Gauteng Gambling Sheriff Cracks The Whip

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By Thebe Mabanga

Gauteng Gambling chief executive Steven Ngubeni has his task cut out after being set a tough revenue collection target by the Gauteng provincial treasury.

Towards the end of November, Gauteng finance MEC Nomantu Nkomo-Ralehoko announced, when tabling her Medium Term Budget Policy Statement,that the province has set itself the target for raising R21,2 billion of its own revenue over the next three years.

Own revenue comes from vehicle license and other permits but also from gambling taxes, which are collected by the Gauteng Gambling Board

“This call comes at the right time, we are preparing to make our contribution to this target” says Ngubeni.

He says the Gauteng Gambling Board aims to double its contribution to the Gauteng fiscus over the next three years from about R1.3 billion next year to about R1.8 billion the year after and R3 billion in the third year and yield a cumulative R6 billion.

Ngubeni says the first step towards realising this goal is moving towards business automation of the gambling industry, which is valued at just over R10 billion in the country’s economic hub of Gauteng.

Automation allows the Gambling Board to move from the current scenario where operators declare their revenue and pay over their taxes to being able to monitor industry revenue in real time and invoice the operators.

This closes the loophole of under declaration of revenue, says Ngubeni.

Ngubeni has the government on this drive as the finance MEC announced in her budget speech that “Economic Development [department] receives an additional amount of R33. 4 million for the Gauteng Gambling Board business automation project, which will enhance revenue maximisation in the gambling environment.”

Ngubeni acknowledges that with a staff complement of 120, he does not have enough capacity to monitor the entire industry in the province.

Gauteng Gaming industry in numbers
– Gauteng has 7 Casinos, 11 Bingo operators, 2000 limited payout machines,
128 bookmakers
– In the year to March 2019, these contributed taxes of R1,13 billion, an increase of 4,4 % from a year earlier.
– This is made up of gaming tax of R 907 million (82%) and betting tax of
R228 million (18%)
– Gaming tax comprises casinos (machine and tables), bingo and limited payout machines
– Betting tax is made up of horse racing and other sport totalizators as well as well as horse racing and other sport book makers.
– Gauteng accounts for 41% of gaming revenue in South Africa, followed by KwaZulu Natal at 18% and the Western Cape with 17%

Source: Gauteng Gambling Board 2018/2019 Annual Report

Ngubeni says the Gauteng Gambling Board’s next biggest challenge is curbing illegal gambling, of which he estimates there are about 400 illegal outlets, which cost the gambling board revenue of about R400 million per year.

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Closing that gap will significantly enhance the revenue. A crucial frontier where this battle is being fought is in Online gambling, which Ngubeni
acknowledges is as much a physical battle of closing illegal, well masked operations as it a regulatory and technological battle of registering those willing to comply and bring them into the tax loop.

“This is a big, sophisticated, complex operation” says Ngubeni, pointing to the training work the Gauteng Gambling has started with the South African Police Services. SAPS has now established a dedicated unit to deal with gambling offences.

Ngubeni says sports betting is the fastest growing segment of the industry, but betting on horse racing is in decline, even as people flock to horse racing events like the Vodacom Durban July, the Sun Met in Cape Town or the Summer Cup in Gauteng.

“The challenge is to make it appealing to a new audience” he says of the sport of kings, horse racing [in Gauteng].

The Gauteng Gambling Board is also responsible for issuing what is called key personnel license, for key operational staff in gambling operations and is also responsible for licensing manufacturers and software developers for the gambling industry.

Before the dawn of democracy, gambling in what is now known as Gauteng was illegal, with Casino’s confined to the former homeland of Bophuthatswana in that mega citadel of Sun City as well as Carousel in Hammanskraal.

Ngubeni notes that the province has evolved as a gambling regulation jurisdiction and is now on par with the best gambling destinations such as Las Vegas in the United States, which has been a good training ground, as well as Macau, off Mainland China.

Ngubeni is now focused on issuing about 50 new betting licenses in Gauteng and is using the process to drive transformation.

Whereas the country’s empowerment legislation requires black ownership
to be at 26%, the Gauteng Gambling Board insists on 51% black ownership and monitors management and control and all pillars of the scorecard as a condition for issuing and maintaining a licence.

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The Gambling Board also drives public education on illegal gambling and responsible gambling.

Ngubeni points out that with illegal gambling, it points out its perils and educate people about the type of outlets to avoid.

“With responsible gambling, you have to remind players that gambling is a game of chance rather than a game of skill” says Ngubeni.

Ngubeni is a qualified town planner who also hold Masters in Development Economics and Public Administration among a range of qualifications.

He thought his background in town planning prepared him well for a regulatory environment, but he has found gambling regulation more
intense.

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He says his public administration have been sharpened as a result. The most fulfilling aspect of his work is when revenue from gambling can be channelled through taxes paid, as well as corporate social investment from the gambling industry.

“Gambling is not evil” he says, noting it is only negative when it is excessive. “If gambling can create Las Vegas, then it can
do more for society. It simply requires high policing and it can thrive.”

Having worked as a municipal manager at the Victor Khanye in Mpumalanga and the CEO of the National Youth Development Agency, all institutions he has headed, including the Gauteng Gambling Board have either had clean audits or been improved towards a clean audit.

His formula for this aspect of governance is simple: “First, there are laws, so comply and where you can’t comply, you must explain why,” he says.

The second and probably more important rule is to “respect the public purse,” and work with the consciousness that the money you are spending
belongs to taxpayers.

That rule seems to have served him and the people of Gauteng well.

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