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Advertising Rights Digest - Arm yourself with knowledge

Published on 12 May 2011

Online gambling advertisements
By Willem Krog
31 Aug 2010

Latest News

The High Court recently ruled in essence that online gambling by an online casino within the borders of South Africa require licensing in terms of the South African legislation. What does this entail for media owners that carry advertisements from online casinos?

The court case, which started in 2006, ended up with the judgement on 16 August 2010. The online casino based in Swaziland argued that the online gambling does not take place in South Africa and the transaction is concluded in Swaziland. The court was assisted by two experts in the matter and concluded that a person sitting in front of his computer in South Africa is indeed gambling in terms of the South African law and therefore requires licensing. The casino appealed the judgement.

What is the position pending the appeal of the judgement?

The South African law is very clear on this issue. Any appeal suspends the original judgement until the appeal court has decided the matter or the appeal is withdrawn. This means nobody will be in contempt of court if they carry an advertisement from an online casino until such time as the appeal is heard.

What is going to happen if the appeal fails?

A court finds law. It does not make law. Parliament makes law. The court just finds what the law is. In the context of this case it means that online casinos are illegal since they started to operate and not from the day of the court judgement. So if the appeal is finalised and the judgement is not overturned on appeal, the online casinos are illegal since they started operations in South Africa. The fact that a court rules years after they started to operate, does not change that.

Section 15 of the National Gambling Act says:

"15. (1)
A person must not advertise or promote�
(a) any gambling activity�
(i) in a false or misleading manner; or
(ii) that is unlawful in terms of this Act or applicable provincial law; or"�

Can media owners be successfully prosecuted?

Criminal activity is all about intent to be illegal. There is no question that media owners had no intent to break the law. Whether online gambling is illegal was a complex legal issue involving very technical aspects. A prosecutor would have to prove you had the technical knowledge that it is illegal and despite that knowledge, you still proceeded with those illegal activities. (This is besides all the other things it needs to prove). The fact that the South African law is silent on online gambling would impose and enormous burden on a prosecutor. The prosecutor can not simply rely on the recent judgement to prove online casinos are illegal. They will have to proof it again as part of the evidence they must prove for a successful prosecution

Pay back the advertising revenue received so far?

The only institution that can demand this is the Asset Forfeiture Unit (AFU) in terms of the Prevention of Organized Crime Act (POCA). Do not discount this possibility because the Gambling Board and the AFU have co-operated on many previous occasions. (Even on small illegal gambling operations with a couple of slot machines)

Having said that - they will face the same problems a normal prosecutor would face plus a heavy additional burden of having to proof how much was received and when etc. All in all we are not talking about organized crime but a technical contravention (if it is one at all). They should not waste time with this when there are bigger fish to catch.

Can the online casino cancel his contract going forward?

Yes - it can. Based on the judgement it may no longer advertise its product therefore the essence of the contract falls away. It would be entitled to cancel the agreement. There is however other legal issues at play here and one must obtain separate legal advice before cancellation is conceded.

* This document is not a legal opinion. No liability is accepted for the correctness of what is stated in here.

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