Roll of the dice

But a meeting attended by representatives of over 30 countries, including South Africa, on October 31, failed to reach any formal agreement on minimum international standards for online gambling, despite the urgings of Tessa Jowell, the host country`s minister for culture, media and sport.

Media reports indicate that Jowell was particularly keen to protect children and "vulnerable people" and set an international standard under which the industry would be regulated. Research commissioned ahead of the summit found there are nearly one million regular online gamblers in Britain alone and that they make up nearly one-third of Europe`s 3.3 million regular online gamblers. They bet about `3.5 billion a year - an average of 1 000 each on 2 300 sites across the world. A large number of these are based in a few key nations, with the tiny Caribbean island of Antigua hosting 537 at the last count and Costa Rica, in Central America, 474.

The Antigua Sun, whose readers were no doubt interested in the outcome of the International Government Summit on Remote Gambling, reported in its online edition that among "the issues discussed were age and identification verification systems as well as the role and responsibilities of governments that host and regulate Internet gaming operators. The summit discussed legal and ethical considerations, including those related to awareness and treatment of problem gambling and gambling addictions." The British were also keen to fight money laundering.

LOCAL MARKET UNKNOWN

No-one knows the size of the local market, either in numbers or in revenue. "We are not certain of the size of the online gaming market and as there has been no market research conducted in this country, we have no way of estimating," says Piggs Peak online casino spokeswoman Wendy Graaf.

Peter Collins, executive director of the National Responsible Gambling Programme, says only about 1% of South African gamblers gamble online because far fewer people have access to the technology. Collins, also director of the Centre for the Study of Gambling at the University of Salford in Manchester in the UK, adds that worldwide about 3% of gamblers use the Internet, one word, or interactive television.

THE NEW PROHIBITION

World Wide Worx MD Arthur Goldstuck says online gambling has taken a knock this year with a new American law that has banned Internet gambling there - or at least made it illegal for online gambling sites to accept money from US-based customers. "In one fell swoop they have whipped the world`s biggest gambling market out from under the virtual feet of the virtual casinos," Goldstuck said.

Jowell has criticised the US approach, comparing it with Prohibition, a period during the 1920s when alcohol was banned in America. The ban drove the sale of alcohol underground, created the modern Mafia and made most ordinary folk criminal for frequenting speakeasies, as the illegal bars of the time were called. Jowell said the American law could lead to the rise of unregulated gaming sites, which would be the "modern equivalent of speakeasies".

The US ban is not the first obstacle the industry has surmounted. Five years ago, Visa and MasterCard stopped accepting credit card payments for online gambling, and the industry has blossomed after an initial downward blip, Goldstuck says. "It`s a global industry estimated to be worth $12-billion, so you can be sure it is not suddenly going to go away," he adds. "However, there is little chance of taking over from traditional gambling. Gauteng casinos alone turn over around R16 billion per quarter - with Internet-style fraud almost non-existent."

Lance Michalson, senior partner at Michalsons ICT Attorneys, says in South Africa gambling is only lawful if licensed.

The National Gambling Act stipulates that no one may engage in, conduct or make available a gambling activity except a "licensed gambling activity". He adds that section 11 of the Act says nobody may engage in or make available an "interactive game" except as authorised by the Act or any other national law. "The term `interactive game` is defined as meaning `a gambling game played or available to be played through the mechanism of an electronic agent accessed over the Internet`," he says.

LATE TO PARLIAMENT

Michalson also reminds that the Department of Trade and Industry is out of time on bringing to Parliament legislation on the matter. He notes that the National Gambling Act provides that the National Gambling Board (NGB) should have established a committee to consider regulation and, if necessary, prepare a Bill on the matter and report to the NGB and the National Gambling Policy Council by 1 November 2005.

The Minister of Trade and Industry, after considering the report, "must introduce legislation in Parliament by 1 November 2006". "We have, therefore, been waiting for the introduction of legislation specifically aimed at Internet or interactive gambling but nothing has, to the best of our knowledge, happened," Michalson says.

IT`S ILLEGAL

National Gambling Board chairman Thibedi Majake says the Bill is still winding its way to Cabinet. He remains hopeful it will pass that hurdle and be tabled in Parliament later this month or in December "at the latest". He concurs with Michalson that online gambling is in the interim "prohibited".

NOT REALLY

This view is not universal, however. Piggs Peak, which advertises in South Africa and operates from Swaziland, says it is within the law. "We are licenced, taxed and operate from Swaziland and, this is where our servers are based, and therefore, where gambling takes place," spokeswoman Graaf says.

Majake says there are two views on the matter. One view, that of Piggs Peak, is that the actual gambling takes place on the server. The other is that it takes place on the computer used by the gambler. The matter is currently before the Pretoria High Court, where the judge reserved judgement on a declaratory order on the point on November 3. Majake expects the order to greatly clarify matters. Internet sports betting is already regulated and, therefore, legal.

It is an open question if regulation will lead to more casinos entering the market. Majake observes that the law provides for only 40 physical casinos. There is no limit for the online variety. He hopes that South Africa as a mature market will attract online casinos optimised for Europe. "South Africa is a premier jurisdiction," meaning it has a well developed financial system and comprehensive legislation. "I expect foreigners to gamble on sites based here," Majake adds.

He does not expect legalisation to grow the local market much as the number of gambling South Africans with access to computers and the Internet is somewhat limited.

Responsible Gambling`s Collins does not expect much growth either. "We do not expect this to increase simply as a result of legislation which will serve to regulate an activity which is presently available to anyone from sites located all round the world," Collins says. "Indeed, we support the legislation precisely because it will encourage South Africans to gamble at well-regulated sites which will be required to include various safeguards against excessive gambling. We are, however, concerned that e-gambling may pose much more of a danger in a few years time when the technology becomes more widely available and more user friendly."

Piggs Peak is more upbeat: "We anticipate that regulating the industry will grow the size of the market but we are not sure how it will impact in terms of legislation," says Graaf.

AVOIDING ABUSE

Collins says regulators must insist on including measures to prevent abuse. These should include encouraging players to set limits to their losses before they start gambling; linking the gambling site to another where the gambler can answer a series of questions to determine whether they might have a gambling addiction and providing telephone and Internet help-lines and counselling services; and supplying on-line information about how gambling works, its dangers and how to avoid them.

Majake is not too concerned about abuse. He says most sites require gamblers to register and provide financial details, so unlike "real" casinos there is a paper, or at least electronic, trail. This makes it difficult for minors and others who should not gamble to do so.

For the moment, online gambling remains in a legal limbo, both here and abroad. "Cyberspace has no boundaries. It will be wise and prudent to have some international minimum standards which are observed by mature jurisdictions [such as South Africa]," Majake says. The rub, he concedes, will be enforcing those standards. Indeed, one of the reasons South Africa has opted for regulation rather than US-style prohibition is the impossibility of placing a policeman next to each PC.