Significant potential for mobile gambling in South Africa


Despite confusing regulatory developments, market estimated at R800 million (GBP 70 million)

The publication ITWeb reports that mobile gambling has significant potential in South Africa despite the still evolving legal regime applying to online gambling.

Cellphones are widely used and mobile technology is well advanced in the country, where it is estimated that there are up to 500 000 online gamblers.

Peter Collins, executive director of the National Responsible Gambling Programme in SA, says the industry is thought to be worth at least R800 million (around GBP 70 million) a year. And he says the sector will grow as an increasing number of cellphones support gambling applications.

The government has been wrestling with online gambling regulation and licensing for years despite extensive research initiatives, political debates and visits to successful overseas licensing jurisdictions. This has resulted in blurred legality lines until definitive laws are passed, hopefully later this year.

In the meantime, and because the legality question is so open to interpretation, foreign companies justify offering their services on the grounds that their servers are not in South Africa and therefore not subject to its laws or advertising restrictions.

A case testing this argument has been ongoing since 2006 and is currently on appeal before the Supreme Court, but the liklihood appears to be that the issue will be resolved by legislators before the judiciary makes a finding.

Until then the government's official position is that online gambling is illegal, although it is not vigorously policed. “It is not something that anyone is going to waste police time on,” Collins told ITWeb.

Arthur Goldstuck, md of World Wide Worx, anticipates five million more people will come online in the next five years in South Africa, and two million of these will use the Internet through cellphones. Research by his company has shown there are currently five million Internet users in SA.

Goldstuck told ITWeb that new users will initially be inexperienced, and not the target market of online casinos. However, “the following five years is when it gets scary” and there will be a need for "checks and balances" to be in place to regulate the sector.

Putting these measures in place is one of the issues facing the Department of Trade and Industry. Nomfundo Maseti, chief director of policy and legislation at the department, is aware that there is a need for precautions against underage and problem gambling, the involvement of organised crime and money laundering, and arrangements are in hand to address all of these problem areas.

If the national government decides to license and regulate online gaming in the country, as is expected, the National Gambling Board will only issue 10 licences. Gambling operators will be required to prove they have a physical presence in SA and their financial transactions will have to be located within South African borders.

Victor Chandler and Ladbrokes have both announced an interest in establishing a presence in the market.

ITWeb reports that according to National Gambling Board numbers, about 7 percent of all gambling revenue globally is spent on the Internet. In South Africa, the overall gaming industry is worth about R16 billion (about GBP 1,43 billion) in revenue.

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