Legal definition of ‘gambling’
What are the legal elements required for an activity to be regarded as gambling?
Gambling is regulated in terms of the National Gambling Act, 7 of 2004 (National Gambling Act) and related provincial legislation. The activities regulated in terms of the National Gambling Act are:
An activity that involves accepting a bet or a wager. Section 4 of the National Gambling Act prescribes that a person places or accepts a bet or wager when that person
‘(a) being a player, stakes money or anything of value on a fixed-offs bet, or an open bet, with a bookmaker on any contingency; or (b) being a bookmaker – (i) accepts a stake of money or anything of value on a fixed-odds bet, or an open bet, from a player on any contingency; or (ii) stakes money or anything of value on a fixed-odd bet, or an open bet, with another bookmaker on any contingency; (c) stakes or accepts a stake of money or anything of value with one or more other persons on any contingency; (d) expressly or implicitly undertakes, promises or agrees to do anything contemplated in paragraphs (a), (b) or (c).’
An activity that involves placing or accepting a totalisator bet. Section 4 of the National Gambling Act defines a totalisator bet as a bet that a person places or accepts
‘when that person stakes money or anything of value on the outcome of an event or combination of events by means of – (i) a system in which the total amount staked, after deductions provided for by law or by agreement, is divided among the persons who make winning bets in proportion to the amount staked by each of them in respect of a winning bet; or (b) any scheme, form or system of betting, whether mechanically operated or not, that is operated on similar principles.’
An activity that involves making available for play, or playing bingo.
An activity that involves making available a gambling game, that is ‘(i) played upon payment of any consideration, with the chance that the person playing the game might become entitled to, or receive a pay-out; and (ii) the result might be determined by the skill of the player, the element of chance, or both’ and includes bets or wagers placed in casinos.
An activity that involves making available for play, or playing an amusement game – if the relevant provincial legislation require such amusements games to be licenced.
Included in the scope of ‘gambling games’ are (1) casino gambling (including poker rooms, slot machines, table games, etc); (2) limited pay-out machines (LPMs); and (3) bingo.
In terms of the National Gambling Act, a pay-out is ‘any money, merchandise, property, a cheque, electronic credit, a debit, a token, a ticket or anything else of value won by a player (a) whether as a result of skill of the player or operator, the application or the element of chance, or both; and (b) regardless of how the pay-out is made’. A pay-out can be distributed or transferred by the person who won it to another person, can be converted to money or any other thing of value. A pay-out expressly excludes an opportunity to play a further game (ie if the player is afforded the opportunity to continue without interruption to play the type of game in respect of which the opportunity was won, on the machine on which the opportunity was won).
Section 11 of the National Gambling Act expressly prohibits engaging in or making available interactive gaming (gambling games played or made available to be played through the mechanism of an electronic agent accessed over the internet). This includes interactive gaming in the form of player-to-player betting and online casino gambling (ie, virtual slots, video poker, online poker rooms etc). Online betting, on the other hand, may be offered by licensed South African bookmakers – this includes betting on the outcome of gambling games that can only be offered by licenced operators at licenced premises.
Lotteries are separately regulated in terms of the Lotteries Act, 57 of 1997 (Lotteries Act) to include ‘any games, scheme, arrangement, system, plan, promotional competition or device for distributing prizes by lot or chance and any game, scheme, system, plan, competition or device, which the Minister may by Notice in the Gazette declare to be a lottery.’ The Lotteries Act regulates the national lottery operated in South Africa as well as (1) lotteries incidental to exempt entertainment (specifically a bazaar, sale, fête, dinner, dance, sporting event or other entertainment of similar character that raise no more than 10,000 rand from the sale of tickets, sold for no more than 10 rand to the benefit of a deserving section of the public); (2) private lotteries (conducted no more than 12 times annually, from the sale of tickets not exceeding 10 rand per ticket, limited to the sale of tickets to the value of 10,000 rand per lottery with the prizes awarded in any private lottery not exceeding 10,000 rand); (3) society lotteries (specifically conducted by social or sporting clubs, no more than six times annually, where the value of the tickets sold may not exceed 2 million rand and the total value of the prizes may not exceed 1 million rand per year).
The national lottery operated in South Africa is awarded to one licensee and is operated under strict regulations and oversight.
This report was first published on Lexology Getting The Deal Through website. You can read the full report here.
For more information, please contact Nick Altini or Leana Engelbrecht or your usual Herbert Smith Freehills contact: