THE SOUTH AFRICAN GAMBLING INDUSTRY OVERVIEW

In 2008 the National Gambling Board (NGB) reported that for the 2007/2008 financial year, tax contribution increased from R1.293 billion (US$ 172m) to R1.520 billion (US$ 202m)

South African Gaming Machine Market

  • The South African Government can issue a maximum of 40 casino licences
  • In May 2009, according to the Casino Association of South Africa, there were 19,900 Class II and Class III gambling machines in casinos
  • Other authorised gaming activities include limited payout machines (LPMs), amusement machines, lottery, bingo, racetracks and sport betting

Legislative Overview

  • Prior to 1994 the only legal form of gambling was horse racing.
  • The National Gambling Act (1996) allowed for the introduction of machines in Casinos and LPM sites
  • Terms of Section 27 of the National Gambling Act of 2004 requires:
    1. Tthe board must establish a maintain a national central electronic monitoring system capable of
      1. detecting and monitoring significant events associated with any limited payout machine that is available for play in the republic and
      2. analysing and reporting that data in accordance to the prescribed requirements
  • The National Gambling Board may contract with a 3rd party to supply products and services required to fulfil its central monitoring obligations

Limited Payout Machines (LPMs)

  • LPMs must be monitored by a single national Central Electronic Monitoring System (CEMS)
  • Legislation allows for up to 50 000 LPMs
  • LPMs are operated across 9 provinces
  • 16 Operators operating in over 1,200 sites
  • Route Gaming Solutions is the exclusive supplier of technology associated with monitoring LPMs
  • Gaming Tax differs between provinces (states) in South Africa and ranges from 6 % - 15% of profit

Taxation

  • The South African casino industry is subject to a complex tax regime. Any casino win is subject to 14% VAT. Each province then levies VAT on the winnings, which varies from province to province (average is 6%)
  • The provinces also collect annual licence fees and tax corporate profits

Central Electronic Monitoring System

  • The CEMS monitors machine proceeds for taxation and detects significant events such as big payouts. Other potential uses include detecting patterns of problem gambling. The CEMS can also remotely verify technical and operational compliance of gambling machines
  • Since it has been in operation since 2003, it has had a down time of less than 1 % and its implementation is seen as a success by operators and regulators.
  • Operating in highly distributed environment
  • Highly secure, through data segmentation, and encryption
  • Caters for a number of communication mechanisms

Monitoring Practices

  • Regulators are able to disable/enable machines
  • All data is sourced directly from the gaming machine
  • The data is owned by the regulator(s)
  • The operators have concurrent , direct and unhindered access to the data
  • Uniform technical parameters for all machines
  • Ensure that unnecessary costs are avoided and that economies of scale are obtained wherever possible
  • Player protection
  • Responsible Gambling