South African Online Gambling Scenario

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The online gambling scenario in South Africa is a peculiar one. The government has in principle approved the concept of legalization and regulation of online gambling, but is procrastinating on the implementation. Therefore it remains illegal for offshore online gambling operators to offer services in South Africa. And while online gambling remains illegal it has to be stopped. The onus has fallen on the Reserve Bank, which is the country's central bank. The Reserve Bank has passed to buck to the commercial banks. In a circular issued them the Reserve Bank has asked them to use the national payments system to flag and block transactions with offshore gambling websites.

In an article published in The Times Live it has been stated that though the banks have not yet formally responded to the circular, they are unhappy at being made the scapegoats. It is impossible to tell with certainty that the credit card transaction has come from an online gambling site. The credit card classifications are not rigorously followed and are easy to disguise. The Times Live article lists other similar problems. If the banks have address them in a foolproof way it would mean creating new software that would better code and evaluate all transactions going through the banking system. The time, effort and ultimately the cost of creating such software has not even been estimated. The banks have also pointed out that this operation would require the cooperation of the credit card companies, because they would have to make corresponding changes in their systems as well. In a nutshell the banks have indicated that the whole exercise is just not worth it.

There are two specific reasons why this exercise could be futile. The illegality of offshore based online gambling has not been established beyond doubt. For quite some time litigation has been in progress between the South African authorities and Piggs Peak Casino in neighboring Swaziland. The online casino has been arguing that it is offering its services outside South Africa and is therefore not subject to South African gambling legislation. The Times Live report says, "That's quite tricky philosophical territory. Whether using an [online] casino's website amounts to gambling in your home or gambling on the website's servers based in another jurisdiction or country." Should the South African courts ultimately accept the latter proposition then the entire effort in blocking such transactions will come to naught.

Tomorrow should the South African government decide to implement their "agreed to in principle" decision of legalizing online gambling then there will be tremendous heart burn over the resources expended in the preventive procedure. It is imperative that the government first takes a firm call in this matter.

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