Gambling watchdogs in South Africa's provinces are stretching their own rules on what they will permit within a traditional bookmaker's licence, going so far as to allow casino and card games with live dealer and RNG elements, adding fuel to a booming licensed online market.
The COVID-19 pandemic, which saw a rigorous lockdown enforced across South Africa and retail gambling outlets and land-based casinos shuttered for long periods, has sparked a new willingness, particularly among the regulators at Western Cape Gambling Board and Mpumalanga Gambling Board, to permit house banked casino-type games online by classifying them as "contingent event betting".
Online interactive gambling is prohibited at national level and the National Gambling Board is continuing to adopt that position in its statements, but in South Africa regulatory powers are split between the national board and nine provincial gambling boards, of which six actively license bookmaking.
Online live dealer games, structured as fixed-odds bets but typically blended with jackpot multipliers, have proved so explosively popular in the past two years that they now account for close to half of South Africa's burgeoning online market, at a time when land-based casinos have all but stalled during the pandemic.
One licensed bookmaker and industry veteran told VIXIO GamblingCompliance the rates of adoption and growth were "f***ing scary and astronomical".
Leading land-based casino operator Sun International confirmed last week in its 2021 results presentation that it estimated the South Africa online market to be worth R5.7bn (US$375m), a number which has grown by 31 percent annually since 2016, although its own participation via its Sunbets subsidiary was just 3.4 percent.
The operator, which has just added Playtech's Neon online casino management system and is gearing up its online business, said "serious consideration is being given to online casinos" in South Africa.
Evolution Gaming, a Baltics-based supplier of live dealer casino platforms, was licensed as a supplier by Western Cape Gambling Board in early 2020 and has subsequently helped many bookmakers to add casino products, including poker, baccarat and jackpot games.
Dean Finder, CEO at Evolution SA, told VIXIO GamblingCompliance that "a lot of this is about finding homes for games under existing categories".
Evolution games are promoted heavily by online market leader Hollywoodbets and on the South African-facing websites of international brands Betway and Sportingbet, LottoStar and World Sports Betting, all of which offer such games via their Western Cape licences.
A similar regulatory approval exists in Mpumalanga province, where domestically owned online operator Supabets currently offers a range of live casino games under its local licence.
Although the games "all share a fixed-odds element in that the punter knows what their initial return may be, the final outcome can be increased by an RNG-driven multiplier to bring pay-outs as high as R10m, but no solely progressive games are currently permitted", explained Finder.
Among those who grant permission for the games, one thing is very clear: licence re-categorisation is not currently on the agenda.
Despite a flurry of consultation papers and letters, none of the South African provincial regulators VIXIO approached for this story said they are proposing to introduce new categories of licensing for random number generator (RNG) based casino-type games or skill games, but all are aware of the tax and revenue attractions of the new varieties of casino games.
Johannesburg-based gaming industry lawyer Wayne Lurie told VIXIO: "What you see is there is little in the way of concrete legislative change — it is now coming down to a political question of interpretation of how executive authorities are approaching existing regulations."
"Almost anything can be declared a contingent event," added Lurie.
COVID-19 losses are driving new thinking on revenues
Budget shortfalls created by periods of economic paralysis during the COVID-19 pandemic have amplified the desperate need to raise money at provincial government level, often simply to alleviate local poverty. The licensing and taxation of gambling has become a significant component of this.
In Mpumalanga, the revenues from licensing and taxing bookmaking operations now exceed those from the province's entire tourism sector, which includes the famous Kruger National Park. A sustained increase in revenues from live dealer casino games licensing and taxation is encouraging the boundaries to be stretched.
At a recent conference in Johannesburg in February 2022, representatives of the Gauteng Gambling Board — once a powerhouse of licensing in South Africa and the country’s most populous province — told delegates that they expected to publish a new draft of their regulations in March 2022, but no proposals have so far been forthcoming.
Cross-border offers of betting between South African provinces by licensed operators is typically permitted, and benefits from a comity arrangement between the provinces that has existed since the beginning of horse race pool betting more than 30 years ago.
In practical reality, little enforcement action has been noted against inter-provincial offers, or against dot.com operators serving the South African market. Online gambling in the form of casino and poker offered by Mauritius and Swaziland-based operators also remains widely available in South Africa.
Lurie confirmed to VIXIO that "there is such a struggle to shut down illegal gambling within the country's borders that extra-territorial enforcement is somewhere between lax and non-existent".
But as South Africa's online market booms, would-be new entrants may not find fresh licensing immediately available. Not all of South Africa's provincial boards offer licensing “on demand” and in some of the provinces the only option remains the purchase of an existing dormant or minimally operational licence, which may come with considerable Broad-Based Black Economic Empowerment (BBBEE) partnership requirements.
In Western Cape, the number of bookmaker licences available is uncapped, as it is in Eastern Cape, but in KwaZulu-Natal, Gauteng and Mpumalanga new applicants will need to wait for a periodic request for application (RFA) process.