there are provisions aimed at consumers using their banking instruments, such as credit cards, to bet online and offshore illegally; unfortunately, some of the more successful enforcement has occurred via these channels and has been directed at (often unwitting and ignorant) individuals versus the illegal operators themselves.
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Briefly detail key requirements for licensees.
See sections 6 & 7 above.
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Briefly detail key anti-money laundering requirements.
AML is the subject of a separate national statute being the Financial Intelligence Centre Act, No 38 of 2001 (FICA).
The structure and provisions of FICA are in line with the international Financial Action Task Force (FATF) guidelines, and a strict degree of compliance is expected of gambling licensees in line with a schedule specifically applicable to gambling institutions.
The relevant regulator via which an operator holds its licence is expected to act as the âsupervisory bodyâ in ensuring compliance with FICA by operators.
Enforcement and fines for non-compliance are strictly and actively applied.
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Briefly detail key responsible gambling (or safer gambling) requirements.
RG is an area provided for as a matter of national policy in the National Gambling Act and carried through in the provincial statutes. There is not a great deal of detail or stipulation in terms of measures to be applied and reference is made to the South African Responsible Gambling Foundation, a quasi-governmental body tasked with providing guidelines to operators and assistance to problem gamblers. In general, the guidelines have been fairly broad and static for over 20 years and operators are expected to formulate and maintain their own policies and standards for detecting and dealing with problem gamblers, which has been aided by technology in recent years.
The National Gambling Board is tasked statutorily with maintaining a self-exclusion register for problem gamblers, however, many complain of the accessibility, currency and/or functionality of such register.
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Briefly detail shareholder reporting and approval threshold(s).
Disclosure thresholds are generally 5% of ownership or more but the regulators may elect to probe shareholders holding a lesser stake â in practice, this is rare.
The same individual disclosures are required of key management personnel.
The paperwork is more or less uniform across the provinces.
Applicants are expected to disclose detailed financial and tax information and to provide a business plan demonstrating sufficient planning and financial liquidity to execute upon the business associated with the licence type.
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Briefly detail the regulatorâs enforcement powers, including sanctions.
See Section 10 above.
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What is the tax rate?
The land-based industry is taxed according to licence on a table that may be obtained from the relevant regulator, and it does vary from regulator to regulator. Generally, casinos are the highest taxed with an average of 10%â15% on gross gaming revenue.
The tax rate in the online betting industry is generally between 6% and 7% of winning bets or net gaming revenue.
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Are there any proposals for changing gambling laws and regulations in the next 12-24 months? If so, please provide an overview of the proposed changes and likely timing.
In 2015, a private memberâs bill was introduced in parliament by the Shadow Minister of Trade and Industry, in the formal opposition party, to bring all interactive gambling to a central national regulator with a refreshed and more appropriate approach and legal framework. The bill never progressed.
In 2022, a senior member of the opposition, Dean Macpherson, reintroduced the same bill with minor but significant changes primarily to deal with interactive gambling on a national level, with delegated responsibilities to the provinces and with a refreshed and more appropriate technological approach and legal framework. Mr Macpherson was elevated to become the national Minister of Public Works and Enterprise under the new government of national unity in mid-2024 and it is unclear which of his colleagues, if any, have continued to champion his bill since Minister Macphersonâs shift to executive government in a non-related portfolio. Little had happened with the bill prior to Mr Macphersonâs elevation.
In the circumstances, the outlook for any change in legislation in the next year, or even longer, remains pessimistic, especially since in the universal tradition of South African legislation format, substantial secondary legislation â in the form of regulations â would be required to be formulated and promulgated to give the proverbial bones of the new act, its meat.
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What key regulatory developments are proposed or on the horizon in the next 12-24 months?
Nothing on the horizon other than the bill discussed in section 17.
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Do you foresee any imminent risks to the growth of the gambling market in your jurisdiction?
1. The threat of illegal offshore online casinos and betting sites exploiting South African citizens grows exponentially year-on-year, with some even offering what appear to be âSouth Africanâ brands or iconography and the response from the authorities remains somewhat weak and ineffectual with a possible lack of cooperation and resources from the national law enforcement authorities.
A recent concern of the licensed industry surrounds sponsorships of sports teams on the local scene by gambling brands that are not licensed within South Africa.
It is anticipated that demand and pressure will continue to mount from the regulated industry, that pays very substantial taxes to the provincial regulators for licensed gaming activity, precipitating and increased focus and effective policy formulation to address this very real threat â both to the licensed industry and punters.
2. The Western Cape regulator, the Western Cape Gambling and Racing Board, has been struggling with delays in the technical compliance process surrounding approval of online content, and whilst a long awaited and much welcomed increase in its staff complement has brought some respite, the technical compliance process may still prove frustratingly long for some in getting new content to market.
In addition, there have been reports of increasing frustrations in terms of technical compliance approvals and processes in the other major âonline regulatorâ, the Mpumalanga Economic Regulator.
This remains partly a product of the outdated and somewhat archaic and inadequate national certification standards applicable to gambling technologies, the SANS1718 suite of standards. It is ever more apparent that reform and a revamp of the overarching national technical standards is dramatically required in order to evolve the approach to new games and content to an international standard.
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If a gambling start-up was looking for a jurisdiction in which to commence its activities, why would it choose yours?
Despite outdated laws and the regulators heaving under the level of new content and interest in the market, the growth of the South African market has been stellar and although no official figures exist, is worth well over a billion US dollars.
Astonishingly, the growth appears unabated and this in and of itself should be very attractive to prospective entrants.
South Africa: Gambling Law
This country-specific Q&A provides an overview of Gambling laws and regulations applicable in South Africa.
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What is the legal definition of gambling?
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What legislation applies to gambling? Please provide a summary of the legal/regulatory framework.
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Which body/ies regulate gambling?
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Are licences available? If so: a) What is the duration of a licence? b) What types of licences are available? c) Are there different types of licences for B2C and B2B operators? d) Do software suppliers need to be licensed?
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Are any types of gambling products prohibited?
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What is the headline application procedure? Please include any eligibility and other application requirements, including approximate application costs and any need to establish a local presence.
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Do individuals within the business need to be personally licensed or authorised? If so, please provide headline requirements.
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Is advertising of gambling permitted and, if permitted, how is it regulated?
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Are marketing affiliates permitted? If so, are they licensed or regulated?
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What are the penalties for offering, facilitating or marketing unlawful gambling, and can the gambler be penalised for participating in unlawful gambling?
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Briefly detail key requirements for licensees.
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Briefly detail key anti-money laundering requirements.
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Briefly detail key responsible gambling (or safer gambling) requirements.
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Briefly detail shareholder reporting and approval threshold(s).
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Briefly detail the regulatorâs enforcement powers, including sanctions.
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What is the tax rate?
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Are there any proposals for changing gambling laws and regulations in the next 12-24 months? If so, please provide an overview of the proposed changes and likely timing.
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What key regulatory developments are proposed or on the horizon in the next 12-24 months?
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Do you foresee any imminent risks to the growth of the gambling market in your jurisdiction?
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If a gambling start-up was looking for a jurisdiction in which to commence its activities, why would it choose yours?