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INTERNET GAMBLING. State must raise or fold
[September 22, 2006]

INTERNET GAMBLING. State must raise or fold

(Financial Mail Via Thomson Dialog NewsEdge) INTERNET GAMBLING State must raise or fold Internet gambling may soon be legal. It might be few years late but has probably been worth the wait to get it right.

The process is very advanced, says Derek Auret, CE of the Casino Association of SA, which has made recommendations to the department of trade & industry (DTI) on what it wants to see in the regulations. National Gambling Board chairman Chris Fismer says the DTI is drawing up draft regulations to govern Internet gambling.

The Internet is particularly suited to card games like poker that are usually difficult to organise and require a similar level of skill among players.

The delay in legalising the industry has resulted in SA losing tax revenue because local gambling operators are setting up in and operating from other countries. The Comeplay poker website, launched in Johannesburg earlier this year and being run through Antigua and online casino Piggs Peak, is run from Swaziland.

Also, the current legal framework locks licensed casino operators out of a rapidly growing market. The Internet gaming sector was worth US$3bn/year in 2001 and that had grown to more than $8,2bn/year in 2004, according to research firm Christiansen Capital Advisors. The market is expected to triple to $25bn/year by 2010.

The slow pace of legalising Internet gaming has annoyed established industry players. Ernie Joubert, CEO of gaming and hotel group Peermont Global, told the FM last December it was disappointing that it had taken so long.

Government has had sufficient warning to take advantage of the emerging trend. In 1999 a report was drawn up advising the SA government to quickly draw up regulations on electronic gambling and establish itself as a leading player in the industry.

Prof Peter Collins of the Centre for the Study of Gambling at Salford University, who drew up the report, said when it was released that the window of opportunity will be gone in six months. He now muses that six years later we are still waiting.

Fismer defends the pace of the regulatory process, saying the National Gambling Act of 2004 gives the minister two years to draw up the regulations to govern Internet gambling.

His defence comes despite a recommendation made almost a year ago by his board to DTI minister Mandisi Mpahlwa to legalise Internet gambling.

It recommended among other proposals that operators pay an annual licence fee of R150000; be obliged to comply with the Financial Intelligence Centre Act (Fica); have to submit to monitoring of their systems by the gambling board; and pay a 2% tax on gambling revenue.

Besides offering operators a legal platform to operate, the regulations, say Fismer and Collins, will protect consumers in the same way as regulation protects them in casinos.

Regulations will control the integrity of the game, prevent nearly number-winning combinations from coming up and control the amount of credit a player has access to, Collins says. In essence, he says, without regulations you don't know if the games are honest.

Copyright 2006 Times Media Ltd.. Source: Financial Times Information Limited.

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