State committed to combat illegal gaming
April 20, 2008
By Wiseman Khuzwayo
South Africa will continue to clamp down on illegal gambling operations, Rob Davies, the deputy minister of trade and industry, said this week.
Addressing the fifth biennial gambling conference, Davies said: "The fact that some or other activity has emerged illegally does not mean that it is merely a matter of time before we give in and legalise it. Nor should operators of illegal activities assume that even if the activity they are engaged in illegally is eventually legalised, they will be the ones to be granted licences.
"Let me be clear. We do not regard operators of illegal activities as trailblazers that will eventually be rewarded, but as criminals that need to face the full force of the law," he said.
Davies said that between 1997 and 2000 the gambling industry had made fixed capital investments of about R10 billion, representing 2.1 percent of total South African fixed capital investment over that period.
As a result of conditions imposed on gambling licences, these investments reached beyond the development of the gambling site itself, leading to the emergence of new hotels, shopping malls, entertainment centres and convention centres.
"As a result, in the 10 years since gambling was legalised in South Africa, casino resorts have added almost 6 000 hotel rooms to South Africa's tourist infrastructure. In 2005 the gambling industry contributed about R2.7 billion to government coffers, of which about R1.8 billion was for provincial gaming tax and value added tax," said Davies.
"The casino industry alone is estimated to have created about 100 000 direct and indirect jobs. Gross gambling revenue grew from R5.6 billion in 2003 to R10.1 billion in 2006. While these developments are all welcome, it is precisely in the last figure that the double-edged sword of the industry can be identified."
Davies referred to a 2003 study commissioned by the National Gambling Board, which found that a significant percentage of people in low-income groups were involved in casino gambling, betting on horses, and participating in the national lottery.
Davies said: "In my view this highlights the complex and difficult challenge that regulators face in achieving an appropriate balance. Our regulators need, on the one hand, to create conditions under which the industry is able to realise its economic, employment and potential broad-based black economic empowerment benefits. But they need simultaneously to ensure that it does this in ways which do not involve overstimulation, particularly in respect of low-income people and low-income communities.
"People in income categories of less than R500 per month, or between R501 and R1 000 per month are probably beneficiaries of social grants.
"We know from a study that has been undertaken in the Western Cape that significant numbers of social grant recipients are in fact spending a sizeable part of that money on gambling activities. This surely cannot be a socially desirable situation," said Davies.
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