Online gambling in disarray following court ruling

Two weeks ago, the court ruled that Piggs Peak and other online casino operators should cease operations. A Fin24.com report quotes Lew Koor, operations director of Piggs Peak, as saying: 'We are in the process of applying for leave to appeal the judgment and felt that we could continue operating in the interim. We have since been advised that we should stop operating for South African players until the matter has been resolved.' According to the report, clients will still be able to withdraw their existing balances from Piggs Peak by e-mailing the support centre. The decision to appeal against the ruling will draw out an already lengthy battle to legalise the gaming operations, notes a Mail & Guardian Online report. Gauteng Gambling Board's (GGB) head of legal services, Lucky Lukhwareni, said the debate over the banning started in October 2004 when Casino Enterprise (Pty) Ltd, also known as Piggs Peak, and the GGB launched an application to determine where gambling starts. The board viewed the judgment as a victory for the gambling industry. 'We have always been of the opinion that online gambling activities start where the punter is seated and concluded where the server is based,' it said.

Piggs Peak argued its case well, using the age-old defence of jurisdiction, notes a TechCentral report. The casino's servers that manage the online gambling system are located in Swaziland, which, it contested, meant it was not subject to SA law. A similar defence has been used in hundreds of legal case across the world, and not just for online gambling. Peer-to-peer services, secretive banking and even pornography have all been subject to the server jurisdiction argument. The basic premise is that if a server or service is located in a particular country, it must follow the laws of that country - even if customers elsewhere in the world are using it. This concept has changed in several countries, and to protect themselves now, many online services run a disclaimer asking the user to be cognisant of their own country's laws. The Times reports that online betting on horse racing and other sports is still legal. Therefore, the judgment does not apply to tote or fixed odds Web site betting on local and overseas racing - or on the likes of soccer, cricket and rugby. Full Fin24.com report Full Mail & Guardian Online report Full TechCentral report Full report in The Times

Meanwhile, the GGB has asked Reserve Bank Governor Gill Marcus to block Internet users from using their credit cards for gambling online, says a report in The Times. The board has also asked media houses and advertising agencies to pull all advertising for online gambling sites - including Silversands Casino's ads, Ed Jordan's Piggs Peak commercials and print adverts for the African Palace online gambling site. It also warns that those who do not will be severely punished - as will those who gamble online. The ruling prohibits adverts for online gambling sites on TV, radio, billboards and newspapers. Edward Lalumbe, GGB's chief operating officer, is quoted in the report as saying: 'Part of the reason we have been fighting online operators is because we cannot guarantee that a gambler will win. If they do, we cannot guarantee that they will be paid their winnings.' Professor Peter Collins, the National Responsible Gambling Programme's executive director, said online gambling was a growing problem. It earned the industry about R500m a year. Warren Whitfield, Addiction Action Campaign CEO, congratulated the Gauteng Gambling Board, saying: 'The problem is that you never know who is on the other side of the line. Gamblers use their wives' credit cards to gamble.' Full report in The Times

Gambling groups are uncertain about the impact of the GGB's move to effectively ban online platforms, but for now it looks like operators not registered in SA will be hardest hit. Brent Graham, who operates the Good For The Game online sports betting news portal, told Fin24.com there had been a great deal of uncertainty in the market following the announcement last week. This included the sports betting industry. He pointed out that bookmakers offering online sports betting had to comply with strict regulations from their local gambling boards, including what software they use. This was conditional to licences being issued. Licences are still being granted. Full Fin24.com report

Meanwhile, the Gambling Review Commission has not yet completed its report that would make recommendations to review the country's gambling laws and could even recommend that online gambling be legalised. ITWeb reports that the commission is 'looking at the industry holistically, including casinos, online gambling and horse racing, so as to do a comprehensive review'. That's according to Nomfundo Maseti, chief director of policy and legislation at the Department of Trade and Industry who said that although she could not pre-empt what the commission would report, it could recommend that online gambling in SA be made legal, which would require a change in legislation. Current legislation does not provide for online gambling. 'It's safe to say (the report) will be ready in about two weeks.' Maseti added that any recommendations made will have to be assessed by the department to determine if they are feasible. Full ITWeb report