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Piggs Peak vs Gauteng Gambling Board: the showdown looms

Piggs Peak vs Gauteng Gambling Board: the showdown looms

Online casinos are temporarily back in business after appealing a High Court ruling that banned online gambling in South Africa. In the Gauteng Gambling Board, however, they have a tough opponent; one that is unlikely to relent.  By MANDY DE WAAL.

While the appeal process is still at the early stage, the Gauteng Gambling Board is already investigating the right to seize all gains from the time of Judge Neil Tuchten’s decision on 20 August 2010, should the online casino’s appeal fail. And the Gambling Board’s target isn’t just online casinos, but everyone who helps facilitate online gambling, including banks, advertisers and internet service providers (ISPs).

“It is business as usual” said a defiant Piggs Peak online casino after winning the right to appeal what the Gauteng Gambling Board called a “ground-breaking ruling”. Judge Tuchten decreed online gambling illegal in South Africa, regardless of whether the servers of gambling companies were located outside of this country. The ruling affects not only Piggs Peak, but all online gambling, including the likes of Silver Sands online casino and African Palace. However, the ruling excludes sports betting.

Directly after the ruling Piggs Peak and Silver Sands shut shop, but only for as long as it took Piggs Peak to seek leave to appeal. The appeal realised a suspension of the gambling ban and enabled web casino operations to continue. Silver Sands and Piggs Peak reopened almost immediately, while African Palace took a more cautious stance. A notice on African Palace’s site stated that the online casino “decided to permanently suspend all casino activities at African Palace Casino until the highest court in South Africa makes a final decision regarding the legality of online gambling in South Africa for South African players.”

“The ruling was against us, but leave to appeal was granted and it is business as usual until the appeal is finalised,” said Dia Wilson, marketing manager of Piggs Peak Casino. Wilson refused to say how many players used the online gambling service, but said the casino’s market covered the rand common monetary area. “Basically you are looking at South Africa, Swaziland, Namibia and Lesotho,” she said.

The Gauteng Gambling Board’s chief operating officer Edward Lalumbe said casinos like Piggs Peak and Silver Sands were taking a gamble and could face forfeiture of all the gains made since 20 August 2010. “It is not the end of the day. When the online casinos have exhausted their rights, we will appeal for forfeiture and will look to seize whatever gains they collected in the period after the original ruling. We can’t stop them at this stage, but they will be taking the risk of following the advice of their lawyers.”

Watch: One of Dolph Lundgren’s horrible I Win My Fights ads for Silversands (Warning: nauseating)

Lalumbe said the board would obtain legal advice and would target all players in the facilitation of online gambling. “Whoever benefits from the proceeds of crime or is in some way involved in the provision of online gambling will be made to return the proceeds they have received from the activity if it is found that online gambling is illegal. We know what funds are at play, the money that gets moved by banks. We know who advertises and where they advertise, and we are following who gets what revenues.”

The board is of the opinion that anyone who helps facilitate an illegal transaction could be liable for a forfeiture claim. “It is basically like murder. Anyone who removed the body can be held accountable. In terms of the Prevention of Organised Crime Act, all people who make profits from an illegal activity can be required to return the profits of that illegal activity. We may see a lot of parties whose assets get frozen,” said Lalumbe. He added that if ISPs were aware that the content traversing their networks was illegal and they continued to allow this activity, they too may be deemed to be involved in an illegal activity.

Digital media lawyer Paul Jacobson said the gambling board was reaching in terms of Internet service providers and was trying to “outsource the board’s responsibility” to ISPs. “The judgment itself doesn’t refer to service providers at all. The gambling board is trying to use the judgment as an authority to include ISPs on the assumption that the ISP is facilitating and, therefore, involved in an illegal activity.”

Jacobson said the gambling board shouldn’t try to get ISPs to police online gambling. “The ECT Act has a provision that shields ISPs from liability in cases like this. ISPs shouldn’t have to actively police their network to see who is using their network or what’s going on across their network. ISPs act as mere conduits for data and in terms of the ECT Act must be hands-off to claim protection under the act.”

Photo: Paul Jacobson.

The situation was a slippery slope that could see all sorts of demands made on ISPs if enforced, said Jacobson, who added: “Today it is online gambling that needs to be stopped by ISPs and tomorrow it’s the recording industry authorities who want the same kind of intervention. The recording industry of SA tried this a little while back, but the ISPs told them to forget it.”

You can bet that many local advertising agencies and media owners will be watching the outcome of the appeal very closely. Piggs Peak, Silver Sands and African Palace are aggressive advertisers as anyone who has been irritated by the high frequency of those awful Dolph Lundgren adverts on DStv can attest to. Earlier the agencies and media houses were asked to pull advertising material by the Gauteng Gambling Board who warned that stiff penalties would apply to those who ignored the warning.

Fin24 quoted the board’s head of legal services, Lucky Lukhwareni who said companies involved in the advertising of online gambling would also face the law and, if found guilty, could be fined up to R10 million or 10 years in jail or both.

A date has yet to be set for the appeal which will be heard in the Bloemfontein Appeals Court, and as the showdown looms, online gambling addiction is on the increase according to experts. “We are aware that online gambling is a growing problem. It currently constitutes a small percentage of the calls we receive from problem gamblers, but this is only because of the low number of computers available to gamblers in this country. As the Internet becomes more popular and as gambling spreads to mobile devices we will see an increase in addiction rates,” said Peter Collins, executive director of the National Responsible Gambling Programme.

Set up after the gambling industry was legislated locally, the NRGP oversees education on and treatment for gambling addiction. It runs a gambling counselling line on 0800 006 008, as well as in-patient and out-patient treatment centres across the country. NRGP does research on the extent of gambling addiction in the country and Collins said 4% of problem gambling calls related to online gaming. He said the industry was earning more than R500 million a year and was growing rapidly.

“The big factor with online gambling is convenience. You can gamble online any time of the day or night without much effort, in fact you can pretty much gamble from your bed. This makes it hugely problematic. Another issue is the fact that online gambling operates outside of the law.” Collins called for online gambling to be legalised so that it could better be regulated. “If the online industry was regulated, we could manage responsible gambling programmes because there is software that enables this for online gambling. Outlawing digital gambling doesn’t make it go away, it just makes it harder to police and impossible to regulate.”

This was made abundantly clear when The Daily Maverick asked Piggs Peak online casino what programmes they were involved in to promote responsible gambling and to help with online gaming addiction. “We have a responsible gambling system in place, but it is monitored internally,” said Wilson. “We are part of ECOGRA. I am not sure of what that stands for or what the URL is, but you can find it if you Google the word.”

Wilson appears to be more than a little confused because ECOGRA or the eCommerce and Online Gaming Regulation and Assurance is a London-based NGO that oversees player protection, standards and operator conduct. As such it manages disputes, but in no way promotes responsible gambling, nor does it offer any education, outreach or counselling on gambling addiction. ECOGRA’s opening gambit for gamblers with a dispute is “please make certain that at least two weeks have passed since the problem began and all reasonable attempts have been made to negotiate a solution.”

That’s small solace if you’ve gambled away your house, your car, your spouse and your life, and you’re desperately looking for help to try to turn things around. DM

Read more: “Get SA’s gambling house in order” at Business Day, and “Online gambling in disarray following court ruling” at LegalBrief.


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