
South Africa’s Illegal Gambling Pandemic:
‘Illegal betting’ is best defined by the Council of Europe Macolin Convention on the Manipulation of Sports Competitions as follows:
“Illegal sports betting” means any sports betting activity whose type or operator is not allowed under the applicable law of the jurisdiction where the consumer is located.”
Online betting allows operators to engage consumers globally, regardless of their licensing status in specific areas. As online betting continues to globalise, it becomes harder for consumers to differentiate between online legal and illegal betting operators, and more difficult for gambling regulators to understand the silent encroachment of illegal betting operators in their local market.
Police, government organizations, including regulators, play a critical role in taking action against illegal betting operators. Education and awareness campaigns are an important component to inform the public about the risks of illegal betting. Key industry stakeholders and NGOs also play an important educational role. Financial institutions help prevent payment methods for illegal betting operators. Telecommunications companies and Internet service providers are needed to deny illegal betting operators access to online services.
Regulating online gambling needs to address local social, cultural, economic, and political conditions. Regulators must focus on issues like preventing gambling addiction, protecting minors, consumers’ rights, maintaining sports integrity, and combating money laundering and other crimes. Some jurisdictions have effectively defined illegal betting and offered a competitive legal market, helping to redirect illegal betting to regulated options.
The aggressive marketing of online betting websites through social media can confuse consumers about what is legal and illegal. When operators advertise in countries without a license, it misleads consumers about the brand's credibility. This allows illegal operators to intrude on markets. As these operators are unregulated, they pose a greater risk, causing consumers to incur debt and fall into harmful cycles of borrowing at high interest rates to continue gambling.
In Curacao, Malta and the Philippines licensed operators face little oversight, benefitting from South African customers without contributing to betting taxes, and the potential risk of funding criminal activities.
Yield Sec, an online intelligence platform commissioned by the South African Bookmakers’ Association, has identified that in the 2023/4 fiscal year, 2,084 illegal gambling operators actively targeted South African players, alongside 1,134 affiliates promoting these platforms and deriving their own affiliate revenue by promoting illegal gambling. New data reveals that illegal operators dominated 62% of the Gross Gaming Revenue (GGR) for 2023/24.
In the Asian Racing Federation “State of Illegal Betting Report”, it is confirmed that betting licenses issued in the same three jurisdictions (Curacao, Malta and the Philippines) account for 62% of these websites that are effectively illegal in most countries.
Illegal betting has become a complex international crime problem, threatening the integrity of racing and sports. Addressing this requires collaboration among government agencies, technology and finance sectors, and regulators, forming a model that benefits all stakeholders involved. There exists a national example that can guide other countries in this effort.
In Australia in 2017, Michael Andrew presented the final report of the ‘Black Economy Task Force’
The ‘Black Economy Task Force’ made the following recommendations to combat illegal betting and gambling:
The government should enforce existing laws.
The government should require Internet Service Providers to block offshore sites that are offering illegal gambling services to Australians.
The government should encourage banks to prevent transactions to and from offshore wagering websites.
Prevent regulated gambling sites from accepting bets sourced from unregulated sites.
Racing regulators should publicly warn off people from attending racetracks and prosecute them if they are found to be using unregulated gambling sites.
Australian law enforcement agencies should exchange information about unregulated gambling with their international counterparts.
Better use should be made of information contained in stored value cards and betting vouchers should be analysed to seek out potential criminal networks.
The government should prevent gambling from being used to shelter tax evasion.
The legislative framework in South Africa deals with illegal online gambling prohibition in the following way.
In terms of section 8(a) of the National Gambling Act 7 of 2004, (“National Act”) it is unlawful to “engage in, conduct or make available” a gambling activity, unless that gambling activity is licensed.
The effect of section 8(a) is that it is unlawful to make available or engage in an interactive game (that is, online gambling) unless that activity is licensed. As the gambling activities provided by foreign-based gambling websites are not licensed in South Africa, it is unlawful to make them available, and for users to engage in them in South Africa.
The Supreme Court of Appeal confirmed this position in Casino Enterprises (Pty) Ltd v Gauteng Gambling Board and Others (“Casino Enterprises”). That case concerned an internet casino run by the appellant from Swaziland, which was not licensed in South Africa. The Court held that a player located in South Africa contravened sections 8 and 11 of the National Act when he played the gambling game offered by the website. In addition, the appellant's placement of the casino on the internet was to “make available” gambling in South Africa, and so the appellant also contravened sections 8 and 11 of the National Act.
The Court highlighted the policy basis underpinning sections 8 and 11 of the National Act. It held that the National Act seeks to regulate and control gambling for three main reasons: to protect the public against the potentially harmful effects of gambling; to protect licensed gambling activities against competition from unlicensed operators; and to protect the income that the State derives from the licensing of gambling. The Court held that its interpretation of the relevant provisions – such that the website operator and the player were both in contravention of the National Act – was in line with these legislative aims.
Monitoring, policing and enforcing against the availability and presence of illegals must become a leading strategy for all legal stakeholders, including regulators, operators, affiliates, payment providers, media platforms, law enforcement and government treasury teams. Each stakeholder has their own part to play in the battle for control over the jurisdiction’s online betting and gaming marketplace, and in ensuring the sanctity of the space.
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