South Africa Gaming Supplier Regulatory Overview

Introduction

Gambling activity in South Africa is regulated by the National Gambling Board (“Board”) pursuant to the National Gambling Act, No. 7 of 2004 (“Act”). Under the act, all manufacturers, suppliers, and maintenance providers of gaming devices must be licensed by the Board prior to conducting business in the country.

Regulation occurs at both the national and provincial levels. However, as the details of each province’s licensing requirements will vary, this analysis focuses solely on the requirements for a national license. Therefore, it is possible for an individual province to require additional materials or a local license in order to conduct business within the province.

Manufacturer, Supplier, or Maintenance Provider Licensing Requirements

All manufacturers, distributors, and maintenance providers of gaming devices must be licensed through the Board for a national license.¹ While not required, these entities may also apply for licensure at the provincial level.² However, all national licenses are issued by the provincial authority having jurisdiction over the gambling activity.³

A “manufacturer, distributor, or maintenance provider” is defined as “a person whose business is to import, manufacture, sell, lease, make available, distribute, maintain or repair a gambling device.”⁴

Furthermore, a “gambling device” is defined as “equipment or any other thing that is used, or at the time of its manufacture was designed to be used, in determining the result of a gambling activity.”⁵ Gambling machines are defined as:

any mechanical, electrical, video, electronic, electro-mechanical or other device, contrivance, machine or software, other than an amusement machine, that
(a) is available to be played or operated upon payment of consideration; and
(b) may, as the result of playing or operating it, entitle the player or operator to a pay-out, or deliver a pay-out to the player or operator.⁶

Duration

All national licenses are valid from the date of issuance until March 31 of the following year. After the initial licensing period, licenses are renewable on an annual basis.⁷

Fees

The initial licensing fee for a manufacturer’s license is R 120,000. The fee for a license renewal is R 80,000.

Required Documents and Information

Those persons interested in obtaining a manufacturer’s license must complete Form NGB 5/1(a) – Application for Manufacturer’s/Test Agent License. In order to complete the application, the following information is needed:

1. List of the categories of equipment that the applicant manufactures;
2. Basic identification information;
3. Address/information regarding enterprise with which the applicant will conduct business;
4. Past business addresses, past 10 years;
5. Business organization structure;
6. Description of nature, type, terms, and classes of voting and non-voting stock issued;
7. List of individuals holding beneficial interest in any non-voting stock;
8. List of all qualifying individuals or entities (sales representatives, officers, directors, partners, signatories on gambling agreements, management employees, etc.);
9. List of former officers and directors, past 10 years;
10. Annual remuneration for officers, directors, and partners;
11. List and description of partners’/members’ interest;
12. List of securities options;
13. Description of any long-term debt;
14. List of holders of long-term debt;
15. List of all other indebtedness and security devices, including the identity of those holding the debt;
16. List of financial institutions where accounts are held;
17. List of contracts to suppliers valued at over R 50,000 during the past six-month period;
18. List of stocks held by the applicant;
19. List of all inside transactions, past five years;
20. Criminal history;
21. Regulatory, bankruptcy, and securities compliance history;
22. License and certification history; and
23. List of all contributions and disbursements, past 10 years.⁸

In addition, the following documents and additional materials are needed:

1. Certificate of Incorporation;
2. Organizational Documents (charter, by-laws, partnership agreement, etc.);
3. Detailed description of business conducted and business of any parent/holding/subsidiary/intermediary company;
4. Description of any former business conducted within the past 10 years;
5. Description of methods by which shareholder rights may be modified other than by vote, if applicable;
6. Company ownership outline/chart;
7. Detailed description of all bonus, retirement, profit sharing, or similar remuneration agreements;
8. Description of all ongoing litigation;
9. Financial statements, past five years;
10. Annual reports, past five reports issued;
11. Any other reports issued by the applicant;
12. Organizational chart; and
13. Tax returns, past five years.⁹

Key Persons Licensing Requirements

In addition to the corporate provisions above, certain key employees of licensees must also hold a valid gaming license prior to conducting business in the country. These individuals include: directors, those exercising sufficient control over the licensee, those who are directly involved in the conduct of gaming, and any other person required under provincial law to be licensed.¹⁰

Duration

All national licenses are valid from the date of issuance until March 31 of the following year. After the initial licensing period, licenses are renewable on an annual basis.¹¹

Fees

There is an initial licensing fee of R 4,000 for employment licenses. Once issued, there is a R 2,000 renewal fee associated with an employment license.¹²

Required Documents and Information

Interested persons must complete Form NGB 5/1(b) – Application for Key Employee License (Personal History Disclosure). In order to complete the form, the following information is needed:

1. Basic identification information;
2. Citizenship information;
3. Marriage history and basic identification information regarding spouse;
4. Education history;
5. Employment history;
6. List of employment disciplinary actions;
7. List of all civil proceedings, including civil proceedings involving spouse;
8. List of all previous and ongoing litigation;
9. Criminal history;
10. Details regarding insurance agreements;
11. List of gambling licenses and activities;
12. List of financial interests in other licensees;
13. List of financiers;
14. Tax history;
15. Garnishment, bankruptcy, and attachment history;
16. List of all directorships held or financial interests in a company over 25%;
17. List of all foreign assets and liabilities;
18. List of all trust assets and liabilities;
19. List of all bank accounts, past five years;
20. Monthly income and expenditure statement; and
21. Detailed financial disclosure and statement of all assets and liabilities.¹³

In addition, the following documents and information must be included with the application:

1. Certified copy of identification document;
2. Photograph, taken within past month;
3. Copy of identity documents for all children; and
4. Tax returns, past three years.¹⁴

Licensing Process

National license applications must be completed by all interested persons and submitted to the provincial licensing authority for review and processing.

Reporting and Records Requirements

All licensed manufacturers must keep records of all gaming machines manufactured, acquired, distributed, or sold and must mark all machines with the name of the manufacturer, the date of manufacture, and a unique serial number.¹⁵ This information is then compiled and maintained on the Board’s national register of gambling machines and devices.

Any transfer in ownership interest of a gambling device must first be approved by the provincial licensing authority.¹⁶

Temporary Licenses

The Board may issue temporary employment licenses to individuals if the Board determines that the licensee would be disadvantaged by the delay in employment and that the employment does not appear to violate Board policy.¹⁷

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¹See National Gambling Act 7 of 2004, Sec. 9.
²See National Gambling Act 7 of 2004, Sec. 38(2)(a).
³See National Gambling Act 7 of 2004, Sec. 39.
⁴National Gambling Act 7 of 2004, Sec. 1, 'manufacturer, distributor, or maintenance provider.'
⁵National Gambling Act 7 of 2007, Sec. 1, 'gambling device.'
⁶National Gambling Act 7 of 2004, Sec. 1, 'gambling machine.'
⁷National Gambling Board Regulations, Sec. 31.
⁸National Gambling Board, Form NGB 5/1(a).
⁹National Gambling Board, Form NGB 5/1(a).
¹⁰See National Gambling Board Regulations, Sec. 18(1).
¹¹National Gambling Board Regulations, Sec. 31.
¹²National Gambling Board Regulations, Schedule 1.
¹³National Gambling Board, Form 5/1(b).
¹⁴National Gambling Board, Form 5/1(b).
¹⁵National Gambling Board Regulations, Sec. 20.
¹⁶National Gambling Act 7 of 2004, Sec. 23.
¹⁷National Gambling Board Regulations, Sec. 19.