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Highlights of Gambling in South Africa

Måndag 12 august, Benjamin Pritchard

There are growing suggestions that the South African government ( might be moving towards allowing online casinos to be operated by local companies, in the wake of the findings of a review into gambling in the country.

The Trade and Industry Minister Rob Davies announced in July that the government intends to tighten legislation around gaming, and as a result is contemplating the establishment of a single gaming regulator, whose remit would encompass online gaming, betting exchanges, the national lottery and sports pools.

Debate about the regulation and licensing of online gaming has raged for over ten years, and although speculation has been growing since 2011 that South African companies would eventually be permitted to operate online casinos, until this recent announcement it appeared that the process had stalled. A change in position was further hinted at in an acknowledgement by Zodwa Ntuli, an official in the Department of Trade and Industry, that the government’s view is that online gaming is “unlikely to disappear.”

Any proposed changes in the law, however, relate to the operation of online casinos in South Africa by local companies. Currently, in websites like it is not illegal for South Africans to play at online casinos located offshore. Therefore, there are already a number of online casino operators can be accessed by players in South Africa.

South African casino operator Grand Parade Investments ( has recently acquired a further two LPM (limited payout machine) route operator licences through its subsidiary GPI Slots, increasing the JSE-listed company’s dominance of the market.

After entering the industry with an initial allocation of 2,000 machines, the two new licences—in Gauteng and Mpumalanga—were gained through acquisitions, and the additional 2,000 machines in each province brings the total number under GPI’s control to 6,000. According to Chairman Hassen Adams, the company’s stated target is to reach a total allocation of 7,500 LPMs.

In 2012, GPI entered into a joint venture with the German LPM manufacturer, Merkur Gaming, to build and distribute slot machines and lottery terminals in South Africa. Grand Merkur, based in Cape Town, expects to produce its first locally-made LPMs by the end of 2013, and this will further benefit the company, whose LPM GGR increased by 25.1% in 2012, in terms of its ability control costs and maintain quality. The company ultimately aims to export its gaming machines to the rest of Africa, Europe and beyond.

It has been claimed that the South African government’s awarding of a third lottery licence in the country will only succeed in creating “stagnation, inefficiency and cronyism,” according to outspoken author and columnist Ivo Vegter ( and that this will also have a negative impact on the ability of new players to enter any potential homegrown online gaming market.

Vegter argues that the process by which the government awards such licences contravenes the country’s Bill of Rights by not enabling all citizens freely to choose their trade, occupation or profession, because the procedure for granting lottery and gaming licences excludes all but the wealthiest corporations.

The expensive and complex process for applying and bidding for a government licence, and the costs involved in maintaining one, are believed by Vetger to be both unreasonable and anti-competitive, in that only a select group has the resources, know-how and technical expertise to make a successful application. He details the costs involved in every step of the process, and describes the handling of the awarding of lottery and casino licences as “greedy”.

Vetger extends his argument to include the potential future regulating and licensing of online casinos in South Africa. He argues that new developments in online gaming will be stifled by this highly bureaucratic process, and that entry to the industry by energetic, innovative start-ups will be barred, in the interests of preserving the cartel enjoyed by the established, land-based players in the market. Vetger makes the case that limited licensing will in fact therefore be protecting the very companies who online casinos have set out to compete against, thus transferring the monopoly they enjoy into the new sector.

His argument is that such a scenario cannot possibly be in the interest of South Africans, as it will see them lumbered with a “decrepit, unattractive, limited, heavily-taxed, inefficient, uncompetitive and non-innovating bunch of licence holders” while inventive, player-friendly online casinos will remain outlawed. Under such conditions, he posits, “Why on earth would South Africans not continue to choose supposedly ‘illegal’ competitors who offer a better deal?”

To stay in touch with the opinions of Ivo Vetger, you can follow him on Twitter( .