An Age-Old Debate Rears Its Head in South Africa

15 December 2006
Co-authored by Garron Whitesman

A great deal of media attention has been focused recently on the judgment handed down on Nov. 27, 2006 by Judge Hartzenberg of the Transvaal Provincial Division of the High Court of South Africa in the case of Casino Enterprises vs. the Gauteng Gambling Board and Others. As a result there has been much speculation as to its affect on Internet gambling in South Africa, and a fairly bleak and negative picture has been painted by the media in general. Before we examine some of the finer detail of the case, it may be worthwhile revisiting the legal position that forms the core around which the judgment has been formulated.

The first thing to emphasize is that the legal regime pertaining to online gambling in South Africa remains unchanged from that which was in place prior to the judgment being handed down. Since the national and provincial gambling boards in South Africa have "concurrent jurisdiction" to regulate gaming affairs in the respective provinces, the overarching national law in terms of Section 11 has a clear impact on online gambling activities. What is not perhaps clear is that in the very near future there will be a significant change in this position.

Section 11 of the National Gambling Act 2004 (the "Act") prohibits the making available of interactive gambling games to South African residents. In addition thereto, Section 15 of the Act prohibits the advertising of such services in South Africa.

Casino Enterprises, which operates an online casino based in Swaziland, had approached the court to consider the jurisdictional issue of where online gambling takes place, since for various legal purposes it needs to be classified as taking place somewhere other than the ether that is the online world. At its heart Casino Enterprises argued that the gambling takes place in Swaziland and, accordingly, falls outside of South African legal jurisdiction.

The Gauteng Gambling Board et al argued that at the very least the gambling takes place in both Swaziland and Gauteng (a province of South Africa) but that even if the gambling was found to take place in Swaziland, Casino Enterprises was still unlawfully making available its services to South African residents and unlawfully advertising such services within the Republic. Judge Hartzenberg determined this issue to be a dispute of fact and subject to trial rather than motion proceedings. The Gauteng Gambling Board took a legal exception to Casino Enterprises' founding papers on the basis that they do not disclose a cause of action and (simply put) that regardless of the cause of action formulated in the summons, the existing South African law was clear and that there was therefore no case for the Board to answer.

It was the prohibitory provisions of the Act (Section 11) that the judge considered to be "of particular importance" in allowing the exception to succeed and dismissing the summons of Casino Enterprises. The judge did, however, allow Casino Enterprises leave to amend its summons and return to court within 15 days with its papers duly amended to include a non-excipiable cause of action. Casino Enterprises also has the universal right to apply for leave to appeal as is inherent in South African court proceedings where a higher court exists and/or where there are grounds for appeal. It is understood that Casino Enterprises will be seeking further relief with regard to the judgment.

So, whilst the judge in the High Court hearing this matter has spoken in terms, it appears that the saga may not be over.

In the interim, notwithstanding that the National Gambling Act contains the prohibitions mentioned before, it also prescribed that a regime to regulate online gambling within South Africa would be tabled by the Minister of Trade and Industry within two years of the Act coming into effect and after a committee constituted by the National Gambling Board made recommendations to the Minister. The new bill has in the past month or so been introduced to the South African Parliament and the process to make it law has well and truly begun. One would expect to see such law being passed during the first quarter of 2007. It is not yet known how long it will be before the first licenses are issued under the new legislation but one would not expect the National Gambling Board (which will likely issue such licenses) to drag its feet in getting to grips with such task. It is anticipated that, if all goes well, applications for interactive gambling licenses will be capable of submission in the fourth quarter of 2007.

So whilst Casino Enterprises may be battling it out in the court room under the existing legislation, very soon it and other interested parties might well be able to seek a license for the operation of an internet casino in South Africa. It is heartening that South Africa has sought to responsibly regulate online gambling activity, instead of simply prohibiting it under threat of stiff penalties, whilst the activity is absolutely bound to continue behind the closed doors of private residences.

Wayne Lurie and Garron Whitesman are South African attorneys specializing in commercial, Internet and Internet gaming-related law. They are both general members of the International Masters of Gaming Law and have been respectively advising on and following the regulatory process in South Africa. They may be contacted at