Cape Town – Operators of internet gambling should be subject to similar tax regimes as their land-based counterparts, established gambling operators have argued before a parliamentary committee.
Casino Association of South Africa (Casa) chairman Jabu Mabuza told the national assembly’s trade and industry committee that his organisation „notes with concern“ that the National Gambling Board had recommended that a tax on interactive gambling games be 2 percent of net gambling revenue.
Mabuza said during hearings on the National Gambling Amendment Bill that Casa members paid tax on their land-based casinos at rates of between 3 percent and 18 percent of „gross gambling revenue“, which was wagers less payouts.
The average tax rate was between 9 percent and 10 percent.
The bill will regulate interactive gambling on the internet and other forms of telecommunications-linked gambling.
Mabuza said Casa members had invested more than ZAR 12 billion in infrastructure in the country and created roughly 100 000 direct and indirect jobs. Taking into account the economic multiplier, Casa members had contributed about ZAR 36 billion to the gross domestic product.
In 2003/04 the casino industry accounted for more than ZAR 1.7 billion in gambling taxes and VAT.
„Given the huge investments that were required to secure licences and the large numbers of jobs the industry sustains, Casa believes it would be unfair were internet operators – who have to incur substantially lower investments and will employ far fewer people – able to benefit from a preferential tax rate,“ Mabuza said.
„Such a tax rate would … tilt the playing fields in favour of interactive operators.“
The lower tax regime would encourage the public to gamble with interactive operators rather than at casinos, as the returns would likely be higher. „This would consequently create an unlevel playing field.“
Peter Collins, an executive director of the South African National Responsible Gambling Programme, told the committee that interactive gambling was illegal in South Africa, „although most South Africans appear to be unaware of this“. But it was not a prohibition that law enforcement agencies could reasonably enforce, such as by raiding people’s homes.
He said interactive gambling operators could offer players a facility for setting limits to their losses over a given time period, after which they would be prevented from playing further. There was software that could detect playing patterns that were characteristic of problem gamblers.
Remote gambling was not yet a serious source of gambling problems in South Africa but „it may well become one“, and this was more likely to happen if internet gambling remained prohibited than if it were well regulated. Technology could be used to tame technology, Collins argued.
This included a requirement that would-be suppliers demonstrate they had effective player identification procedures, as stipulated in the bill, especially for ensuring that children could not gamble at their sites.
Labour union Cosatu called for the committee to reject the bill because it would result in the proliferation of interactive gambling. Gambling affected the poor the most because they used a larger proportion of their income, it said. Revenue from the gambling industry was tantamount to regressive taxation.