Submissions on Remote Gambling Bill Submissions on Remote Gambling Bill [PMB3-2015] & DTI Gambling Policy- [PMB3-2015] & DTI Gambling Policy- Parliamentary Portfolio Committee on Parliamentary Portfolio Committee on

Trade & Industry Trade & Industry 3 June 20153 June 2015

Garron WhitesmanGarron WhitesmanBA LLB LLMBA LLB LLM

www.whitesmans.comwww.whitesmans.com

Brief BioBrief Bio

• Attorney of the High Court of South Africa since 2006.Attorney of the High Court of South Africa since 2006.

• Practised in South Africa and London.Practised in South Africa and London.

• Practised internationally in the gambling industry since 2003.Practised internationally in the gambling industry since 2003.

• Recognised for many years internationally as one of the leading legal experts Recognised for many years internationally as one of the leading legal experts internationally and in South Africa on issues of online gambling.internationally and in South Africa on issues of online gambling.

• Been involved professionally for clients in licensing and compliance in most licensing Been involved professionally for clients in licensing and compliance in most licensing jurisdictions.jurisdictions.

• Litigated industry- related matters in the UK, US and the ECJ.Litigated industry- related matters in the UK, US and the ECJ.

• Act for many industry participants internationally but not on brief in respect of these Act for many industry participants internationally but not on brief in respect of these submissions, which are being made as an independent professional and express my own submissions, which are being made as an independent professional and express my own views.views.

RegulationRegulation

• In favour of Regulation over Prohibition.In favour of Regulation over Prohibition.

• Prohibition likely to be wholly unsuccessful- as it is now.Prohibition likely to be wholly unsuccessful- as it is now.

• Bona fide operators (e.g. those already regulated) are Bona fide operators (e.g. those already regulated) are accustomed to regulated markets, are part of international accustomed to regulated markets, are part of international trend towards increasingly being regulated and are trend towards increasingly being regulated and are comfortable with being regulated.comfortable with being regulated.

• Bona fide operators are already bound by strict advertising Bona fide operators are already bound by strict advertising codes, AML and player protection obligations by their primary codes, AML and player protection obligations by their primary licenses.licenses.

Regulation cont..Regulation cont..

• Bona fide operators are already strictly regulated Bona fide operators are already strictly regulated and it is highly arguably just as “safe” for a player as and it is highly arguably just as “safe” for a player as a locally licensed operator.a locally licensed operator.

• Bona fide operators want to be here and are happy Bona fide operators want to be here and are happy to be regulated in South Africa.to be regulated in South Africa.

Regulation cont…Regulation cont…

• Regulation allows one to regulate Regulation allows one to regulate vs. having a vs. having a market in which one is reliant on others to create the market in which one is reliant on others to create the control that we want to assert.control that we want to assert.

• The driver for regulation is largely irrelevant:The driver for regulation is largely irrelevant:• Player protection vs.Player protection vs.

• Raising revenue (e.g. Italy)Raising revenue (e.g. Italy)

• Can we driven by both.Can we driven by both.

Regulation cont…Regulation cont…

• Little doubt that problem player behaviour can be more quickly Little doubt that problem player behaviour can be more quickly and effectively identified and controlled online.and effectively identified and controlled online.

• Not convinced that more harm will result by regulation as DTI Not convinced that more harm will result by regulation as DTI would have it or that the number of players who currently play would have it or that the number of players who currently play online is going to materially increase. online is going to materially increase.

• Questionable whether the demographic of persons currently Questionable whether the demographic of persons currently playing online is the same as those desirable to view as playing online is the same as those desirable to view as “vulnerable” and protect against proliferation.“vulnerable” and protect against proliferation.

• No doubt it will raise further funds for the fiscus even if it only No doubt it will raise further funds for the fiscus even if it only redirects currently untaxed activity to be taxed.redirects currently untaxed activity to be taxed.

Regulation cont…Regulation cont…

• Highly unlikely that a prohibition can be effectively enforced despite Highly unlikely that a prohibition can be effectively enforced despite anything the DTI proffers including its reference to “devices”. What anything the DTI proffers including its reference to “devices”. What “devices”? I have never heard of so- called “devices” that can do this. “devices”? I have never heard of so- called “devices” that can do this.

• Is DTI going to have cooperation of the SA banks and ISPs? Is DTI going to have cooperation of the SA banks and ISPs? Enforcement highly unlikely to stem tide of proliferation. Enforcement highly unlikely to stem tide of proliferation.

• Highly undesirable to prosecute players (AU took this view despite its Highly undesirable to prosecute players (AU took this view despite its law permitting player prosecution).law permitting player prosecution).

• Agreed that this is a question of policy, which is a balancing act, but Agreed that this is a question of policy, which is a balancing act, but how does one resolve the fact that there has been a steady increase how does one resolve the fact that there has been a steady increase in the rollout of multiple forms of gambling over the past decade in SA.in the rollout of multiple forms of gambling over the past decade in SA.

Regulation cont…Regulation cont…

• In a matter from the Netherlands, the ECJ held that it was contrary to EU law for the In a matter from the Netherlands, the ECJ held that it was contrary to EU law for the Netherlands to keep out EU- based competitors from its market on the ground of Netherlands to keep out EU- based competitors from its market on the ground of public health and control of proliferation whilst increasing the offering being made public health and control of proliferation whilst increasing the offering being made available by the Dutch monopoly (not binding on us but indicative of the logic available by the Dutch monopoly (not binding on us but indicative of the logic applied).applied).

• ECJ decision re. Germany took a similar view when dealing with the German ECJ decision re. Germany took a similar view when dealing with the German regime on public health grounds.regime on public health grounds.

• Most EU countries have regulated or are quickly heading towards regulation.Most EU countries have regulated or are quickly heading towards regulation.

• We can’t look at certain models of regulation by prohibition- we need to look to how We can’t look at certain models of regulation by prohibition- we need to look to how similar societies with similar mores and similar democracies have dealt with the similar societies with similar mores and similar democracies have dealt with the issue- UK, for example. The following jurisdictions are inappropriate:issue- UK, for example. The following jurisdictions are inappropriate:

• Singapore is a benign dictatorship (even chewing gum banned).Singapore is a benign dictatorship (even chewing gum banned).

• US is largely conservative and non- permissive.US is largely conservative and non- permissive.

• China is a communist dictatorship.China is a communist dictatorship.

Legally QuestionableLegally Questionable

• Substantial questions of law as to whether the desired Substantial questions of law as to whether the desired prohibition is legally sustainable from both local and prohibition is legally sustainable from both local and international law perspective (has been previously international law perspective (has been previously raised).raised).

• I question: I question: • whether the DTI has properly considered this.whether the DTI has properly considered this.• what the DTI believes is the material and defeasable what the DTI believes is the material and defeasable

distinction in law between current landbased casino distinction in law between current landbased casino and poker activities and e.g. virtual racing and and poker activities and e.g. virtual racing and equivalent online activities.equivalent online activities.

Legally Questionable cont…Legally Questionable cont…

• In my view and experience the distinction is arbitrary and In my view and experience the distinction is arbitrary and capricious and nigh impossible (if at all) to justify (GRC report capricious and nigh impossible (if at all) to justify (GRC report seems to recognise this)seems to recognise this)

• Apart from this, most countries who have had some semblance Apart from this, most countries who have had some semblance of a local industry and banned other forms of gambling have of a local industry and banned other forms of gambling have been legally unable to sustain the prohibition on the basis of been legally unable to sustain the prohibition on the basis of public health grounds. public health grounds.

• Permissive (but well regulated and taxed) or total ban Permissive (but well regulated and taxed) or total ban tolerated, but can’t be “half pregnant”.tolerated, but can’t be “half pregnant”.

ConclusionConclusion

• I submit that whatever policy is ultimately adopted the same I submit that whatever policy is ultimately adopted the same should be:should be:

• ClearClear

• EnforceableEnforceable

• Legally defensibleLegally defensible

• Sensible within a constitutional democracySensible within a constitutional democracy

• Well- reasoned (not arbitrary or capricious)Well- reasoned (not arbitrary or capricious)

• Ultimately, however, I reiterate that I am in favour of regulation.Ultimately, however, I reiterate that I am in favour of regulation.