Having released the gambling genie from the bottle soon after the end of apartheid rule, the government is now desperately trying to put it back. A new set of proposals could deal a severe financial blow to the industry. Tom Nevin reports.
If a new bill becomes law, it promises that gambling will receive the same treatment as smoking - another horrible habit the government has sworn to stub out. This won't be without a lot of financial pain to the South African exchequer. The tax man helps himself liberally to the gaming industry's income, estimated in 2001 at nearly R7bn a year.
The National Gambling Bill, tabled recently in the South African Parliament, totally rewrites the 1996 Gambling Act and seeks to redress black economic empowerment deals that were used to justify gambling legislation.
Sending shivers through the industry are foretastes of laws to come, announced in a plan drafted by the Department of Trade and Industry (DTI). Among other things, under the proposed regulations, casinos would have to close for at least six hours a day instead of being open around the clock, would not be allowed to operate within a certain distance from schools, would be banned from promoting gambling through advertising, and would be obliged to display signs warning of the dangers of compulsive gambling.
Other provisions prohibit the use of credit to pay for gambling and bans automatic teller machines (ATMs) in gaming establishments.
Gambling debts in some cases would be unenforceable.
In addition, said the department, a major review of all black economic empowerment deals used to justify gambling legislation is under way.
Poor gamble the most
The department's reasons for the stringent new laws: Gambling in South Africa is getting out of control.
DTI's rethink came after a survey earlier this year by the South African National Gambling Board that showed that 22% of gamblers are unemployed and that 21% earn less than R6,000 a year.
The figures have shocked institutions and departments, especially bearing in mind that 45% to 55% of South Africans live in poverty and 36% are unemployed.
"It's the old story," says Michael O'Conner, chairman of the Gauteng Bookmakers' Association. "When times are tough, liquor sales and gambling increases."
Social Development Minister, Zola Skweyiya says money that should be used for food was being spent on gambling. Seven out of every 10 South Africans play the lottery and two in 10 visit casinos. All of this ranks South Africa number 14 in the world in gross gambling turnover.
The Gambling Board reports: "South Africa is rated exceptionally high in world gambling terms. In the majority of cases, only the wealthier countries in North America, the European Union and the Far East received a ranking higher than South Africa in gambling terms".
The Board also points out that the propensity of South Africans to gamble is almost three times that of US citizens, while the per capita income of the US is nearly 11 times higher than that of South Africa.
Confirming that South Africans are on a gambling binge, spokespersons for the Cape Town and Durban branch of Gamblers' Anonymous say gambling addiction is on the rise. "Three years ago we had two new members joining a week. Now the number has escalated to around 10," they say.
Professor Adam Habib, Director at the University of Natal's Centre for Civil Society, says that while casino owners might be celebrating the huge casino revenues, the gambling industry is harmful to society. "Government must bear the brunt because in order to fast track its black empowerment efforts, it facilitated the opening up of the gambling industry in urban areas at the cost of the poor and the destitute," he maintains.
Fighting back, the gambling industry says casinos have a positive effect on the economy. For example, it says, 50,000 direct jobs were created in the gambling sector in 2000, and billions of rands were earned for the country. And anyway, they say, it's too early to become alarmed because the Bill is in proposal form and is yet to be engaged by the public.
"There's still a long way to go and many and many forums at which to debate the issues," says Hendrick Brand, head of the South Africa Casino Association. "We look forward to engagement on some of these issues," he says. "We are by no means looking at a final product."
Gambling no worse than elsewhere
Brand will find support from such institutions as the National Responsible Gambling Programme (NRGP) that claims to be able to prove that gambling in South Africa is no more severe than in other countries. The programme found, in a national research project on gambling trends and behaviour, that betting had increased only slightly in the past two years, primarily on the lottery and with scratch cards. The 12-month study, conducted by the University of Cape Town on behalf of the NRGP, examined the gambling habits of nearly 6,000 urban dwellers with easy access to casinos.
"Our study reveals that 270 out of 5,816 respondents (4.6%) gamble too much and can be categorised as problem gamblers," reports Peter Collins, director of the NRGP. "The research also suggests that 0.7% of this sample have an addiction to gambling which is similar to alcoholism and drug addiction. This is in line with international trends."
So, according to the NRGP, South Africans are not the feverish punters they are being portrayed. But if the NRGP's numbers are correct, then even 4.7% of South Africa's gambling population is too much for the government, and they're intent on cracking down hard on what they perceive is the beginning of a social disaster.
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Let the poor also dream
Although not a target of the bill, South Africa's three-year-old national lottery is also under the spotlight, and its officials hurried to defend it against its many critics who maintain it takes advantage of poor people. According to Humphrey Khoza, CEO of the lottery company Uthingo, "you can't buy a loaf of bread for R2.50, but you can buy a chance to become a millionaire".
Khosa maintains it would be wrong to deny poor people participation in the lottery. "I believe poor people still dream about improving their lives. Everybody is entitled to a dream," he insists, adding that of the 320 instant millionaires the lottery has created, 71% are from disadvantaged backgrounds. "It's the democratic right of people to decide whether to buy half a bottle of beer or spend the same money on a chance of becoming a millionaire," he says, even at odds of nearly 14m to one.
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Gambling becoming a people's fever
Prior to 1994, under the all-white National Party government, gambling in South Africa was treated with extreme caution. Horse racing was the only permitted urban form of betting, while casinos were situated a long trek from towns and cities in the so-called 'homelands', giving birth to the now famous Sun City and Wild Coast casino and entertainment complexes in Bophuthatswana and Transkei; or over-border in neighbouring Lesotho and Swaziland.
Casino and other forms of gambling were legalised in 1996, under the new democratic government.
Although carefully regulated and rationed by province, conventional thinking believes that by siting casinos in cities and bringing gambling to virtually every South African over the age of 18, an epidemic of betting has become a crisis and that the government is obliged to step in.
© African Business 2003
