3.2 LEGISLATIVE MODELS APPLIED TO INTERACTIVE GAMBLING
3.2.3 System of total prohibition
48 Liberal prohibitive systems
This system allows interactive gambling from their territory yet they prohibit it for local residents.254 The aim of such legislation is twofold: on the one hand, this prohibition guarantees the protection of law and order and public morality, while, on the other hand, the government may benefit from all the fiscal and commercial revenues which the gambling industry generates for the country.255 The system in Australia may also be described as liberal prohibitive as the Interactive Gambling Act of 2001256 prohibits Australian interactive gambling operators from providing services to Australian residents, however, anyone from outside the country may access these services.257 Moreover, the Interactive Gambling Act,258 with regard to the relation between Federal, Australian State or Territory laws, stipulates that
―it is not intended to exclude or limit the operation of a law of a state or territory to the extent that the law is capable of operating concurrently with the Act‖, that is, ―states can continue to license interactive gambling service providers‖ as long as the license under state law does not interfere with federal law.259 Building on this legislation, the industry has elaborated a code of conduct which aims at enabling internet users to filter out prohibited overseas gambling sites.260
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attitudes towards gambling, take a restrictive approach towards interactive gambling; in Saudi Arabia, there is only a single government-controlled ISP, which allows the government to dictate which sites are available and monitor the home user‘s activity.263 Prohibitive systems are characterised by the fact that interactive gambling is prohibited, that is, the offer, commercial exploitation and practise of gaming.264 The protectionist prohibitive systems permit gambling, but only if the operator is licensed domestically. They form part of the prohibitive systems because the restriction of licensing to home-based casino operators means that gambling services from abroad are illegal.265 Jurisdictions that have this system in place want to create a national system for gambling and want to protect their local markets from foreign intruders.266 Such an approach may be chosen in particular due to fiscal reasons, so that only the national government benefits from any tax revenues incurred in connection with gambling activities by residents of that country. 267 A good example for this system is the Netherlands, which doesn‘t at this point have any legislation covering interactive gambling, however, a proposal bringing about major changes into this industry was brought about by the government, and although it has not been put into place it could bring about a change to the current state of affairs.268 Should this legislation be considered, it will need further elaboration and must be approved by parliament.269 The noteworthy elements of this proposal are that interactive gambling would be granted on a limited national scale; licenses will be granted for 2/3 years; a spread of supervisory commission will be set up between representatives of the state department of Economic Affairs, the department of Public welfare and sports etc., restrictions on the age limit, digital monitoring of players, registration of operators, as well as ensuring fair play and maintain the integrity of gaming.270 Furthermore, the profits will be used for charitable purpose, however, safeguards will be in place with regards to the gambling operators; an independent organ would verify the games offered to ensure they comply with the criteria relating to the probability of winning, or the average hourly loss, the money that may be risked by players and the way in which the winnings are
263 Aronovitz et al 105.
264 Aronovitz et al 118.105.
265 Aronovitz et al 109.
266 Aronovitz et al 109
267 Aronovitz et al 111.
268 Stephen Ketteley ‗Netherlands: With regulation of interactive gambling looming, the relevance to sports integrity comes into play‘ available at
http://blog.dlapiper.com/gambling/entry/netherlands_with_regulation_of_interactive, accessed on 18 May 2013.
269 Aronovitz et al 111.
270 Aronovitz et al 111.
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paid out.271 Finally, there will be controls conducted at random to ascertain whether the operators are competent and adhere to the requirements of the license.272
South Africa follows a prohibitive system, that is, residents cannot offer interactive gambling games, they cannot take part in any games and no form of commercial exploitation of this type of gaming is permitted. The National Gambling Act of 2004 prohibits any form of gambling over the internet. However, as per the reason for this dissertation, the legislature has been for the past four years drafting and debating on a piece of legislation that would change this model. The South African legislature drafted the NGAA of 2008 so as to regulate interactive gambling and follow a more liberal model. The regulation of interactive gambling in South Africa would be by way of concession as will be stated under 3.3, this will include the ways in which the legislature intends to maintain its discretionary power as well as the regulation of interactive gambling under 3.4 which will provide the list of criteria for the application process and how the government intends to ascertain that unsuccessful candidates have no way of operating so as to maintain the power within government. The way in which the legislature intends to tax this industry is also discussed below. However, it is very important to note that South Africa needs to promulgate this legislation soon, as the point of its creation was to change the model of interactive gambling, and the rate of interactive gambling is increasing at a faster pace and people are being exposed to it more and more. The regulatory policies will be more effective implemented, and any loopholes will be visible when the legislation is in operation. The promulgation will also make sure that the government can start receiving the taxes due to this country that are unaccounted for through illegal gaming.
As mentioned above there is no one law that confines all jurisdictions to comply with it, however each jurisdiction has adopted at least one of the models listed above. These models vary according to the reasons a particular government has chosen to regulate or prohibit interactive gambling. It is important to note that each jurisdiction is guided by certain values or characteristics when choosing a particular model. Most, if not all governments aim to protect their citizens at all costs, however it is done. Some choose to prohibit with the hope that people will not be exposed to interactive gambling, others because they are religiously
271 Aronovitz et al 109.
272 Aronovitz et al 111.
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inclined, while others prohibit their own residents while permitting their operators to provide such games to foreign gamblers. On the other hand some governments choose to regulate in order to control the way in which their citizens gamble or the types of games they are exposed to as well ensuring the safety of the sites used. A further reason would be to protect the economy of such jurisdiction; this is done by way of taxation of the gambling operators and the gamblers. Moreover, ensuring that the jurisdiction can benefit from the regulating or prohibiting of interactive gambling.