The Furthest Liberals Should Go On Gambling Regulation
To be ideologically clear, ideally, online gambling would not be regulated at all. But reality demands even those with a coherent grasp of ideology to reluctantly concede certain points.
Should the legal status of online casinos, which remain technically illegal in South Africa, be resolved? The response to this question from most people, particularly those familiar with the gambling landscape, will likely be yes. However, any attempt to legalise online casinos should not come at the expense of licenced bookmakers that already contribute substantially to provincial tax revenue.
Martin van Staden’s contribution to the debate on gambling regulation, which addresses the ideologically incoherent claims of those with a misconceived definition of liberalism, is valuable because it effectively undermines the social-cost rationale being deployed unwittingly to justify policies that would harm the legal online gambling market.
What also needs to be addressed is the concern about the “unfettered advertising and marketing of gambling and sports betting” that has “fuelled the rise in gambling and betting spending”. This concern is worryingly shared by illiberal organisations such as the MK and the EFF that support outright bans on gambling advertising.
The fundamental problem with it is that it is paternalistic. It casts individuals as “vulnerable” and helpless subjects who require a paternal figure (read the state) to intervene and protect them from supposedly predatory gambling operators.
The negation of human agency is inherently at odds with liberalism. As van Staden correctly notes, there are many among the poor who, in the face of this unfettered advertising, have made a conscious choice not to partake in gambling as a means to generate income. Those who have gone the other way and partook are equally capable of deciding not to partake at some point. Human beings have agency, and the negation of it is fundamentally incompatible with liberalism.
The invocation of child protection still doesn’t justify state paternalism. Liberalism holds that the responsibility of protecting children lies not with the state, but families, communities, and social institutions. The state, if one is a minarchist, only exists to intervene in cases where aggression is directed at life, liberty, or property.
Practically, the concern about gambling advertising indirectly aligns those who have distanced themselves from outright bans with a broader, problematic discourse that is likely to shift gambling policy in the direction of debilitating centralisation.
This discourse lumps all types of gambling operators together, portraying them as profiteers who exploit poor people and who are therefore deserving of crackdowns and higher taxation because they are supposedly underpaying. For a clear example of this discourse, refer to Rise Mzansi’s broader position on gambling regulation.
In their defence, those with an overly concessive approach to gambling regulation can argue that they are only calling for some restrictions on advertising and not outright bans. Yet, alignment with the broader discourse is the real problem here because it inevitably legitimises and invites punitive state intervention in the form of National Treasury’s 20% online gambling tax proposal and other measures that would suppress the legal online gambling market.
To be ideologically clear, ideally, online gambling would not be regulated at all. But reality demands even those with a coherent grasp of ideology to reluctantly concede certain points. The moral outrage around gambling makes some practical policy intervention all but inevitable.
In this regard, the Free Market Foundation (FMF) is preparing a submission calling on Treasury to withdraw its 20% national online gambling tax proposal that raises enforcement concerns, undermines the authority of Provincial Gambling Boards (PGBs), overburdens legal operators, and will likely destabilise the legal online gambling market. More broadly, the submission calls for the legal status of online casinos to be resolved within the existing decentralised gambling regime before any consideration is given to a fiscal framework for them.
The existing regime through which licenced bookmakers are taxed provincially should not be interfered with by the national government. Licenced bookmakers already make substantial contributions to provincial tax revenue, and the FMF’s submission will demonstrate this.
Hypothetically, were online casinos to be regulated, they should also operate under the existing regime in which PGBs hold primary regulatory authority, however challenging such an approach may be.
Given this, the FMF naturally opposes the National Gambling Amendment Bill, which, among other things, seeks to seize unlawful winnings at national level, effectively centralising gambling regulation and undermining provincial authority, as argued by the Western Cape Gambling and Racing Board (WCGRB). It also opposes the uncommenced National Gambling Amendment Act of 2008, which sought to broadly centralise the regulation of online casinos through the National Gambling Board (NGB). Lastly, it opposes the Remote Gambling Bill, whose main problem is that it reflects paternalism and indirectly aligns itself with a broader discourse on gambling that is deeply problematic.
The only concession should be on online casinos, which according to research, already account for roughly 62% of all online gambling market activity. Any other concession invites centralised policy that will likely destabilise the legal online gambling market and drive more users to offshore platforms.
Liberals ideally eschew the regulation of individual choices. But under practical constraints, they reluctantly concede to policy responses that respect liberal principles, preserve decentralisation, and avoid interfering with legal markets that already contribute substantially.
Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is a Policy Officer at the Free Market Foundation.
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