South Africa moves to pull plug on internet gambling

International internet gambling sites that enable players to win or lose thousands at the press of a button and in the privacy of their own homes have taken South Africa by storm.

But now the South African Reserve Bank has wised up to the millions of rands flowing out of the country illegally and has warned that people who play on these sites using their credit cards could face criminal charges for breaking foreign exchange regulations.

And in a bid to clamp down on the growing number of cyber gamblers, the South African National Gambling Board has commissioned consultants to advise on legislative measures to control the burgeoning industry.

There are hundreds of these sites on the net and players are promised the chance of winning millions.

Although most of the sites advertise themselves as internet casinos based in the gambling city of Las Vegas, the reality is that in the United States no one is allowed to register an internet gambling site and citizens are prohibited from internet gambling.

Most of the internet casinos are in fact based in tax havens and there are a number in Australia and Antigua in the West Indies.

Thibedi Majake, manager of the South African National Gambling Board, said the board was well aware of the problems and risks posed by internet gambling sites and was concerned about the large amounts of money leaving the country.

"We have appointed consultants to advise us how to handle the issue. Of course there is great concern about the flight of money out of the country via these sites, but that is a foreign exchange issue and falls under the control of the Reserve Bank.

"Once we (the National Gambling Board) have received a report from the consultants on proposed measures to handle and control these sites, we will advise the government on legislation on this particular industry."

Majake confirmed that the board had been approached by several groups wanting to set up internet gambling sites in South Africa but because there was no legislative framework to handle such requests, the board could not approve the applications.

A spokesperson for the Reserve Bank said using credit cards to gamble on overseas-based gambling sites was in contravention of exchange control regulations and might result in the withdrawal of transgressors' credit cards and or prosecution.

The spokesperson said credit card companies had to hand records of credit card transactions to the Reserve Bank and it was easy for officials to trace these transactions.

Rossouw Lubbe, spokesperson for the Western Cape Gambling and Racing Board, said it was important that internet gambling was strictly regulated to ensure that taxes were paid.

Lubbe said South Africa should promulgate legislation to allow authorities to monitor and control sites that can be established in this country.

"This will mean money will flow into this country, rather than flow out. Also companies and sites based here will at the least pay company tax, which will boost the local economy. At the moment, aside from the fact that it is illegal for South Africans to gamble on these sites, it can also be highly risky.

"Who knows how secure the credit card information is on such sites? I believe there is a window period for South Africa to get involved in this industry so that it can be effectively controlled and monitored."

- INDEPENDENT NEWSPAPERS (SOUTH AFRICA)