Emerging markets unclear about future of online gambling

Online gambling in South Africa may be set for tough times ahead. For users, tech entrepreneurs and established businesses alike, new laws may change the way gambling in the wealthiest African emerging market takes place.

The National Gambling Amendment Act of 2008, which is said to make provisions for the licensing of online casinos, may only come into force after an appeal to a high court ruling against “interactive gambling” is heard, according to journalist Jan Vermulen. Even services hosted outside the country would be rendered illegal if the proposed legislation comes into effect.

The South African Department of Trade and Industry (DTI) also revealed that penny-auction websites such as Smokoo, Bidchaser, Kooldeals and ViaZiz will soon be considered interactive.

“Having considered the way these auctions are conducted it is now clear that this is similar to gambling and can be regulated under gambling regulations,” the DTI told MyBroadband.

If penny-auctions are considered gambling, then it follows that penny-auction sites like Smokoo fall under the same legal axe as Piggs Peak.

“Any form of online/interactive gambling is illegal in South Africa up until the National Gambling Amendment Act of 2008 comes into effect,” the DTI confirmed.

Even in markets where gaming is illegal, operations have continued. Chinese gambling is an industry estimated to produce almost US$4-billion annually, an impressive turnover in a country where gambling is technically illegal, apart from a sanctioned state lottery. But it wasn’t always this way – in fact, China is the origin of some of the most widespread forms of gambling worldwide.

A move to regulate the industry would allow the Chinese government to keep a larger portion of that growth capital inside China through licensing fees and through taxation. In the meantime, however, Chinese gambling fans continue to break the law whenever they visit an online casino.

Brazil which has quietly been conquering the South American online poker scene also proposes an online gambling piece of legislation. The country’s parlimantary chamber, the Senate, has considered banning payments to and from online gambling sites. The original legislation was introduced 15 months ago, but more recently has grown some teeth. At President Lula de Silva’s pushing, in an effort to move the bill forward and pass it before the end of 2010, the Senate has attached companion legislation that requires Brazilian ISPs to block access to prohibited sites, and calls for prison time for violations. Also attached to the bill now is a parallel ban on child pornography.

Back in South Africa, interactive gambling legislation in South Africa may be in limbo until after an appeal to a high court ruling is heard.

The appeal of gambling online continues to grow worldwide, and the most logical reaction of government would seemingly be to tax the hobby and enjoy a steady new revenue source, rather than waste funds fighting a battle that is unwinnable.

So the schizophrenic response of proposing or passing legislation, but failing to act on it may continue to characterise emerging markets. In the case of South Africa, the courts not the politicians will decide the future of online gaming.