Western Cape Gambling and Racing Board - Annual Performance Plan 2021-2022 - Western Cape ...
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WESTERN CAPE GAMBLING AND RACING BOARD ANNUAL PERFORMANCE PLAN 2021/2022 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 1
EXECUTIVE AUTHORITY STATEMENT The Western Cape Gambling and Racing Board (WCGRB) is responsible for providing a stable, just, consistent and effective regulatory environment for gambling in the province. Furthermore, it must inspire public confidence and trust that gambling in the province is conducted honestly and is free from corrupt elements. In addition, it also ensures that gambling contributes towards the economy of the Western Cape. This is done in two ways – firstly with the industry itself creating opportunities for employment and contributing to the tourism sector, and secondly through the collection of taxes and levies that contribute to government revenue. The latter is used for the purposes of service delivery in education, health and infrastructure, amongst other, in the Western Cape. In setting out the WCGRB’s Annual Performance Plan for 2021/22 guidance was taken from the vision of the Western Cape Provincial Strategic Plan, 2019-2024 which seeks to create “A safe Western Cape where everyone prospers”. The plan includes five Vision-inspired Priorities or “VIPs”: 1. Safe and cohesive communities 2. Growth and jobs 3. Empowering people 4. Mobility and spatial transformation 5. Innovation and culture The outcomes of the WCGRB are also aligned to the National Development Plan strategic outcomes. This is all taken into consideration in the development of the WCGRB’s vision which, over the next five years, aims to be the leading gambling regulatory authority for innovative, sustainable business practices, that maximises economic opportunities in a socially responsible manner with the purpose of having a properly regulated gambling industry in the Western Cape. To this end, the Annual Performance Plan will assist in monitoring and evaluating the performance of the Board against set criteria, thereby enhancing corporate governance, effectiveness, efficiency and public accountability. The WCGRB have my full support as they set about implementing the 2021/22 Annual Performance Plan to ensure the objectives and matching programmes achieve maximum benefit for all who live in the Western Cape. Mr David Maynier Minister for Finance and Economic Opportunities 2 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
ACCOUNTING AUTHORITY STATEMENT It gives me great pleasure to present, on behalf of the Board, the Annual Performance Plan (APP) of the Western Cape Gambling and Racing Board for the 2021/22 financial year. This Board’s 2021/22 APP is rooted in the principles and targets of the development trajectory as set out in South Africa’s National Development Plan. The APP of the Board is informed by the Provincial Strategic Plan (PSP) 2019 - 2024. The PSP sets out the Western Cape Government’s (WCG) vision and strategic priorities. Its content is defined by the WCG’s approach to addressing the economic, social, and development challenges in the Province. The following priorities were outlined in the Government’s Plan of Action and the Premier’s State of the Province Address: • Economy and jobs • Empowering people • Public transport, mobility and spatial transformation • Safe and cohesive communities • Innovation across government and culture change in the Western Cape. Where possible, the planned outputs of the Board have been linked to the Strategic Priorities as set out in the PSP to ensure that the Board’s planned performance is in line with the strategic objectives of the Western Cape Provincial Government. The Annual Performance Plan details the pre-determined objectives and targets for the year under review whilst projecting intended performance targets and programme indicators for the two outer years in the Medium Term Expenditure Framework of the Board and it does so with the eye on the country, and the Province’s key strategic priorities as well as the current socio-economic constraints and opportunities. The APP unpacks the activities as well as administration budget essential for achieving the Board’s goals. In doing so the WCGRB reaffirms its commitment in the period under review to enforce effective regulation of the gambling industry. The Western Cape Gambling and Racing Board has been charged with the responsibility to perform all functions assigned to it in terms of the Western Cape Gambling and Racing Act, 1996 (Act 4 of 1996). The objectives of the Board are to control and regulate gambling within the Province of the Western Cape to: • provide a stable, just, consistent and effective regulatory environment; • inspire public confidence and trust, in an environment free from corruption and unlawful gambling and racing activities; and • contribute to the economy of the Western Cape in an innovative and socially responsible manner. Mr David Lakay Accounting Authority: Chairperson of the Board Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 3
OFFICIAL SIGN-OFF It is hereby certified that this Annual Performance Plan: • was developed by the members of the Board and the management of the Western Cape Gambling and Racing Board under the guidance of Minister D Maynier; • was prepared in line with the 2020-2025 Strategic Plan of the Western Cape Gambling and Racing Board; • accurately reflects the performance targets which the Western Cape Gambling and Racing Board will endeavour to achieve given the resources made available in the budget for 2021/22. Ms Yvonne Skepu Manager: Legal Services Ms Sweetness Sixubane Manager: Human Resources Ms Megan Basson HOD: Licensing Mr Robin Bennett HOD: Regulatory Compliance Mr Alwin Matthews HOD: ICT Ms Zoé Siwa Chief Financial Officer Mr Primo Abrahams Chief Executive Officer Mr David Lakay Accounting Authority: Chairperson of the Board Approved by: Mr David Maynier Executive Authority/Minister for Finance and Economic Opportunities 4 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
ABBREVIATIONS/ACRONYMS The following list contains all the abbreviations/acronyms that is utilised throughout the annual performance plan, irrespective of which section of the annual performance plan it pertains to: Abbreviation/ Description Acronym 4IR Fourth Industrial Revolution 5IR Fifth Industrial Revolution ADFIN / Adfin Administration and Finance APP Annual Performance Plan AOP Annual Operation Plan BBBEE Broad Based Black Economic Empowerment Board Western Cape Gambling and Racing Board board Collective of non-executive Board members CASA Casino Association of South Africa Capex Capital Expenditure CEO Chief Executive Officer CFO Chief Financial Officer CSI Corporate Social Investment Constitution The National Constitution of the Republic of South Africa, 1996 COVID-19 Coronavirus disease 2019 DoL Department of Labour DRP Disaster Recovery Plan DTIC Department of Trade, Industry and Competition DTPW Department of Transport and Public Works EE Employment Equity ERM Enterprise Risk Management EXCO Executive Committee FIC Financial Intelligence Centre FICA Financial Intelligence Centre Act, 2001 FY Financial Year GGR Gross Gambling Revenue GLC Gambling Liaison Committee GRAF Gambling Regulators Africa Forum GRAP Generally Recognised Accounting Practice G2E Global Gaming Exposition HOD Head of Department HR Human Resources ICT Information and Communication Technology IT Information Technology ITIL Information Technology Infrastructure Library Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 5
ABBREVIATIONS/ACRONYMS IYM In Year Monitoring LPM Limited Pay-out Machines MEC Member of the Provincial Executive Council Minister Western Cape Minister of Finance and Economic Opportunities MOU Memorandum of Understanding MTEF Medium Term Expenditure Framework NAT JOINTS National Joint Operation Intelligent Structure NCEMS National Central Electronic Monitoring System NCGB Northern Cape Gambling Board NGB National Gambling Board NTR National Treasury Regulations OD Organisational Development OHASA Occupational Health and Safety Act, 1993 Opex Operational Expenditure PAC Public Accounts Committee PAIA Promotion of Access to Information Act, 2000 PAJA Promotion of Administrative Justice Act, 2000 PESTEL Political, Economic, Social, Technological, Environmental and Legal PFMA Public Finance Management Act, 1999 PGWC Provincial Government of the Western Cape PLA Provincial Licensing Authority PI Performance Indicator POPI Protection of Personal Information Act ,2013 PSP Provincial Strategic Plan RFI Request for Information RFP Request for Proposal SARS South African Revenue Service SAPS South African Police Services SARGF South African Responsible Gambling Foundation SCA Supreme Court of Appeal SC Senior Counsel SCM Supply Chain Management SCOFEOT Western Cape Provincial Parliament’s Standing Committee on Finance, Economic Opportunities and Tourism SCOPA Standing Committee on Public Accounts SOP Standard Operating Procedures SP Strategic Plan Act Western Cape Gambling and Racing Act, 1996 TID Technical Indicator Descriptions 6 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
A ABBREVIATIONS/ACRONYMS TIPS Trade and Industrial Policy Strategies TR Treasury Regulations Type B LPM Site Sites with 6 to 20 LPMs Type C LPM Site Sites with 21 to 40 LPMs UPS Uninterrupted Power Supply VIPs Vision-inspired Priorities WC Western Cape WCDTPW Western Cape Department of Transport and Public Works WCED Western Cape Education Department WCG Western Cape Government WCGRB Western Cape Gambling and Racing Board WCPT Western Cape Provincial Treasury WSP Work Skills Plan Western Cape The Province of the Western Cape Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 7
CONTENTS PART A: Our Mandate 9 1. Relative legislative and policy mandates 10 2. Institutional Policies and Strategies 12 3. Relevant Court Rulings 13 PART B: Our Strategic Focus 15 4. Situational Analysis 16 4.1 External environment analysis 16 4.2 Internal environment analysis 20 PART C: Measuring Our Performance 29 5. Institutional Programme Performance Information 30 5.1 Programme 1: Board and Administration 30 5.2 Programme 2: Licensing 35 5.3 Programme 3: Regulatory Compliance 37 5.4 Programme 4: Information and Communication Technology 40 PART D: Technical Indicator Descriptions (TID) 43 6. Programme 1: Board and Administration 44 7. Programme 2: Licensing (TID) 52 8. Programme 3: Regulatory Compliance (TID) 54 9. Programme 4: Information and Communication Technology (TID) 57 PART E: Annexures to the Annual Performance Plan 61 10. Annexure A: Amendments to the Strategic Plan 62 8 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
A OUR MANDATE 9
OUR MANDATE 1. Relative legislative and policy mandates Basic Conditions of Employment Act, Financial Intelligence Centre Act, 2001 1997 (Act 75 of 1997) as amended (Act 38 of 2001), as amended (“FIC Act”) This Act outlines the basic conditions of employment for The FIC Act established the Financial Intelligence workplaces in South Africa and has a direct bearing on Centre and Money Laundering Advisory Council to employees of the Western Cape Gambling and Racing combat money laundering and financing of terrorist and Board. related activities. The Board is, pursuant to this Act a supervisory body and its licence holders are accountable Broad-Based Black Economic institutions. The FIC Act accords a number of statutory Empowerment Act, 2003 (Act 53 of duties, functions and powers on the Board in exercising 2003) and Codes as amended its supervisory oversight of the gambling industry. This Act constitutes the legislative framework for the promotion of black economic empowerment; empowers Intergovernmental Relations Framework the Minister of Trade and Industry to issue codes of good Act, 2005 (Act 13 of 2005) practice and to provide for matters connected therewith. This Act establishes a framework for the national The Board enforces the legislative and policy objectives government, provincial governments and local on Broad-Based Black Economic Empowerment through governments to promote and facilitate intergovernmental the imposition of licence conditions on licence holders relations; to provide for mechanisms and procedures to and complies with the prescripts that is binding on the facilitate the settlement of intergovernmental disputes; Board as a public entity. and to provide for matters connected therewith. Disaster Management Act, 2002 (Act 57 Labour Relations Act, 1995 (Act 66 of of 2002) as amended and Regulations 1995) as amended (“LRA”) This Act establishes a legal framework for an integrated, The LRA regulates and guides the Board, as employer, to co-ordinated disaster management policy that focuses give effect to the rights, duties and structures created in on preventing or reducing the risk of disasters, mitigating terms of that Act and in so doing ensure labour harmony the severity of disasters, emergency preparedness, rapid and the democratisation of the work place. and effective response to disasters and post-disaster recovery. It provides for the establishment of national, National Gambling Act, 2004 (Act 7 of provincial and municipal disaster management centres 2004) and Regulations with a policy focus on the rehabilitation and functioning This Act sets out the competencies of the national and of these centres. It further provides for the alignment provincial gambling Boards with respect to the regulation of the functions of the National Disaster Management and control of gambling and racing in South Africa. This Advisory Forum to accommodate the South African Act, together with the Western Cape Gambling and National Platform for Disaster Risk Reduction. Various Racing Act, 1996 and the respective Regulations passed Regulations were published in 2020 to address, prevent thereunder, constitutes the statutory mandate of the and combat the spread of the Coronavirus COVID-19. Board as Regulator. Various Guidelines and Regulations were issued under the Disaster Management Act to regulate the conduct This Act further provides for uniform norms and and impose restrictions on individuals, employers and standards with respect to gambling and racing businesses to manage and prevent the risk of exposure throughout the Republic. and transmission of the coronavirus. Occupational Health and Safety Act, 1993 Employment Equity Act, 1998 (Act 55 of (Act 85 of 1993) as amended 1998) as amended This Act provides for the health and safety of persons This Act constitutes the legal framework for the at work and for the health and safety of persons in elimination of unfair discrimination in the workplace connection with the use of plant and machinery; the and prescribes the processes and procedures that protection of persons against health and safety hazards the Board must implement to achieve a diverse and arising out of or in connection with the workplace; and to competent workforce that is broadly representative of provide for matters connected therewith. the demographics of the Western Cape. 10 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
A OUR MANDATE Preferential Procurement Policy is to ensure that all revenue, expenditure, assets and Framework Act, 2000 (Act 5 of 2000) liabilities of government institutions and departments and Regulations are managed efficiently and effectively; provides for the responsibilities of persons entrusted with financial This Act constitutes the framework within which the management in government and to provide for matters Board must give effect to the Constitutional imperative connected therewith. of implementing a preferential procurement policy and system that is fair, equitable, transparent and cost- effective. Skills Development Act, 1998 (Act 97 of 1998) Promotion of Access to Information Act, This Act provides an institutional framework to devise 2000 (Act 2 of 2000) (“PAIA”) and implement national, sector and workplace strategies to develop and improve the skills of the South African PAIA prescribes the statutory process according to work force; to integrate those strategies within the which applications or requests for access to information National Qualifications Framework contemplated in are considered and processed and gives effect to the South African Qualification Authority Act, 1995; the constitutional right of access to information. It is to provide for learnerships that lead to recognised applicable to both private entities or organisations and occupational qualifications; to provide for the financing public bodies. of skills development by means of a levy-grant scheme and a National Skills Fund; to provide for and regulate Promotion of Administrative Justice Act, employment services; and to provide for matters 2000 (Act 3 of 2000) (“PAJA”) connected therewith. PAJA was enacted pursuant to section 33 of the Constitution of the Republic of South Africa, to give Skills Development Levy Act, 1999 (Act 9 effect to the right to administrative action that is lawful, of 1999) reasonable and procedurally fair and the right to request This Act provides for the imposition of a skills development written reasons for administrative action taken. As a levy; and for matters connected therewith. public body, the Board is bound to give effect to the principles of procedurally fair administrative action as prescribed by this Act. The Constitution of the Republic of South Africa, (Act 108 of 1996) Protection of Personal Information This is the Supreme law of the country and outlines inter Act, 2013 (Act 4 of 2013) (“POPI”) as alia South Africa’s system of government, the role and amended responsibilities of the different spheres of government, the basic human rights of all citizens and creates a POPI’s objectives are inter alia to promote the protection number of Constitutional institutions. of personal information processed by public and private bodies; to introduce certain conditions to establish minimum requirements for the processing of personal Western Cape Gambling and Racing Act, information and to provide for the establishment of an 1996 (Act 4 of 1996) as amended and Information Regulator to exercise certain powers and to Regulations perform certain duties and functions in terms of this Act. This is the primary legislation governing the Board’s Certain provisions of POPI took effect on 11 April 2014. regulatory functions and powers. It sets out inter alia Sections 2 to 38; 55 to 109; 111; and 114(1), (2) and (3) shall the establishment and operations of the Board, the type commence on 01 July 2020 and sections 110 and 114(4) of licenses that the Board is empowered to consider as shall commence on 30 June 2021. The effect of this is well as the Board’s sources of funding. It further provides that all organisations must be compliant with POPI by 1 for the imposition of statutory taxes and fees payable July 2021. by licence holders, as well as administrative penalties for non-compliance. Public Finance Management, 1999 (Act 1 of 1999) (“PFMA”) as amended The Board is a Schedule 3C Provincial Public Entity and bound by the financial and budget management prescripts of this Act. The PFMA’s primary objective Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 11
OUR MANDATE 2. Institutional Policies and Strategies The Board’s policies are based on the Constitution, the the WCG an employer of choice in the province. It Act, the National Act, National Treasury Instructions, also includes keeping corruption out of the Western Provincial Treasury Instructions and such other laws and Cape. regulations applicable to the Board. In terms of section 4 of the Act, the main object of The Provincial Strategic Plan 2019 – 2024 (PSP) that was the Board shall be to control all gambling, racing and launched by the Premier in March 2020 is the guiding activities incidental thereto in the Province subject to document for the growth and development of the this Act and any policy determinations of the Executive Province. It outlines the priorities of the Western Cape Council relating to the size, nature and implementation Government (WCG) in the form of five Vision-Inspired of the industry. Priorities (VIPs), namely: The Western Cape Gambling and Racing Board is 1. A safe Western Cape where everyone prospers: therefore the Provincial Licensing Authority for gambling Improving law enforcement and crime fighting by and racing in the Province of the Western Cape and is ensuring and supporting a modern, honest and therefore not a service delivery public entity. For that professional provincial police service in the Western reason, the Board’s outcomes cannot directly be linked Cape, and partnering with national and local to all the key strategic priorities in the Government’s Plan government, State-owned Enterprises, civil society of Action. and communities, and creating safe spaces. The Board has assessed the alignment of its plans with 2. Growth and Jobs: Growing the economy and creating the Vision-Inspired Priorities. These alignments are fair access to real and long-term jobs in the Western disclosed in Part C: Measuring our Performance under Cape (“A job in every household”). This includes a each Sub-Programme. primary focus on creating an enabling environment to grow the economy, especially through removing The problem statements that frame the five VIPs have red tape, prioritising infrastructure and resource not changed. What COVID-19 has done is to exacerbate resilience with a focus on water, energy and waste the challenges that are confronting the Province, and and appropriate climate change responses. new ones have emerged. For that reason, the Western 3. Empowering people: It includes providing an Cape Recovery Plan has been developed. It identifies education system that is accountable, retains as the problems that require an urgent, whole-of-society many learners as possible, and prepares learners for response in order to create jobs, foster safe communities, the fast-changing world of work in the Western Cape, and promote the well-being of all the residents of the as well as building a healthcare system that delivers Western Cape. quality care in the Western Cape. With the focus on Education, Health and Social Development, it links to The Recovery Plan is built on four themes: youth development, child and family development, • COVID RECOVERY: The pandemic will be with us and arts, culture and sports aspects of dignity, for the foreseeable future; existing measures must wellbeing and quality of life along the life-course. continue and new ones put in place to deal with disruptions to the economy and service delivery. 4. Mobility and spatial transformation: Safe, reliable, • JOBS: The economic impact of COVID-19 has been affordable and low carbon public transport, including severe. We can only recover if our economy grows a provision rail service that runs on time and works and our citizens generate income. in the Western Cape, and catalysing investment in • WELLBEING: Government must ensure that the mixed use, mixed income neighbourhoods through basic human needs of our citizens are realised, as strategic land release. Speeding up the delivery of guaranteed in the Constitution. basic services for all in the Western Cape is also • SAFETY: This is the over-arching theme for the prioritised, which includes housing opportunities. Provincial Strategic Plan, and it is equally relevant going forward. It is inextricably linked with Wellbeing, 5. Innovation and culture: Building capacity for as Safety cannot be achieved if basic human needs adaptive governance and management, innovation, are not met. governance for service delivery impact, and making 12 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
A OUR MANDATE The Board’s strategy for the next financial year will be This is also in line with the principle of the separation of informed by the Western Cape Recovery Plan to ensure powers. that we assist the Western Cape Government, as far as possible, with the COVID Recovery, Jobs, Wellbeing and CASINO ENTERPRISES (PTY) LTD v Safety. GAUTENG GAMBLING BOARD AND OTHERS 2011 (6) SA 614 (SCA) The Board embarked on in-house research in the form of The court confirmed that internet gambling remains a desktop analysis of jurisdictions that implemented play illegal in South Africa. The Court further confirmed that management systems to assist with responsible gambling. persons offering or making available a gambling activity The Board has completed the initial phase of information within the borders of South Africa require a licence to do gathering and a draft research report was circulated so, even if their operations are situated extra-territorially. to the industry for inputs and comment. Guided by the comments received, the Board resolved to commission VUKANI v WCGRB AND OTHERS CASE further research into specific areas pertaining to problem NUMBER 21127/2008 CAPE HIGH COURT gambling and responsible gambling measures in the The applicant brought an application to review the Western Cape and the report will be refined in the new granting of a key employee licence to an individual in financial year, taking into account the inputs received. circumstances where such applicant had pending legal The Board intends to engage other PLAs and the NGB proceedings. The judgement outlined the different factors with the process of the player management card. that the Board ought to consider when determining the suitability of an applicant. The Board has been requested to conduct further research on becoming financially self-sufficient and NATIONAL GAMBLING BOARD v not rely on the Western Cape Government for financial PREMIER OF KZN AND OTHERS (CCT support. 32/01) 2001 ZACC, 2002 (2) SA 715 The gambling industry in the Province has matured and In essence the dispute concerned the functional areas stabilised and there is a need for further investment of concurrent legislative competence with respect to and injection of economic growth through licensing gambling contained in schedule 4 of the Constitution. of additional modes of gambling. The Board will invite The Court dismissed the application as it found that both prospective applicants to submit an expression of organs of state failed to comply with Chapter 3 of the interest to gauge the market opportunities. Constitution, Sections 40 and 41 in particular. The Court re-iterated the duty on organs of state to avoid 3. Relevant Court Rulings legal proceedings against one another and in particular to adhere to the principles of co-operative governance AKANI GARDEN ROUTE (PTY) LTD v as enshrined in the Constitution. PINNACLE POINT CASINO (PTY) LTD 2001 (4) SA 501 (SCA) TEEMANE (PTY) LTD T/A FLAMINGO CASINO v THE CHAIRPERSON OF THE The Court held that the regulation of gambling, and NORTHERN CAPE GAMBLING BOARD casinos in particular, is a Schedule 4 concurrent (“NCGB”) CASE NUMBER 2023/2016 competence in the Constitution, in that both national and provincial legislation may be passed in relation to same. The Applicant challenged the decision of the Northern Furthermore, the National Gambling Act 33 of 1996 vests Cape Gambling Board that freeplay credits awarded control and the regulation of gambling in independent by the casino to its loyalty card holders forms part of boards at national and provincial level. Section 2(2) of the gross receipts for purposes of calculating the levy the Western Cape Gambling and Racing Act provides payable on gross gaming revenue. The Court concurred that the right to carry on any gambling within the with the Applicant’s submission that freeplay does not province vests exclusively in the Board. The Court held form part of gross receipts because the Applicant does that Section 37(1) (j) of the provincial Act meant that the not receive any revenue when a patron play utilizing the competence to require guarantees vested in the Board free credits. That the applicable Regulation 2 imposes a and not the Provincial Executive Authority. It ruled that levy on “revenue” received by a licensed operator. The policy determinations cannot override, amend or be in NCGB argued that the legislation makes no provision conflict with laws, including subordinate legislation. for the deduction of any costs. The Court opined that Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 13
OUR MANDATE if the Legislature intended to include freeplay as part of The Board resolved to appeal the judgement, after a licensed Operator’s gross win, it ought to have done having obtained legal advice on the prospects of success so expressly. The Court set aside the Board’s decision on appeal. and substituted same with an order that freeplay credits do not constitute nor form part of “gross receipts”, for SUNWEST INTERNATIONAL (PTY) LTD purposes of Regulation 2. It is therefore not taken into AND WORCESTER CASINO (PTY) LTD v account for the computation of “gross win”. WCGRB ET AL, CASE NUMBER: 2203/18 Two licence holders applied for a declaratory order in the THE KWAZULU-NATAL BOOKMAKERS’ Western Cape High Court, for an order in the following SOCIETY AND 2 OTHERS v PHUMELELA terms: GAMING AND LEISURE LTD AND 16 • Declaring that Freeplay credits do not constitute OTHERS CASE NUMBER 38728/2015 a “drop” for the purpose of the computation of The application was in the main for an order interdicting adjusted gross revenue and does not form part of the three Totalisators from offering sports pools, in that the taxable revenue per Section 64 of the Act read this conduct amounts to an encroachment on the powers with Schedule III; of the National Lottery and the National Lotteries Board. • Ordering that the Minister for Finance, in his capacity It infringes the South African Constitution, 1996, the as the custodian of the provincial revenue fund, Lotteries Act, 1997 and the Rule of law and that, to the refund the Applicants R44 570 465 and R1 763 983, extent that any of the nine provincial gambling Boards respectively in relation to taxes paid; and authorised the Totalisators to offer sports pools, that • Alternatively that the Board offset the referenced such authorisation would be unlawful. The High Court amounts against the Applicants’ future liability to dismissed the application. On appeal to the SCA, it ruled pay gambling tax; that the application was opportunistic and aimed at achieving a monopoly in respect of betting on sports, The Court held that Freeplay used to bet on slot machines other than horse racing. The Court ruled that Totalisator at the applicants’ casinos do not constitute part of the betting on sports does not fall within the definition of “drop” for purposes of the computation of adjusted gross a sportspool as envisaged in the Lotteries Act and is revenue in terms of section 64 of the Act”) read with regulated in terms of National Gambling Act and the Schedule Ill. Further that Freeplay credits accordingly do provincial legislation. The appeal was therefore dismissed not form part of taxable revenue in terms of section 64 of with costs. the Act read with Schedule Ill. The Court directed that the Board off-set the amount agreed between the parties or TSOGO SUN & 3 OTHERS v WCGRB & 1 proved by the Applicants against the applicants’ future OTHER, CASE NUMBER: 21344/17 liability to pay gambling tax in terms of section 64 of the The Applicants launched an application in the Western Act read with Schedule Ill. Finally, that each party is to Cape High Court, Cape Town for the review, setting aside pay its own costs. and declaring unlawful and invalid the Board’s decision to impose BBBEE-related conditions of licence on the The Board resolved to appeal the judgement, after Applicants as licence holders. Further, that the Court having obtained legal advice on the prospects of success award costs against any party opposing the Application. on appeal. The Minister and the Board filed Applications The Board argued that it is empowered in terms of the for Leave to Appeal. BBBEE Act and the National Act to impose conditions to ensure licence holders achieve certain BBBEE targets. The matter was heard on 5 March 2019. Judgement was delivered on 11 December 2019, in favour of the Board. The Court held that the Board is competent to impose the impugned conditions on existing licence holders; that a review of the licence conditions is not a condition precedent for imposing licence conditions and there are no preconditions for the exercise of its powers; that the Board did not rigidly fetter its discretion in deciding to impose the impugned conditions and that the Board did not act unreasonably and irrationally when it imposed the impugned conditions. The Application was therefore dismissed with costs. 14 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
OUR B STRATEGIC FOCUS 15
OUR STRATEGIC FOCUS 4. Situational Analysis The Western Cape Gambling and Racing Board (WCGRB) • Although Gauteng, compared to other provinces, is a statutory body constituted in terms of the Western generated the highest amount of GGR relative to Cape Gambling and Racing Act. The WCGRB is a Schedule casinos (44.3%), betting on horse racing and sport 3C PFMA provincial public entity with the Western Cape (43.6%), and bingo (40.8%), the highest amount of Provincial Treasury as its parent/responsible department. GGR in the LPM sector was generated in Western There are two levels of oversight of the Board’s affairs. At Cape (26.8%) in FY2018/19. national level, the NGB conducts oversight evaluations • A total amount of R3 billion of taxes and levies was and at provincial level the Board reports to Provincial collected during FY2018/19. Treasury and the Western Cape Provincial Minister of Finance and Economic Opportunities. The Provincial • During FY2018/19 at 62.3%, casinos contributed the Parliamentary Oversight committees are the Standing highest amount of taxes/levies paid by comparison to Committee on Finance, Economic Opportunities and other gambling modes. Although Gauteng collected Tourism; and Public Accounts Committee. the highest amount of taxes/levies in FY2018/19, the largest portion of taxes/levies in the LPM sector were The external effect of the Board’s area of responsibility collected in Kwazulu-Natal (31.7%) and the Western is centred on development of socially responsible Cape (27.5%). economic reforms and the protection of the public while • Overall, growth was recorded in terms of GGR safeguarding the industry. generated in the gambling industry – an increase by 7.0% from FY2017/18 to FY2018/19. To this end, the Board continuous to monitor the industry • The highest increase in GGR was noted in the bingo for any over stimulation and rapidly advancing changes. sector (26.6%) followed by the betting sector (17.8%) and specifically as a result of betting on sports as offered by bookmakers. For the LPM sector an 4.1 External environment analysis increase by 13.2% was reflected during the same The Board has utilised the PESTEL analysis to analyse the period. Casino GGR growth decreased by 1.2% in factors that may have a profound impact on the Board’s 2018/19 when compared to the growth in 2017/18. performance. • The highest growth in GGR generated per GAMBLING INDUSTRY IN SOUTH AFRICA province was noted in Limpopo (23.4%), largely due to increases in the number of active LPMs and The following information represents the audited National operational bingo positions, followed by Kwazulu- Gambling Statistics compiled by the National Gambling Natal (19.7%) and Mpumalanga (14.1%). A negative Board in South Africa for the 31 March 2019 financial year: growth in GGR was recorded in North West and the • A total amount of R30.8 billion of gross gambling Northern Cape. revenue (GGR) was generated during FY2018/19. • Although Gauteng represented the highest amount • During FY2018/19 casino GGR accounted for 60.5% of turnover relative to casinos (45.1%), betting on of the gambling market followed by betting GGR with horse racing and sport (60.7%), and bingo (40.2%) a market share of 23.5%. Limited Pay-Out Machines compared to other provinces, the highest amount of (LPM) GGR accounted for 10.9% of the market whilst money in the LPM sector was wagered in the Western bingo GGR had the least market share in terms of Cape (27.9%) in FY2018/19. GGR of 5.1%. • The collection of taxes/levies increased by 6.8% to • From FY2009/10 to FY2018/19, the trend in market R 3.1 billion from FY2017/18 to FY2018/19. share showed that the share of casino GGR in the market has dropped from 84.4% to 60.5%, whilst WESTERN CAPE GAMBLING STATISTICS the share of other modes (betting, LPM and bingo The information below was compiled by using the sectors) has increased. National Gambling Statistics compiled by the National • Compared to all other provinces, Gauteng at a 41% Gambling Board for the 31 March 2020 and 31 March share, accounted for the highest amount of GGR 2019 financial years in respect of the Western Cape. generated in FY2018/19 compared to Western Cape (17.2%) and Kwazulu-Natal (17.6%). 16 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
B OUR STRATEGIC FOCUS • As at 31 March 2020, GGR from all modes of gambling The World Economic Forum suggests that “from a totalled R5.9 billion in the Western Cape. Of this total, business perspective, companies generally cannot be casino GGR accounted for 49.8% of the gambling successful in societies that are not functioning well.” market followed by betting GGR with a market of With the educational drop-out rate expected to increase 33.7% and LPM GGR with a market of 16.5%. due to disrupted education and reduced parental finances, a higher unemployed youth rate and increased • Casino GGR amounted to R2.9 billion in FY2019/20 unemployment, it will take some time for society to with the same results reported for FY2018/19. be functioning well again and accordingly for business • In terms of the generation of GGR, positive growth in economic activity to reach close to normality. GGR has been recorded in all gambling modes except the casino sector, whereas the highest increase in It is evident from recent tax collections and revenue GGR was noted in the betting sector (36% increase statistics that the casino and horse racing sectors no since the prior year) followed by the LPM sector (12% longer only experience a lower growth rate, but in some increase since the prior year). periods, a negative growth rate or decline. The industry • From FY2019 to FY2019, however, the trend in is constantly seeking new contingencies for betting or market share showed that the share of casino GGR increasing gambling revenue and this places a burden in the market has dropped from 55.4% to 49.8%, LPM on the regulator to ensure that these contingencies are GGR share has dropped from 17.0% to 16.5% whilst lawful and that the proper protection for the public is in the market share of betting GGR has increased from place. 27.6% to 33.7% in FY2019 to FY2020. The ongoing ESKOM saga of rolling load-shedding • Taxes/levies to the amount of R687.7 million was resulting in either interrupted operations of casinos or collected during FY 2019/20, representing an high additional cost for alternate energy during these increase of 6% since the prior year. periods places an additional strain on the industry which, • A total amount of R74.2 billion was wagered in as a result of the COVID-19 pandemic and National FY2019/20, representing an increase of 10% since Lockdown, already suffered massive economic losses. the prior year. The Board is aware of alleged and confirmed instances ECONOMY of corruption in government institutions in South Africa which threatens sustainable economic development, The economic climate in which the industry currently ethical values and endangers the rule of law. Corruption operates is no different to that in which South Africa as and international perceptions of corruption in South a whole finds itself. The gambling rand now competes Africa has been damaging to the country’s reputation more vigorously with the spend on the basic needs as and has created obstacles to local and foreign direct presented in the Maslow theory of basic needs. The effect investment, economic growth and has ultimately of the COVID-19 Lockdown has an even greater strain distorted the development and upliftment of citizens. on the economy and the socio-economic environment. The Board’s Fraud and Anti-Corruption Policy, which is The COVID-19 pandemic and the associated national reviewed annually, aims to ensure compliance to laws lockdown with all its various regulations has had a marked and regulations in the organisation. The procedures effect on the economy and social welfare at large and include a national hotline and an anonymous reporting in particular, has seen the non-essential gambling sector box to ensure that fraud and corruption can be reported. both suffer and grow during the lockdown period. INDUSTRY DEVELOPMENTS Land based gambling has been hit hard by the lockdown while on-line betting has thrived. The continued The Board is in the process of investigating allegations restrictions placed on places of entertainment, alcohol of illegal gambling pertaining to pigeon racing. At this sales and the general curfew has resulted in contracted stage the information gathered suggest that the money economic activity for the land based gambling entities relative to this activity relates to the prize money for the which has led to a reduced need for the number owners of the winning pigeons. of resources required like, employees, hardware, outsourced services and acquired consumable goods The Board had approved contingencies for bookmakers among other. This has led to a reduced revenue stream which permitted the offering of betting to the public with the consequence of retrenchments, lower spending on casino type games. This approval was granted and corporate social investments. after extensive consideration and although it resulted Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 17
OUR STRATEGIC FOCUS in the Board being named in a litigation matter with REVIEW OF THE GAMBLING INDUSTRY the Casino Association of South Africa, the Board was There is uncertainty surrounding the relocation of an satisfied that the legal basis for such approval was outer lying casino to the metropole and the effect such sound. CASA has since withdrawn the application and relocation may have on the gambling industry in the the matter is regarded as finalised. The offering of the Province. Currently the Board has no role in the relocation new contingencies provides a wider variety of betting process other than providing comments on the proposed contingencies that bookmakers could offer and these amendments, which has since been published for public alternative offerings also serve to obviate the decline in comment. the horse racing numbers. Provincial Treasury commissioned research into the Horse-racing as a sport has been a struggling industry regulation of international junkets. The research is a and the Board noticed a substantial decline in betting review of the legal, practical, economic and taxation taxes over the past year. Re-invigoration of horse-racing considerations through a comparative analysis of the as a sport is necessary to make it more appealing to the different jurisdictions where international junkets are younger generation, which could assist the operator/s operational. This research is in its final stages and to have a turnaround in this industry. Provincial Treasury awaiting presentation to the Minister and the Board for has embarked on research which explores the request for final completion. government assistance received from the Totalisator. An external service provider was appointed to dissect the Apart from the research commissioned by Provincial economic position the Totalisator finds itself. The report Treasury, the Board is reviewing the gambling landscape concludes with recommendations on the options open and gambling opportunities in the Western Cape. The to the provincial government. This report is not made LPM Operators engaged the Board on the roll-out of public as yet and the Board awaits the financial decision Type B and C LPMs in the Province. The Board issued of the Minister and Province in respect of the research 3 000 LPMs, with each LPM Operator awarded 1 500 and findings. LPM machines. The National Gambling Act, 1996 and concomitant National Regulations allocates a total of 9 The Board’s position is that it advocates the legalising 000 LPMs for rollout in the Western Cape. The Board and regulation of interactive gambling to protect patrons approved a rollout of 3 000 LPMs when the first RFP and for the applicable taxes to accrue to the fiscus. was issued at inception of the gambling industry in this While patrons, being the citizens of South Africa do not Province. have legal alternatives, they will not only be committing a crime by participating in illegal online gambling, but To date, the Board rolled out Type A LPM site licences, also be left to the mercy of unscrupulous operators which permits site operators to display up to 5 LPMs for that are not regulated in terms of fair play, return to play by patrons in their licensed LPM site establishments. patron percentages, probity, licensing and suitability Type B LPM site licences permit the rollout of up to 20 requirements. Licensed operators are vetted through a LPMs and Type C LPM site licences permits the rollout of rigorous licensing process to ensure that the industry up to 40 LPMs in a licensed LPM site. These categories of is free from corruption and illegal activities. The Board LPM site licences attract additional regulatory approvals opines that interactive gambling modes will afford and distinct investment and regulatory requirements are patrons protection from exposure to COVID-19 in that prescribed for their operation. The Board is putting the they can gamble at their leisure remotely, and will also necessary measures in place to facilitate the rollout of provide a much needed revenue injection given the Type B and C LPM sites. The pre-rollout phase entails current economic climate. The Board made submissions engaging the Board’s oversight bodies, reviewing the to policy makers at both provincial and national level gambling Rules and controls and prescribing the broader advocating that the mechanisms be put in place to financial investment and statutory fees. licence and regulate interactive gambling. The rollout of Type B and C LPM licences will not only boost the local economy and gambling taxes to the provincial Fiscus, but will also foster job creation and broad-based empowerment. 18 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
B OUR STRATEGIC FOCUS CURRENT LEGISLATIVE CONSIDERATIONS Gambling and Racing Amendment Bill was published for A briefing was held by the Department of Trade and public comment on 24 April 2020, inviting comments Industry before the National Council of Provinces Trade to be submitted to the Standing Committee on Finance, and Industry, Economic Development, Small Business Economic Opportunities and Tourism by 29 May 2020. Development, Tourism, Employment and Labour on 16 These fees in the main replace the casino exclusivity and July 2019 on the Draft National Gambling Amendment Route Operator fees that expired in terms of the 10-year Bill. The scope of the Bill was substantially reduced limitation prescribed in the Act. When these statutory from the version initially published for comment. fees are enacted, it will significantly bolster the Board’s The Bill deliberated in the legislature focused on the objective of becoming self-sufficient in terms of its reconfiguration of the National Gambling Board, the budgetary requirements. The WCGRB is reliant on the expansion of the national central electronic management WCPT to propose amendment of legislation to allow for system to other modes of gambling and addressing the changes in its revenue stream. governance issues affecting the National Policy Council. The Board received an invitation, per letter from A further briefing was held by the Department of Trade, the Western Cape Provincial Parliament’s Standing Industry and Competition before the National Council of Committee on Finance, Economic Opportunities and Provinces Trade and Industry, Economic Development, Tourism on 25 June 2020 to submit comments by 31 July Small Business Development, Tourism, Employment and 2020 on the Western Cape Nineteenth Gambling and Labour on 25 August 2020, to consider the final mandates Racing Amendment Bill, 2020. The Board subsequently of Provinces in respect of the National Gambling made oral submissions before the Standing Committee Amendment Bill [B27B-2018] 1. The Department of Trade, on 9 September 2020. Industry and Competition (DTIC) spoke to the rationale and the background of the Bill, which commenced at the The Draft Western Cape Twentieth Gambling and Racing end of the Fifth Parliament and then revived in the Sixth Amendment Bill, 2020 and the Draft Western Cape Parliament. The final mandates of Provinces for the Bill Twenty-First Gambling and Racing Amendment Bill, were that three Provinces voted in support of the Bill, 2020 was published for public comment on 8 May 2020. four Provinces voted against the Bill and there were two The amendments in the Draft Western Cape Twentieth abstentions. The Western Cape Province did not support Gambling and Racing Amendment Bill in the main the Bill. The National council of Provinces must make provides for the relocation of a casino and addresses a determination on the way forward, after seeking the substantive issues pertaining the amendment of licences. necessary legal guidance. The amendments in the Draft Western Cape Twenty- First Gambling and Racing Amendment Bill in the main The Western Cape Gambling and Racing Regulations introduces the new Casino exclusivity tax and economic (Fees and Cost 2016) were amended on 25 March 2020 to opportunity tax in relation to the relocation of a casino. effect inflationary increases to the statutory application, licence and investigation fees. These fees are updated RESPONSIBLE GAMBLING annually for inflationary adjustment. The effective implementation of a national exclusion programme is hampered as the National Regulations The Western Cape Gambling and Racing Regulations aimed at regulating same is not operational. The Minister (Fees and Costs 2016), Draft Second Amendment, 2020 of Trade, Industry and Competition (“DTIC”) must gazette was published for comment on 8 May 2020 and prescribes the date these Regulations shall take effect. The Board the Application fee for amendment of a casino operator hosted an engagement with the DTIC and the National licence for purposes of relocation. Gambling Board to discuss, amongst other, the readiness to enact the Regulations for commencement. The Board The Draft Western Cape Nineteenth Gambling and is continually engaging the said entities to fast-track the Racing Amendment Bill, 2018 was first published for exclusion register process, with the legislated mandate comment on 28 February 2018. The Bill was re-published to enforce same. on 2 May 2019, with its scope reduced to dealing with the statutory fees prescribed for Route Operator and Casino Operator licence holders. The Draft Nineteenth 1 https://pmg.org.za/committee-meeting/30926/ Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 19
OUR STRATEGIC FOCUS CHALLENGES TO BE ADDRESSED The Board’s challenges are motivated by its constraints. They include (see table overleaf): Challenge: Mechanisms to address the challenges Vacancies on the Board, which places pressure on • Board advises Minister in a timely manner of pending its effectiveness to honour scheduled meetings and vacancies on the Board. consequently its mandate and affecting licence • Board meetings scheduled well ahead of time to ensure holders as scheduled events, are postponed. that Board Members are timely and well-advised of the meeting dates. • Board employs rescheduling of meetings and in emergencies, round robin processes to ensure that the Board remains effective. COVID-19 constraints places a significant • Business continuity management plan in place to sustain constraint on the WCGRB’s activities, revenue, the operation of critical business services following a financial and logistical arrangements. The full disaster or adverse event. impact of the pandemic will be ascertained as • Business continuity plan continually reviewed for all the industry responds to the various stages and WCGRB business operations in response to disruptors. levels of lockdown and opens up to the general • The Board had to change its approach to adopt to the public in accordance with the National Lockdown “new normal” and will continue to be flexible to respond Regulations. to further disruptions brought about by the COVID-19 pandemic. 4.2 Internal environment analysis RESEARCH INTO LICENSING FURTHER MODES OF GAMBLING The vision of the Board is to be recognised as the leading The Board is conducting research on those categories gambling regulatory authority for innovative, sustainable of licences outlined in section 27 of the Act that has to business practices and maximisation of economic date not been rolled out in the Western Cape. These opportunities in a socially responsible manner. include the licensing of junkets and Bingo offerings. The Board previously conducted a socio-economic impact The mission of the Board is to control and regulate study to determine the impact of current gambling gambling within the Province of the Western Cape, to: modes on households, the surrounding communities and • provide a stable, just, consistent and effective gamblers. Being mindful of the socio-economic impact regulatory environment; of gambling on the inhabitants of the Province, the • inspire public confidence and trust, in an environment Board is duty-bound to engage the public and interested free from corruption and unlawful gambling and parties through a public participation process before betting activities; and making a determination on the licensing of new modes of • contribute to the economy of the Western Cape in an gambling. The Board must further balance the competing innovative and socially responsible manner. interests and rights that comes into play where economic opportunities are created and a stringent process shall The Board’s Strategic Focus for the 2021/22 Financial be followed as and when the determination is made to Year is outlined below: licence further modes of gambling as envisaged in the • Research into the licensing of further modes of Act. gambling in terms of the categories of licences that the Board is mandated to licence in terms of the The other important considerations in making a Gambling and Racing Act and the National Gambling determination in licensing further modes of gambling are: Act, 1996 • Organisational Structure Review a. Increased revenue to the Western Cape • Technology and Information Gambling and Racing Board • Safe and Responsible Gambling, including awareness In terms of paragraph 1.1(q) of the Western Cape programmes Gambling and Racing Policy Determinations (published • Planning for disruptions; and on 12 March 1999), the Board should, as soon as possible, • Corporate Social Responsibility become financially self-sufficient. 20 Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22
B OUR STRATEGIC FOCUS The table below outlines the Board’s own income as well as the government grant as a percentage of total revenue for these two income streams for the past five (5) years (amounts in the table below represent millions). Figures in millions 2020 2019 2018 2017 2016 Board’s own income 40.2 38.3 34.8 38.8 34.6 Government grant 37.6 26.8 19.7 9.9 5.2 Total 77.8 65.1 54.5 48.7 39.8 Board’s own income % allocation 52% 59% 64% 80% 87% Government grant % allocation 48% 41% 36% 20% 13% For FY2016 and FY2017, LPM Operator’s fee of R5.8 million and R6.5 million, respectively, has been included in the Board’s own income as presented in the table above. The LPM Operator’s Fee has since expired and as a result, the government grant allocation has increased from 20% to 36% in 2017 to 2018. The increase in the Board’s own revenue over the past five (5) fiscal years amounts to 6%, whereas the increase in the government grant over the same period amounts to 618%. For the past 5 years, the government grant from the Western Cape Government, represented, on average, 3.2% of the total taxes and levies collected by the Board on behalf of the Western Cape Government. The government grant is to assist in funding the loss of the Casino Exclusivity Fee as well as the Limited Pay-Out Machine Operator Fee which are no longer payable to the Board. With revenues under pressure as a result of the COVID-19 pandemic, many licensed gambling operators have looked to reduce operating costs by retrenching staff and improving efficiencies. Some of the smaller operators ceased to operate as a result of the COVID-19 pandemic and the subsequent National Lockdown. This will invariably have an impact on the Board’s own revenue streams as the Board’s income is based on industry demand. The Board’s own revenue is therefore under severe pressure as a result of the COVID-19 pandemic but also due to the loss of significant income streams of the Board. It therefore follows that the Board can make greater strides in becoming financially self-sufficient by expanding the gambling industry in the Western Cape Province in a socially responsible manner. b. Contribution to government revenues Over the past five (5) fiscal years, the Board collected R3.133 billion in taxes and levies on behalf of the Western Cape Government. Taxes and levies collected in the table below represent millions. Figures in millions 2020 2019 2018 2017 2016 Total Taxes and levies collected 693 652 617 595 576 3 133 Government grant as a % of taxes 5.4% 4.1% 3.1% 1.7% 1.7% 3.2% and levies collected The gambling industry has made a significant contribution to government revenues, gross domestic product, investment, as well as employment. For the month of September 2020, four thousand, three hundred seventy-three (4 373) employees have been employed across all gambling sectors in the Western Cape. Comparing the direct employment figures to the previous month, the number of licensed employees decreased by seventy-three (73). This trend is expected to continue as a result of the COVID-19 pandemic and the medium-tem impact of the pandemic on the industry. Western Cape Gambling and Racing Board • Annual Performance Plan 2021-22 21
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