We need to get to grips with online gambling — start with banning ads

It is never certain that when answering a question at a company’s results presentation, it will capture quite so much attention. This is precisely what happened when I was asked for my view on the impact of online gambling on disposable income in South Africa at Pick n Pay’s results presentation on 27 October.

This may have appeared as an unrelated subject to retail, but that is to take one industry in isolation from another. The fact is, unchecked online gambling has a distinct and direct impact on disposable income and thus what South Africans are spending on food and groceries.

The numbers are astounding and bear repeating. The very latest report from the National Gambling Board records that total gambling turnover reached a startling R1.5-trillion, and gross gambling revenue now sits at R74-billion. The frightening statistic is that online gambling constitutes by far the largest share of gambling spend, with casinos a very distant second. For the 24/25 financial year, 75% of turnover was spent on online gambling and betting.

Three things emerge from this data and its analysis. The first is that the legal gambling industry contributed just under R6-billion in levies and taxes. Contrast this with unregistered or illegal online gambling operations, or those registered abroad, where mostly foreign operators are “hoovering” money out of the country every month and paying precisely zero in tax in South Africa for the privilege.

The second thing to note is that casinos and horse racing not only pay tax (including a special gambling tax), but create many thousands of jobs, whether on the casino floor, in restaurants, in hotels or in major arenas that offer entertainment. Casino gambling has been well regulated to date. Problem gambling has hovered around 5% for many years. Until now.

Read more: South Africa’s bad bet: How online gambling is a major source of extraction from the economy

The third, and most critical issue to consider is the impact on the poor – those least able to afford recreation of any kind, least of all gambling. With smartphone penetration growing every day, access to online gambling becomes easier and easier. Age limits put in place are meaningless when children under 18 are using their parents’ details to register and log in.

Experian and Vault22’s report on online gambling maintains that there is a direct link between people who gamble and financial distress. South Africans aged from 29-44 represent 60% of gamblers, while those aged 45-60 have seen a doubling from 10% to 20% of all gamblers.

Standard Bank’s assessment presents a dire picture, with its assertion that 15% of gamblers struggle with control and that, worst of all, a full third of Sassa grant recipients visit betting sites, and 16% of gamblers borrow money to gamble.

Equally worrying is that teenagers as young as 13 are gambling using fake details, and teens report using gambling to pay for essentials like toiletries and school lunches. Teachers report that students are addicted and openly discuss better odds in class. This trend extends to the middle classes, with gamblers in this group spending 38% to 50% of their income on gambling – 30% more than they spend on groceries.

Read more: Students wager NSFAS allowances and their futures at online betting sites

So to characterise online gambling as “growing” is a vast understatement when you consider that gambling is not only displacing spending on groceries and other essentials, but that total betting has grown about 50% per annum over three years, which far exceeds the increase in food spending over the same period of about 8%. The maths is not hard to work out.

What is the answer then? Just last week, the Supreme Court of Appeal in Gauteng confirmed that a bookmaker licensed under a provincial statute cannot offer fixed-odds bets on casino games. Although the ruling is specific to Gauteng, the National Gambling Board has said that it applies to all South African provinces.

Other interventions could be effective. Teens have reported that they started gambling when an advertisement for online gambling appeared on their phones. You can’t but notice visibly overwhelming advertising for online gambling, whether in airports or elsewhere.

In my view, this should end, and end soon. While a ban on advertising, such as in the tobacco industry, may not have ended consumption, there is every reason to believe that disallowing the kind of constant and ubiquitous branded exposure to online gambling would indeed help as a first intervention.

Education is also key, as are other interventions. Aside from warnings on advertisements of legal players, there does not appear to be much that is being done to warn against the risks of online gambling, particularly for those least able to afford it.

The support of company-run gambling addiction helplines for problem gamblers is akin to a mugger supporting victim trauma centres.

Either way, concerted attention from government is long overdue, and policy must be updated in a calm, well-thought-out manner so it protects the vulnerable, maximises a fair return to the fiscus, and doesn’t encourage illegal gambling by passing legislation that is too restrictive.

There is a middle ground. We need to find it fast, as sadly, the number of our communities and children going to bed hungry grows at an alarming rate.

The simple truth is that addiction, poverty and misery are at the core of this industry, hardly a noble endeavour by any stretch of the imagination. DM