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SUBMISSION BY BETFAIR LIMITED. to the Portfolio Committee on Trade & Industry in respect of the National Gambling Amendment Bill, B31 - 2007 22 August 2007. OUTLINE. Introduction Presenters and structure (section 1 of written submission)

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SUBMISSION BY BETFAIR LIMITED

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SUBMISSION BY BETFAIR LIMITED

to the Portfolio Committee on Trade & Industry

in respect of the National Gambling Amendment Bill, B31 - 2007

22 August 2007


OUTLINE

  • Introduction

    • Presenters and structure (section 1 of written submission)

    • Summary of Betfair’s submissions (section 2 of written submission)

    • Betfair (sections 3 and 4 of the written submission)

  • Context (section 5 of written submission)

    • Scope of global regulated interactive gambling

    • The effect of prohibition

  • Substantive submissions (section 6 of written submission)

    • Exclusion of certain activities under the Bill (section 7 of written submission)

    • Undesirable practical impact of certain provisions and omissions (section 8 of written submission)

  • Conclusion and Recommendation (section 9 of written submission)

  • Q&A


INTRODUCTION

  • Presenters and Structure

  • Summary of Betfair’s submissions

  • Betfair and its aspirations in South Africa in the context of the Bill


CONTEXT: SCOPE OF REGULATED GAMBLING ON THE INTERNET

UK legal online gambling market in 2006 - ZAR11.5bn

Online Casino

Online Poker

Online fixed odds

Exchange

Tote, 1%

30%

25%

31%

14%

Total P2P = 40%

Global legal online gambling market in 2006 - ZAR90.6bn

Online sports

Online Casino

Online Poker

??

betting

33%

25%

42%

Total P2P = at least 25%

Source: Global Betting and Gaming Consultants 2007

1 GBP: ZAR 14.5


CONTEXT: THE EFFECT OF PROHIBITION

Global illegal gambling market in 2006 - ZAR1,117bn

China

US

Other Asia

ROW

50%

30%

15%

Compared to:

SA entire regulated

UK entire regulated

market – ZAR1.5bn

market - ZAR137.8bn

Source: Global Betting and Gaming Consultants 2007

1 GBP: ZAR 14.5


SUBSTANTIVE SUBMISSIONS – EXCLUSION OF CERTAIN FORMS

  • Background to the proposed exclusions

  • Any exclusion undermines regulatory objectives

  • No policy basis for the proposed exclusion

  • The proposed exclusion is discriminatory

  • If exclusion is justified, it can be circumvented

  • Parliament should anticipate future regulation of excluded forms


THE REGULATORY EFFECT OF PROPOSED EXCLUSION

Online Poker

Exchange

Online Casino

Online fixed odds

Player-to-player

Tote, 1%

25%

14%

Not regulated under Bill = inadequate control = inadequate protection


SUBSTANTIVE SUBMISSIONS – UNDESIRABLE PRACTICAL EFFECTS

  • Player protections not uniformly imposed on all providers

  • Bill is not technology neutral: favours existing gambling activities

  • Onshore server requirement handicaps regulatory objective

  • Age verification measures are inferior

  • Specific provisions undermine player retention and sustainability

  • Specific drafting creates uncertainty


THE COMBINED PRACTICAL EFFECT ON REGULATORY SCOPE

Online Poker

Exchange

Online Casino

Online fixed odds

Online fixed odds

Player-to-player

Tote, 1%

25%

14%

Outside scope of Bill = inadequate control = inadequate protection


CONCLUSION

  • Policy framework informing the Bill is both sound and achievable

  • Current draft of Bill demonstrates a less than comprehensive understanding of both policy and operational issues

  • Cumulative effect of the proposed exclusion of P2P and shortcomings of the Bill on operational matters impairs the Bill’s ability to achieve its policy objectives

  • High level solutions proposed by Betfair


RECOMMENDATION

The Bill in its current form should be rejected,

and sent back to the dti in order to address the policy and practical shortcomings of the current draft


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