Online Gambling

[Chatmaster]

Once again the National Gambling board is shooting hot air about Internet gambling being illegal in South Africa.

Well first of let me state this, the only province (yes provinces regulate gambling) that specifically states that they view internet gambling as illegal is the Eastern Cape.

Second of all even the Eastern Cape has a BIG problem proving that it is actually illegal to do so.

The argument that Howard Berchowitz raised is a very important one. Piggs Peak is licensed and regulated in Swaziland which is inside the common Rand monetary area. The actual transactions take place in Swaziland where their gambling servers are located, what are the DTI and the National Gambling Board on about? I can't help it guys, this kind of misleading propaganda just drives me mad. What gives the DTI and the NGB the right to openly lie to people about the legality of online gambling in SA.

[Dave A]

I'm not much of a gambler, and I'm certainly not up on South African gambling law. But jurisdiction issues when it come to the internet can be fairly complex and at times entirely undefined.

On the tax front, that seems reasonably clear. The tax legislation applicable and jurisdiction is the country of the site owner. However, any internet site easily has three jurisdictions in play - that of the owner, the hosting server, and the browser.

It's when we get to the browser that I've seen most discussion.

Is the site owner responsible for dealing with legislative concerns iro the location of the browser? General consensus is that the site owner should at least try to accomodate legislative issues for the browser - if only in their "client's" best interest so as to keep them as a client.

So I think the core is - is it illegal for South Africans to gamble overseas? Certainly the answer is No in a physical situation.
But in an online situation? To be honest I don't know for sure.

I'd argue that it would require specific legislation against it. Without specific legislation preventing it, how can it be an illegal act by the "client."

More importantly in this case under revue, how accountable is the off-shore site owner for the actions of their "foreign clients"? I'd think not accountable at all. Although I can see value in their trying to accomodate their clients' legal situation.

[Chatmaster]

The way gambling is setup in an online environment is completely different from what most people understand and that is exactly where the NGB has a huge problem. The gambler downloads software to his computer. All this software is, is an interface for the player to connect securely to the gambling software which are located on the gambling server. It has nothing to do with the physical website of the online casino as the websites are unrelated to the actual gambling software.

Thus the argument is that the player is actually playing at the location of the gambling software. If there is no connection to the gambling server, the player can't play. There might be other issues as well, such as currency and so forth, but for one casino in SA Piggs Peak, not even that is an issue. The NGB is chasing a dream of getting their hands on the money flowing through online gambling which is globally worth in access of $50bil. Online Poker alone was worth $18Bil in 2005 and was the fastest growing online industry for a long time. Many of the online casinos are run from South Africa, infact Online Gambling's largest software supplier in the world originated in Durban. They know all this and know that there are billions of rands that they are missing out on. The problem is that they have no idea how to get a hold of the Gold. So instead of just legalizing online gambling they actually want to force these operators to pay them fees to allow South Africans to play there, the problem is how do they do that if there is no legislation preventing South Africans from playing online.

A further problem they have is that Online gambling has evolved in such a way that they are self regulated and doesn't need any government assistance in it. It also have several watchdogs that can cause them to close down if they act stupidly, sites like casinomeister.com can cause a casino some serious damage if they receive complaints and the casino doesn't respond. This can easily result in the casino being blacklisted and eventually closing down. So in essence the NGB has very little to give any player.

I like games of skill and therefor I like to play a game of poker now and then. I do however not play casino games. I do not believe in luck. But these guys are plainly lying and it is purely the principle of lying through their teeth that gets to me. How many people are now worrying that they will end up in jail, only because the NGB issue press releases like that.

[duncan drennan]

How are winnings taxed in terms of SA law?

[Dave A]

In a story mainly about international interest in setting up online gambling facilities here in South Africa, I found this background on the licencing issue.

That online gambling in South Africa was illegal was affirmed by the Pretoria high court in November 2006. It dismissed an application by Casino Enterprises of Swaziland to have Gauteng residents gamble online.

The casino had taken the Gauteng and the national gambling boards, as well as the minister of trade and industry, to court. The basis of the application was that although the gambling was done on computers in Gauteng, the gambling was taking place in Swaziland.

In his ruling, Judge Willie Hartzenberg said it was recognised that gambling could be a great source of revenue for the Gauteng province, which, if spent wisely, could improve standards of living.

He said: "One thinks of licensing of casinos and of a levy on turnover. All monies spent on casino gambling must contribute to the coffers of the state or province."

In dismissing the application, Hartzenberg said: "It is difficult to see why the Swaziland legislation, in terms of which the plaintiff obtained its casino licence, can have extra-territorial operation. In other words, why actions of the plaintiff within the borders of the Republic are sanctioned by the Swaziland licence."
from Business Report here

[Chatmaster]

I wish I knew who their sources was.

Under current legislation, online gamblers in South Africa can be fined up to R10 million or be jailed for up to 10 years.

This section doesn't make sense to me. Unless a new law was published in the past 6 months. As far as the ruling in 2006 against Casino Enterprises are concerned. As far as I know the court case was to allow them to advertise in Gauteng (The gambling licenses in SA are by province). It was then turned down explaining that they have to be licensed in Gauteng to advertise in Gauteng. Then again there has been a lot of nonsense told to me by both the NGB and Casino Enterprises so I do not know what to believe anymore.

I must say, if they knew how many online casinos were actually operating from SA already they would not have made such a big issue out of a small player like Victor Chandler wanting to move here. South Africa has much bigger operators based here already, they just do not allow SA players to play at their casinos and are very much running clandestine.

[Dave A]

On the marketing front, I see Silversands Online is advertising on TV

[Chatmaster]

Yes, if you think back a year or so Party Poker did the same. They are actually advertising a free site. In other words you can go and play with play money. But the moment you register for the play money they have your email address and can send you promotions for their real money casino. They are simply bending the law to obtain targeted email addresses as they do not advertise a real casino. Piggs Peak and African Palace are doing the same just not on TV.

[misty]

Just as a matter of interest, I looked at hosting an online gambling site a few months ago. Bought the software, bought what I thought was a great domain name, got some cheap hosting set up - I was ready to go.

I was then told that because online gambling was not allowed in the States, I should refrain from targeting that market. I wondered how I could do that until I was told that targeting geographically designated countries (I've just forgotten the exact term used) was the way to go.

Other people told me not to worry as it would be nigh impossible to stop a person from the States finding an gambling on my site. I could see problems arising.

Needless to say, I dropped the idea of having a gambling site online.

Anyone had a similar experience?

Bob

[Chatmaster]

Yes, this is unfortunately the truth. I sold some of my best domains when Bush signed the law at the end of 2006. I now only own .co.uk domains and only promote UK gambling sites. But more than 80% of all my traffic are from the US, not to mention my conversions. Fortunately that is the problem of the casino operators imo, as I clearly do not promote any dollar casinos.