The Continuing Legal Struggles Of South African Online Casinos

Posted: August 15, 2023

Updated: August 15, 2023

Thanks to the take up of mobile phones over the past decade or so, there's been a massive upswing in the number of gamblers visiting online casinos in South Africa. Though this is great for business on paper, in reality it's nothing but a continuous headache for gaming oprators simply because the gambling laws are backwards. As a result many South African online casino players prefer to spend their money in offshore platforms.

Thanks to the take-up of mobile phones over the past decade or so, there's been a massive upswing in the number of gamblers visiting online casinos in South Africa. Though this is great for business on paper, in reality, it's nothing but a continuous headache for gaming operators simply because the gambling laws are backward. As a result, many South African online casino players prefer to spend their money on offshore platforms.

Understanding South African Online Casinos and Gambling

The surge in global online casinos has garnered plenty of attention in recent times. As the worldwide iGaming industry experiences robust expansion, as evident on Gamingzion.com, the issue of legality becomes more significant in numerous nations, South Africa included. In this article, we delve into the existing legal standing of South African online casinos and explore the intricate legal aspects surrounding this matter.

Grasping The Legal Framework

The fundamental legislative framework overseeing gambling in South Africa is the National Gambling Act of 2004. According to this Act, online gambling is formally prohibited. Nevertheless, the Act doesn't explicitly address online casinos, leading to confusion and contentious discussions on this topic. In 2008, the government aimed to clarify the situation by introducing the National Gambling Amendment Act, which intended to legalise online gambling. However, due to insufficient backing and plenty of strong opposition, this amendment has not been fully enforced as of now.

Casino Games Presented As Number-Based Draw Games

According to online gambling news in South Africa, the legality of South African online casino gaming has not been properly established, prompting operators like King Billy Casino to ingeniously adapt conventional casino games to align with prevailing sports betting regulations.

South African online casinos — Picture Source: Pxfuel

For example, rather than incorporating the customary 'spin-button' seen in slot games, operators market these games as draw games centered around numbers. This strategic approach enables them to portray these games as regulated international betting events. In fact, many frequently hold licenses from the UK Gambling Commission. Consequently, South African online casinos and gaming platforms provide an array of casino games, including things like online poker, as well as encompassing live casino experiences, RNG table games, and slots. However, they are all rebranded and tweaked to conform to South African gambling regulations. This distinct adaptation has given rise to an online gaming market that closely mirrors global gaming platforms.

The Phumelela Case About Online Gambling Legality

In the year 2020, an influential legal case revisited the debate on the legality of online gambling. The Phumelela Gaming and Leisure Limited company initiated a lawsuit against the Gauteng Gambling Board, contending that online gambling should undergo regulation and taxation. Although the case was ultimately dismissed, it underscored the urgency for establishing clarity within the gambling laws of the country.

Necessity Of Rigorous Testing For Games and Software

Despite existing in a rather peculiar regulatory landscape, online casino gaming still faces many additional hurdles when seeking approval for their adapted games. While classified as bookmakers under these regulations, online platforms in the country essentially operate as South African online casinos. The process of introducing new games or products involves a comprehensive testing and endorsement procedure. This entails submitting games and software to testing laboratories like BMM and GLI, which subsequently make reports to the gambling board. The board might request further inquiries prior to granting authorization. This whole process can span from six months to a year. This thorough certification protocol encompasses not only modified casino games but also extends to sports betting. The situation is further complicated by the fact that the South Africa's National Gaming Board oversees gambling activities nationwide. Yet each of the seven South African provinces maintain their own distinct regulator who has considerable autonomy. Nevertheless, once a game secures licensing in one province, it can be offered throughout the entire country. Even though potential confusion may arise due to differing provincial regulations.

The Quest For A Singular Regulatory Authority

For operators seeking to introduce new gambling activities like slot games, the challenge is to locate a single regulator willing to authorise such activities under existing laws.

The Western Cape province has displayed a more progressive stance towards online gambling, with the Western Cape Gambling and Racing Board (WCGRB) displaying greater openness to the idea of licensing and supervising online casinos. However, other provinces have yet to adopt this approach. This only complicates matters because it still leaves the national government's standpoint as ambiguous. So it's really no surprise that the issuance of licences on an ad hoc basis by this specific board, in contrast to the request-for-proposal approach adopted by other provinces, has made it a preferred choice among online operators. Regulators are also motivated by the revenue generated from licence fees. The present system, which might not have been the main intention of lawmakers when they initially legalised online betting in South Africa, has evolved into a functional solution despite the outdated legal structure. This transformation can largely be put down to regulators' willingness to accept a broader range of gambling products.

A Total Revamp Of South African Online Casinos Is Essential

The existing gambling laws in South Africa are showing signs of being outdated and unclear, resulting in confusion and innovative workarounds employed by online gambling sites in South Africa. There is a pressing requirement for a more comprehensive and contemporary legal framework that effectively deals with the complexities of the online gambling landscape.

Something that would guarantee player safety, fair competition, and efficient regulation. Modernising the legislation could also yield additional economic advantages. These could include things like higher tax income and the generation of new jobs within the industry.

Outmoded And Inadequate Gambling Laws

In September 2022, the opposition party Democratic Alliance introduced a bill in the country's parliament with the aim of establishing a national regulatory structure for online gambling. This move was intended to safeguard the public interest and counteract the erosion of legal principles. Under the proposed new guidelines, provincial authorities would retain the authority to issue licences, albeit within a more defined national framework. The surge in South African online casinos and gaming has made it challenging for lawmakers to overlook the necessity for updated legislation. Nevertheless, the proposed bill, originating from the opposition party, faces obstacles in garnering support from the ruling government, particularly with an upcoming election year in 2024. Present indications suggest that substantial progress on the bill will not be achieved within the next three to five years. On the plus side, momentum could potentially build thereafter.

The Advantages Of Legalising South African Online Casinos

Economic Expansion: The legalisation and regulation of online casinos have the potential to foster significant economic growth. This would lead to higher tax revenues and the creation of job opportunities within the sector.
Player Safeguards: Regulatory measures would ensure that players are shielded from unscrupulous operators, thus creating a safer environment for responsible gambling.
Combating Illicit Gambling: Legalisation would diminish the appeal of unregulated offshore online casinos, which currently attract South African players.

To be frank, legalising South African online casinos presents a set of unique challenges. These encompass concerns from the public about a potential surge in problem gambling. There's also the necessity for crafting a regulatory framework that demands substantial time and resources and could prompt further legal disputes. Then there's the likelihood of international organisations like the World Trade Organization urging the country to uphold its current stance on online gambling.

Conclusion - South African Online Casinos

In summary, the online gambling sector in South Africa is grappling with an outdated legal landscape. Casino operators like King Billy Casino have ingeniously modified traditional casino games to conform with existing regulations for sports betting due to the deficiency in local regulations. Although regulatory bodies have tried to adapt to contemporary gambling trends, the existing laws remain unsatisfactory and are overdue for revision. There exists a pressing requirement for a comprehensive legal structure that adequately addresses the multifaceted nature of online gambling in South African online casinos.